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HomeMy WebLinkAbout2020-08-05 Utilities Advisory Commission Agenda PacketAMERICANS 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. 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 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 July 1, 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.Discussion and Presentation by Professor Richard Luthy on "One Water" Resource Approach Discussion 2.Discussion of the Fiber Network Expansion Project by the Vendor Magellan Advisors Discussion 3.Discussion and Update on Activities to Facilitate Distributed Energy Resource Adoption and Discussion Integration 4.Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action NEXT SCHEDULED MEETING: September 2, 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 •Utilities Quarterly Informational Report for Q3 Fiscal Year 2020 UTILITIES ADVISORY COMMISSION – SPECIAL MEETING WEDNESDAY, August 5, 2020 – 4:00 P.M. ZOOM Webinar Chairman: Lisa Forssell  Vice Chair: Lauren Segal  Commissioners: Michael Danaher, Donald Jackson, A.C. Johnston, Greg Scharff, and Loren Smith  Council Liaison: Alison Cormack Item No 1 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. 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- based meeting. Please read the following instructions carefully. A. You may download the Zoom client or connect to the meeting in-browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30+, Firefox 27+, Microsoft Edge 12+, Safari 7+. Certain functionality may be disabled in older browsers including Internet Explorer. B. You will be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. C. When you wish to speak on an agenda item, click on “raise hand.” The Attendant will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. D. When called, please limit your remarks to the time limit allotted. E. A timer will be shown on the computer to help keep track of your comments. 3. Spoken public comments using a smart phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. Join Zoom Webinar Here Meeting ID: 966-9129-7246 Utilities Advisory Commission Minutes Approved on: 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 DRAFT Utilities Advisory Commission Minutes Approved on: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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 Utilities Advisory Commission Minutes Approved on: 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 DRAFT Utilities Advisory Commission Minutes Approved on: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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 Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 1 of 7 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF AUGUST 5, 2020 SPECIAL MEETING CALL TO ORDER Chair Forssell called the meeting of the Utilities Advisory Commission (UAC) to order at 4:01 p.m. Present: Chair Forssell, Vice Chair Segal, Commissioners Danaher, Jackson, Johnston, Scharff and Smith Absent: ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES Commissioner Scharff moved to approve the minutes of the July 1, 2020 meeting as presented. Vice Chair Segal seconded the motion. The motion carried 7-0 with Chair Forssell, Vice Chair Segal, and Commissioners Danaher, Jackson, Johnston, Scharff, and Smith voting yes. AGENDA REVIEW AND REVISIONS None. REPORTS FROM COMMISSIONER MEETINGS/EVENTS None. UTILITIES DIRECTOR REPORT Dean Batchelor, Utilities Director, delivered the Director's Report. Utilities Staffing – Approximately half of the Utilities Department staff had returned to work and half of the staff continues to work remotely. Almost all Operations staff are physically reporting to work to carry out field maintenance and operations projects and respond to emergency service calls. Customer Support Service staff rotate in and out of the office. Staff in the Administration, Resource Management and Engineering divisions are mostly working remotely; although, some are choosing to return to in-person work. Utilities had suspended reading meters in backyards and behind locked facilities in accordance with the shelter in place requirements but resumed all meter reading at the beginning of June once some of the restrictions were lifted. Staff who report to work must perform a symptoms check each day, wear face coverings when around others, and adhere to social distancing protocols. All staff are provided with the sanitation tools, personal protective equipment, and training necessary to protect themselves, their coworkers and community members. Other Utilities Projects in Progress – In addition to Utilities carrying out regular field maintenance and operations projects, you may see our staff or contractors out in the community working on other special projects. Each year Utilities performs a routine inspection of the gas distribution system to check for leaks, Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 2 of 7 and contractors are currently walking residential areas for this inspection. We are replacing utility poles in various areas of the city. Contractors or Utilities staff will contact residents if they need to enter properties to replace poles located in backyards. Our utilities meter audit project continues and is expected to wrap up in the fall. Utilities Rate Assistance and Payment Relief for Residential and Commercial Customers – When the City declared a local emergency in response to the coronavirus (COVID-19) shelter in place public health order, Utilities expanded payment relief and rate assistance programs for customers. The moratorium on disconnections for non-payment, late payment fees, and full-bill payment requirements remain in effect until the proclamation of a local emergency officially ends. Current delinquent balances past 60 days total around $500,000. This is higher than our baseline of $25,000 but much less than the $2,000,000 that we initially forecasted. As a reminder, residents may qualify for our Rate Assistance Program, which provides a 25% discount on gas and electricity charges and 20% discount on storm drain service fees. Residential and commercial customers can set up a bill payment plan for relief from late payments. The ProjectPLEDGE program allows commercial and residential Utilities customers in good standing with their own accounts to donate funding on a one-time or recurring basis to help another resident in Palo Alto. Residents who are struggling to pay their utility bills may apply to this program for one-time assistance. Saving Energy and Water While Sheltering in Place – Earlier this year, Utilities launched an outreach campaign about energy and water efficiency to help customers keep bills low while people are working and studying from home. Recently we began a new “Summer Sustainability for Kids” e-newsletter series to educate younger Palo Alto community members and provide family-friendly activities for children as they spend more time at home this summer. Modifications to Utilities Programs – All visits inside occupied residential dwellings remain temporarily on hold, so staff are modifying programs to offer online services. A virtual Home Efficiency Genie webinar on the topic of Indoor Air Quality will be held on Tuesday August 11. Annual Water Quality Report – Utilities provides an annual consumer confidence report on water quality conditions for the previous calendar year. The report on water quality conditions for 2019 is now available online at www.cityofpaloalto.org/waterqualityreport or in print by request. Please contact us at UtilitiesCommunications@cityofpaloalto.org or (650) 329-2479 to request a printed copy. This report is also available in Spanish and Chinese at www.cityofpaloalto.org/waterquality. Carbon Neutral Plan – Staff will present the Amended Carbon Neutral Plan and Electric Utility Reserves Management Practices to the Council for approval on August 17, 2020. In response to Chair Forssell's query regarding ProjectPLEDGE donations and applications, Batchelor reported contributions exceed payouts. Dave Yuan, Strategic Business Manager clarified that donations and requests are equal at approximately $10,000. The program has a balance of approximately $44,000. ProjectPLEDGE has been operational for several years. In reply to Vice Chair Segal's inquiry regarding the water quality report, Batchelor advised that there has been no major change in water quality. COMMISSIONER COMMENTS None. UNFINISHED BUSINESS None. Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 3 of 7 NEW BUSINESS ITEM 1: DISCUSSION: Discussion and Presentation by Professor Richard Luthy on "One Water" Resource Approach. Karla Dailey, Senior Resource Planner, reported Commissioner Johnston requested information about the One Water approach. Typically, water supply planning involves potable water, demand management measures, and some recycled water. With the pressure on water supplies, the industry is beginning to view water resources holistically. Richard Luthy, Stanford University Professor, advised that there is greater interest in potable reuse, non- potable reuse, and the capture of wastewater going to the ocean. Use of stormwater is possible, but there are some constraints around storage. Desalination of brackish water is growing, but seawater desalination is a last resort. Water banking is efficient. In reply to Chair Forssell's question about water banking, Luthy indicated water is allowed to flow into the California aqua duct for storage, and jurisdictions have the right to pump water from the aqua duct. Luthy continued his presentation, stating in April 2019, Governor Newsom directed all state agencies to prepare a water resilience portfolio, which would prioritize multi-benefit approaches, embrace innovation and new technologies, and encourage regional approaches. These approaches include efficiency, non- potable reuse, potable reuse, water banking, stormwater harvesting, and desalination. Non-potable reuse was innovative in the 1970s. After three decades, non-potable reuse is expensive and can be energy intensive, and the water is too salty to be used for long-term irrigation. Decentralized non-potable reuse involves the reclamation of wastewater using new technology that does not require aeration. This process is energy efficient, does not require lengthy pipelines, and produces water suitable for irrigation. Potable reuse was first demonstrated in 1962 with tertiary-treated wastewater. Indirect potable water reuse projects operate in Orange and San Diego Counties. El Paso and Big Spring, Texas, are experimenting with processes for direct potable water reuse. The Bay Area One Water Network is a clearinghouse for stakeholders and water managers to share information, build collaborative capacity, and develop strategies for implementing resilient integrated water systems. The Bay Area One Water Network hosts workshops and shares synthesis reports. Stormwater reuse has multiple benefits, and large systems are cost-competitive with other sources of new water. Over the next 35 years, the public and elected officials will expect the Bay Area to recycle wastewater and to be less reliant on imported water. A regional network can help identify and foster partnerships, demonstrate and optimize new technologies, and engage the public and elected officials. In answer to Commissioner Johnston's question about separate systems to collect and treat stormwater and wastewater, Luthy indicated the systems do not necessarily need to be separate. Some stormwater can be diverted for reuse to a treatment plant with excess capacity. In response to Commissioner Jackson's inquiring regarding segregation of the water supply at the local level, Luthy suggested water reuse may not be worthwhile in existing developments because of the cost of purple pipe. In reply to Chair Forssell's request for the status of direct potable reuse projects in Texas, Luthy indicated the Big Spring project was discontinued when the drought ended. The El Paso project has been approved. In these projects, water was sent to the treatment plant rather than a natural buffer. In answer to Councilmember Cormack's query regarding The Dreamt Land by Mark Arax, Luthy related that he is not familiar with the book. Councilmember Cormack noted gray water reuse can be part of the Cubberley Community Center redevelopment. ACTION: None Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 4 of 7 ITEM 2: DISCUSSION: Discussion of the Fiber Network Expansion Project by the Vendor, Magellan Advisors. Daniel Dulitz, Palo Alto Hills Broadband Working Group, reported wired broadband is not available in Palo Alto Hills. Microwave service is expensive and often unreliable. He presented a petition requesting the City of Palo Alto Utilities (CPAU) provide or facilitate broadband service to Palo Alto Hills. Tim Parsey described internet service providers and service for residents of Palo Alto Hills and noted the current internet provider has lost its lease. Kathy Roskos emphasized the necessity of broadband service for residents to work and attend school from home. Mike Carlton indicated Palo Alto Hills residents have no option for DSL or high speed internet service. The wireless options for internet service are unreliable. He requested CPAU allow or facilitate usage of the existing fiber endpoint. Dean Batchelor, Utilities Director, introduced John Honker and Jory Wolf of Magellan Advisors, the City's consultant for the fiber network expansion project. John Honker, Magellan Advisors, reported the fiber network is a major City asset. Magellan provides turnkey services across the spectrum of planning and building fiber networks. Phase 1 of the project began on July 18, 2020 and will result in a high-level design and cost estimate for expanding the City's network to support automated metering infrastructure (AMI), Supervisory Control and Data Acquisition (SCADA), telemetry, and wireless applications for Public Safety and Public Works. Phase 1 should be complete by the end of the calendar year. Phase 2 will result in a detailed backbone engineering design for the expansion. The goal of Phase 3 is to understand the alternatives for building Fiber to the Premises (FTTP). Phase 4 is engineering design for FTTP. The Council will review and approve each phase. Jory Wolf, Magellan Advisors, indicated policy discussions will focus on dig once, joint build, one touch make- ready for utility poles, use of City assets, multiunit right of entry, and micro-trenching. In reply to Chair Forssell's query regarding inclusion of Palo Alto Hills, Honker advised that the assessment will cover the entire City. In response to Vice Chair Segal's inquiry about an estimated date to build the infrastructure for the City piece of the project, Honker explained that Phases 1 and 2 will take about a year. A Request for Proposals (RFP) could be released when the 90% or 100% design is ready. Construction could begin 18 months after the beginning of Phase 1 and extend for 12-18 months. Phases 2 and 3 could be consolidated so that the timeline is shorter. In answer to Commissioner Scharff's question regarding the Council's rationale for the phasing, Dave Yuan, Strategic Business Manager, understood the Council wanted to take an incremental approach. The Fiber Fund's balance is about $30 million. Previous studies estimated the cost of a complete buildout at $80 million. Commissioner Scharff proposed the UAC discuss a recommendation for the Council to combine Phases 2 and 3. Phase 3 should provide quite a bit of information for the Council. COVID has focused attention on the need for broadband service. Commissioner Smith agreed with Commissioner Scharff's comments. The City should take advantage of the opportunity to accelerate some of the programming. Phase 3 will provide significant background and detail for cost projections to build out the network. Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 5 of 7 Commissioner Johnston concurred with Commissioner Smith's and Commissioner Scharff's comments. In response to his question about timeframes for construction mobilization and construction for the City piece, Honker indicated mobilization could require 3 months, and construction could extend for 12-18 months. The number of miles the expansion will cover is unknown and could affect the length of construction. A reasonable estimate is 18-30 months for construction. If fully approved, the system could be ready for service in 2 ½ or more years. The length of Phase 4 construction is dependent on the number of homes and the size of the project. Honker further reported that Phase 3 will be evaluation of possible alternatives for FTTP. Magellan will explore lower-cost and lower-risk approaches to build out FTTP. Where the Phase 1 network is designed, FTTP could be provided to areas in close proximity to the backbone. Because these projects are capital- intensive, Magellan will explore integrating the expansion project with other capital projects. Magellan will also assess the use of wireless for last-mile access. Phase 4 will result in a low-level design for FTTP, final construction prints, permit packages, a construction bid package, and an RFP for a construction contractor. Commissioner Danaher concurred with accelerating the phases. In answer to Commissioner Smith's query about potential challenges for expanding the network for City departments and later for FTTP, Honker clarified that the fiber network was originally intended to serve City departments, and some areas of the network are quite congested. Magellan will assist the City with decisions around expanding the existing backbone and building new backbone segments. Flexibility in the backbone is important for supporting applications. Wolf added that physical conditions such as soil will also need to be evaluated. Chair Forssell agreed with the suggestion to combine Phases 2 and 3 and inquired about the methodology for developing a business case and recent changes that could make FTTP feasible now. Honker indicated the competitive environment has not changed significantly since the last business case was developed. Municipal services have competed well with commercial services because reliability, price, and availability are as important as speed. An incremental approach can be more tactical and provide the same value to the community. Magellan will look at a number of methods to achieve expansion and help the UAC identify the best methods. Each neighborhood will be analyzed to provide build-out costs, payback on capital, and potential take rates. Vice Chair Segal supported combining Phases 2 and 3 and expressed interest in the equity component of expanding the fiber network. In reply to Councilmember Cormack's inquiry regarding the funding source for Phases 2 and 3 and the projected fiscal years for implementation of Phases 2 and 3, Yuan explained that Phase 1 can be found in the fiber rebuild project in the Capital Improvement Program (CIP). Phase 2 has not been budgeted because Phase 1 is not complete. Batchelor added that extra conduit for fiber expansion is installed as part of any capital project for the Electric Utility that includes undergrounding or rebuilding. In answer to Commissioner Jackson's query regarding City ownership of fiber along Page Mill Road, Batchelor advised that City fiber stops at the water tower, which is about 2,000 feet short of homes. Staff will have to review the situation and City policies to determine if the fiber endpoint could be moved to street-side. Commissioner Jackson remarked that the City does not provide residential broadband to any resident. With a lot of hard work, a group of people may be able to obtain broadband service if they could get access the City's dark fiber ring. In response to Commissioner Smith's question regarding the potential to work on tasks concurrently and to reduce the timeline by combining Phases 2 and 3, Yuan advised that staff and the consultant will discuss Phases 2 and 3 to determine the most economical and efficient method to proceed and update the UAC. Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 6 of 7 Batchelor added that the Council would have to approve a proposal to combine Phases 2 and 3. Commissioner Smith suggested compressing the timeline for Phase 1 and a new combined Phase 2 and 3. ACTION: None The UAC recessed at 6:15 p.m. and returned at 6:25 p.m. ITEM 3: DISCUSSION: Discussion and Update on Activities to Facilitate Distributed Energy Resource Adoption and Integration. Shiva Swaminathan, Senior Resource Planner, defined a distributed energy resource (DER) as a resource, potentially behind a customer meter, that can significantly change the timing, duration, and magnitude of energy use in the distribution system. Staff across CPAU divisions and City departments coordinate the integration and facilitation of DERs. Staff is evaluating proposals for AMI implementation, has implemented Phase I of the MyCPAU customer portal, has launched the Technical Assistance Program regarding electric vehicle (EV) chargers, is facilitating VMware's community microgrid, and is analyzing the impact of DERs on the distribution transformer loading. Plans for fiscal years 2020-2022 include implementation of MyCPAU Phase II; enhancement of customer programs, particularly EV chargers for multifamily homes; enhancement of DER customer programs, particularly for income-qualified customers; a pilot program for retail rates that minimize barriers to electrification; and AMI implementation. Nicola Acutt, VMware Vice President for Sustainability, advised that VMware provides IT infrastructure and digital workspace technology. Acutt reviewed the vision and objectives for the microgrid project. The initial phase of the program is to determine whether the project is logical and the business capabilities add value. The microgrid is under construction at a customer briefing center and a gym that supports emergency services and critical infrastructure. The project includes demonstrating the capability of plugging the Mobile Emergency Operations Center (MEOC) into the microgrid in order to provide indefinite power. Potential use cases for the microgrid are full building resiliency, islanding critical loads, peak-shifting modes, demand response operating mode, grid services, and integration with VMware's building management system. Construction of the microgrid is anticipated to be substantially complete in November 2020. Next steps include continued collaboration between CPAU and VMware, capture and share learnings, and continued development of innovative microgrid control technology. In response to Commissioner Scharff's questions, Acutt indicated the project is comprised of two buildings with solar installations and batteries. The batteries and solar panels provide power for daily use. Tomi Belosevic, VMware, explained that the batteries are oversized to provide resiliency. Solar generation is limited and does not charge the batteries fully. Electric power is used to fully charge the batteries. The batteries are cycled daily in an attempt to align utility and VMware peaks. The system will use different inputs to dynamically dispatch the batteries in combination with solar power to determine when the batteries need to be charged from the solar panels or the utility. Acutt related that community involvement in the project relates to providing support for the MEOC. A key contribution of the project is knowledge. In reply to Commissioner Johnston's inquiry regarding full building resiliency, Belosevic clarified that the battery should be large enough to power the whole building with average occupancy for 4 hours if the utility grid goes down. The team is planning to test a blinkless transition from grid connection to island mode. On cloudy or sunny days, power can be directed to specific portions of the buildings. In answer to Vice Chair Segal's query about Stanford University's participation in the project, Acutt indicated Stanford University's participation is focused on research, innovation, and application. In response to Chair Forssell's inquiry regarding the battery technology, Belosevic advised that the batteries are LG Chem lithium ion with nickel/magnesium/cobalt chemistry. ACTION: None Utilities Advisory Commission Minutes Approved on: September 02, 2020 Page 7 of 7 ITEM 4: ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting. Commissioner Smith requested a future discussion with Magellan Advisors. ACTION: None NEXT SCHEDULED MEETING: September 2, 2020 Commissioner Scharff moved to adjourn. Commissioner Johnston 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 7:08 p.m. Respectfully Submitted Tabatha Boatwright City of Palo Alto Utilities City of Palo Alto (ID # 11363) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: Integration of DERs in Palo Alto Title: Discussion and Update on the Adoption and Integration of Distributed Energy Resources in Palo Alto From: City Manager Lead Department: Utilities Recommendation This report provides information to facilitate the Commission discussion and feedback on the City’s activities to facilitate customer adoption of distributed energy resource (DER) technology, and initiatives to optimally integrate DERs into the City’s electric supply and distribution system for the benefit of all residents and businesses in Palo Alto. No action is required at this time. Executive Summary In January 2019, the Utility Advisory Commission (UAC) discussed DER1 related activities and the staff’s work plan for the three-year period 2019-2021. These workplan areas were: a) business strategic and operational planning, b) electric supply planning and operations, c) distribution system planning and operations, d) customer retail rate design, and e) customer program design. Considerable progress has been made under these work areas. The activities include: a) evaluation of advanced metering infrastructure (AMI vendor proposal with expectation to begin AMI implementation in Q3 2021, b) implementation of MyCPAU customer portal, c) formulation of customer programs to facilitate DER adoption, including launch of technical assistance program to assist multi-family, non-profits and mixed use properties to install electric vehicle (EV) chargers, d) coordinate the integration and optimization of a large solar photovoltaic (PV) + Energy Storage System (ESS) based microgrid system at a commercial campus to improve resiliency, and e) evaluate distribution transformer loading at four locations with high penetration of EV registrations. The report further details the progress and future activities planned. 1 California Public Utilities Code 769 defines “distributed energy resources” as distributed renewable generation resources such as solar photovoltaics (PV), energy efficiency (EE), energy storage (ES), electric vehicles (EV), and demand response (DR) technologies. Staff: Shiva Swaminathan City of Palo Alto Page 2 Background DERs are electrical energy resources connected to the City of Palo Alto Utilities (CPAU) electric distribution grid that can significantly change the location, timing, and magnitude of C PAU’s electric loads. These resources are primarily sited at customer premises, behind the utility electric meter, and include solar photovoltaic (PV), energy efficiency (EE), energy storage systems (ESS), electric vehicles (EVs), demand response (DR) technologies, heat pump water heaters (HPWH), and heat pump space heating (HPSH) systems. The goal of the DER related activities and workplan,2 as discussed with the UAC in January 2019, is to facilitate customer adoption of DERs and to enhance the value of customer sited DERs to all members of the Palo Alto community by using DERs to lower overall cost, lower greenhouse gas emissions, and increase the resiliency of the community while avoiding or mitigating any potential negative impacts from DER growth. Attachment A provides an overview of the impact of DER technologies have on different facets of CPAU operations and related work planning documents.3 Attachment B provides a summary of initiatives being considered to integrate DERs into the distribution system and the electric supply portfolio. Table 1 below summarizes the estimated number of DERs and magnitude of DERs loads in Palo Alto at the end of 2019. Detailed assumptions made to estimate the energy and capacity impacts of these systems are listed in Attachment C. 2 https://www.cityofpaloalto.org/civicax/filebank/documents/68309 3 These work plan documents include the Electric Integrated Resources Plan (2018), Distribution System Assessment (2018), and the updated Customer Programs Work Plan (2019) currently being implemented. City of Palo Alto Page 3 Table 1: Overview of Estimated Number of DERs and Associated Impact on Electrical Load in 20194 DER System Approximate # of DER Systems5 Impact on Electrical Load Impact on Total Electrical Load (% of total load) Energy6 (MWh) Capacity (MW) (connected) 7 Energy8 Peak Demand Reduction9 EV 4,000-4,500 +13,000 +10 to +15 +1.4% +0.5% to +2% (summer) +1% to +4% (winter) PV 1,223 -24,000 -15 -2.6% -3% to -6% (Summer) 0% (Winter) EE > 40,000 -64,000 -7 to -15 -7.3% -4% to -8% DR none - - - - ESS 20 - +/- 0.21 - - HPWH 44 +40 +0.06 - - HPSH 30-50 not estimated not estimated - - The estimated greenhouse gas (GHG) reduction potential for each DER unit is currently estimated to be as outlined below10. Estimates of GHG Reduction Potential of Each DER Systems 4 These estimates are calculated based on technologies deployed primarily since 2007, and reflect the total impact observed through the end of 2019. 5 The estimated numbers for PV and ESS are based on city/permitting records; the EE and HPWH estimates are based on rebates processed by CPAU, with EE measures varying widely from LED light bulbs to commercial HVAC upgrades; the EV estimate is based on DMV data for registered EVs in Palo Alto. 6 EVs and HPWHs increase the electrical loads on the distribution system and the energy supply needs, while PV, and EE will lower the electrical loads. DR programs tend not to have any net impact on energy consumption. 7 For PV the capacity is the addition of inverter capacity of each connected system, with a degradation factor applied to account for the age of the system. For ESS it is the estimated capacity of all 20 systems. The capacity impact of EE is harder to estimate. The capacity of the HPWH could range from 0.5 kW to 5 kW depending on the mode of operation; the average is assumed to be 1.4kW making the total capacity for the 44 systems to be 60 kW. For EV, the charging capacity at home could range from 1kW to 15kW, for this estimate it is assumed to be 2 to 3kW per EV registered in Palo Alto. 8 The fraction of the energy impact associated with each DER was computed by dividing Palo Alto’s annual electricity consumption in 2019, which was 908,851 MWh. 9 Impact on peak demand is based on “coincident demand,” which is the largest electric demand in MW during the 15-minute period of a given year when the entire Palo Alto electric load peaks – a peak of 140 to 180 MW depending on the season. 10 Though Palo Alto’s electric supply is carbon neutral, in the margins, any hourly energy consumption changes in Palo Alto rely on California-wide grid electricity which has a carbon content. This estimate assumes the marginal carbon content of electricity in the CAISO grid to 0.15 to 0.6 MT/MWh in any given hour, and 0.15 to 0.3 MT/MWh for solar production hours. These are direct emissions and do not include losses in the system or upstream emissions related to fossil fuel production and distribution. City of Palo Alto Page 4 DER System Estimates of GHG Reduction Potential (CO2e Metric Tons) Notes/Assumptions EV 1.5 to 3 MT/EV/year Depends on miles travelled in a year PV 1 to 2 MT/year Assumes a 5kW south facing home PV system EE 0.15 to 0.6 MT/MWh conserved Depends on time of day and season DR 0.1 to 0.4MT/MWh For a load shifting program; from solar production period to non-solar production period ESS 0 to 2MT/year Depending on operating mode for 13kWh unit; back- up mode, to daily cycling to maximize GHG reduction HPWH 0.6 to 1.2 MT/year For a residential unit, depending on extent of use HPSH ~1MT/year Residential central unit In 2021, staff will provide an update of the impacts of DERs on the long term electrical loads and the community’s GHG reduction goals (through 2030); the assessment will incorporate impacts of COVID-19, customer resiliency needs triggered by wildfire risk perceptions, and progress in meeting community’s greenhouse gas reduction goals. A prior long term assessment was discussed by the Commission in November 2017.11 Discussion This report will discuss progress on the following five DER planning focus areas and thirteen associated actions under them, as discussed with the UAC in January 2019. A. Business Strategic and Operational Planning B. Electric Supply Planning and Operations C. Distribution Planning and Operations D. Customer Retail Rate Design E. Customer Program Design To effectively manage DER growth, CPAU’s planning and operational activities related to electricity supply, the distribution system, and customer programs are closely coordinated. In addition, retail rates must be designed to remain cost-based while sending economically efficient price signals to customers who are considering DER investment and to collect sufficient revenues to maintain a reliable utility system. Overall utility business strategies must also be aligned to effectively integrate DERs. The report discusses the progress made on each of these five areas over the past 18 months. A. Business Strategic and Operational Planning To effectively take advantage of the opportunities created by DER adopti on, and to avoid potential negative impacts, CPAU needs to put certain fundamental technologies in place, most 11 https://www.cityofpaloalto.org/civicax/filebank/documents/61748 City of Palo Alto Page 5 importantly Advanced Metering Infrastructure (AMI). There are also potential opportunities and impacts related to the way DERs could affect utility loads and utility finances. CPAU needs to evaluate these opportunities and impacts to effectively take advantage of them or mitigate them, as applicable. Actions Planned Progress To date • Begin planning to implement an AMI system as described in the Utilities Smart Grid Assessment and Utilities Technology Implementation Plan. • Request for Proposals (RFP) for AMI system issued, and responses were received on 6/9/2020. Progress on evaluations and selection process will be discussed with the UAC in the Fall. Final selection planned for Q1 2021, implementation of AMI and other related projects planned for 2021-2024. See June 2020 report for details.12 • The AMI meter data management system vendor selection will ensure customers are aware and have access to high quality utility consumption information and associated analytical tools and enable customers to share their data. • Single-sign-on feature for customer portal to be implemented in Q4 2020. Implementation of additional customer engagement features using single sign-on is in progress (improved consumption dashboards and home energy and water reports). • In the process of finalizing specifications to implement a new customer information system (CIS). Implementation planned for 2021-2024, in coordination with AMI implementation. • Implementation of advanced utility rates (time of use) to more fully integrate DERs is not planned until 2025. A pilot all-electric home rate will be implemented earlier. • Undertake a competitive assessment of the impact of DERs on the electric utility finances and competitiveness • Preliminary research work done, timeline for completion of project depends on staff time availability but is tentatively planned to be completed in mid-2021. B. Electricity Supply Planning and Operations The Electric Integrated Resource Plan (EIRP) considers the electric supply provided by customer- sited DERs and supply from central resources located outside Palo Alto. In accordance with the EIRP, staff will continue to use the ‘avoided cost’ methodology13 to compare the economic merits of electric supply options from DER resources within Palo Alto and from resources outside Palo Alto on an equal basis.14 The current estimated avoided cost of CPAU’s energy 12 http://cityofpaloalto.org/civicax/filebank/documents/77113 13 The EIRP contemplates pursuing an optimal mix of supply and demand resources (Strategy #2) and procuring flexible utility scale resource supplies to effectively meet changes in customer loads due to DER adoption (Strategy #6) 14 The avoided cost methodology computes the cost of meeting customer loads from outside energy resources (supply resources), and then uses this cost benchmark to evaluate the economics of DER resources (demand side resources) –with DER resources preferred when the cost of DER resources is at or below the avoided cost benchmark. This methodology to compare supply and demand resources ensures energy is economically sourced City of Palo Alto Page 6 supply in FY 2021 is 10.4 cents/kWh, and it is 13 to 15 cents/kWh for energy supply from a PV system based within Palo Alto15. Large commercial scale DERs (PV, ESS and DR systems) will also impact day-to-day operations to optimally meet the community’s hourly loads. Any large variation in DER operations at a customer sites16 will require coordination with CPAU as well as the NCPA, the City’s scheduling coordinator, and CAISO, the state’s grid operator. Except for the planned VMWare community microgrid project17 staff is not aware of any other large project that could have such impacts in the next few years. Attachment D provides details of the VMware project. Actions Planned Progress To date • Continue to update electrical load forecast based on anticipated growth of DERs and incorporate it into supply resource plans. • On-going annual activity for budgeting, rates and supply planning purposes. Long term (10 year) forecast will be updated again in 2021. • Continue to evaluate DERs as an alternative to supply resources from outside the City. • On-going activity when facilitating DER adoption by customers. ‘Avoided cost’ methodology for energy and capacity is used to compare external supplies with DER supplies. These methodologies are being used to coordinate and optimize the PV+ESS at the VMware campus. C. Electric Distribution Planning and Operations The Assessment of Distribution System to Integrate DERs discussed with the UAC in April 2018 found the following: for all CPAU customers. Resiliency and other local benefits are also considered for DERs. 15 Under CPAU’s CLEAN (Clean Local Energy Assessible Now) program PV projects could be developed and output sold to CPAU at a fixed prices over a long term contract. CPAU also compensates for the excess electricity generated by customer PV systems and exported to the distribution grid at the Net Energy Metering 2 (NEM2) rate. 16 For a 180MW load like Palo Alto, DER resources such as Demand Response or Energy Storage systems in the order of 3MW+ are considered a large variation and will require operational coordination with Northern California Power Agency (NCPA), CPAU’s scheduling coordinator with the CAISO transmission operator. 17 VMware’s proof of concept (PoC) community microgrid project contemplates the installation of two battery ESSs at two separate buildings on campus that currently have solar PV systems on their roofs. Each of the battery systems will be 500kW/1MWh in size and will be coupled with two existing PV systems (120kW and 130kW) to provide improved supply reliability for the campus. In addition, two separate connection spots and receptacles will be reserved for the City’s emergency operating vehicles to be set-up and powered in the event of an emergency/power outage situation. The PV+ESS system could also potentially help shift energy from the less valuable solar production period of 10am to 2pm to more valuable periods between 4 and 9pm. The system will furthermore be tested for its technical capability to inject reactive power into the distribution system to improve the system’s power factor. Upon successful implementation of this PoC system, feasibility of a campus- wide microgrid system is also being evaluated by VMware. City of Palo Alto Page 7 • The nine electric substations and 68 high voltage feeders have sufficient capacity to accommodate PV and EV growth in the residential sector through 2030 (this 2018 conclusion will be re-evaluated in 2021) • Staff should closely monitor distribution transformer loadings in residential neighborhoods which have a very high penetration of EVs. • Sufficient feeder capacity exists in the commercial sector to accommodate EV load growth. • Development of large PV systems (>500 kW) may have system impacts related to ‘reverse flow’ on lightly loaded distribution feeders. As such, each of the larger projects are evaluated on a case-by-case basis. In addition to evaluating DER options as alternatives to electric supply purchases, DERs sited at a specific location on the distribution system may have the potential to avoid additional distribution system investment by CPAU. This would be dependent on the amount, type, reliability, and operational characteristics of the DER, and the customer ’s load response should the DER capacity not be available. In light of CPAU’s responsibility to serve customer loads even if the DER is offline, and the technical and economic potential for such opportunities using the corresponding avoided costs, no such economically prudent opportunities to reduce distribution system investments via DER investments were found or anticipated in the near future. Actions Planned Progress To date • Update mapping of customer meters to distribution transformers serving customers to assess transformer loading • On-going process to ensure accuracy of electric meter to transformer connectivity maps. • Identify distribution transformers that have the potential to overload • On-going, with existing analytical tools that have proven well to date, with no transformer failures due to overloading. • Initial assessment underway with four transformers to refine the tools for customer EV charging patterns (see Attachment B for details). • Evaluate a standardized policy and connection fee for residential customers requesting electrical panels larger than 200 Amperes and implement if feasible; similar initiative to aid commercial customers • Evaluation planned, but no progress in the last year due to lack of staff availability. Currently planned for 2021 • Explore the potential to integrate smart inverter capability to meet the operational needs of the distribution systems • Plan to test the capability of the VMware microgrid ESS to inject reactive power into the distribution system to improve system power factor during times of need. • Facilitate the implementation of customer- initiated and owned microgrid projects • An estimated ~20 residential customers have PV+ESS based microgrids in their homes, with a equivalent number of projects in the permitting phase. • Facilitating VMware microgrid project. City of Palo Alto Page 8 D. Customer Retail Rate Design The most important DER-related rate design task will be time-of-use (TOU) rate implementation once AMI meters become available, currently planned for 2021-24. TOU rates enable CPAU to send economically efficient price signals to customers who are contemplating DER investments to optimally meet their electricity needs18. Actions Planned Progress To date • Evaluate an all-electric home or building electrification friendly retail rate • Initial assessment underway – recommendation for implementation of a pilot scale program under consideration. Implementation will depend on staffing priorities and rate design issues. • Evaluate utility bill discounts for EV customers • A number of programs are under consideration. Bill discount for income qualified customers and DC fast charger locations under consideration for 2021. Low Carbon Fuel Standard (LCFS) funds would be utilized for such discounts. • Analyze, forecast, and monitor the impact of DER adoption on rate design, in order to fairly treat all customers and to maintain the financial health of the utility • On-going evaluation, with major long-term evaluation update planned for late 2021. • A preliminary evaluation of standby rates for large solar PV and ESS is underway within the context of the VMware microgrid project. Evaluation finalization and discussion with UAC planned in 2021 depending on staff availability. • Minimum bill rate design and implementation in progress. E. Planning & Implementing Customer Programs & Communications In October 2019 the Commission discussed the planning and implementation framework for customer programs. As discussed in that report, the goals of customer programs have shifted in recent years, with the focus on traditional energy efficiency and renewable energy expanding to include sustainability and carbon reduction programs. This shift includes a major focus on DERs such as electric vehicles and building electrification technologies to achieve sustainability goals and ESS to meet reliability/resiliency needs of individual customers19. 18 CPAU had a pilot-scale residential TOU rate from 2015-2019 to serve interested customers, as part of the CustomerConnect advanced meter pilot. Approximately 100 customers participated and save an average $1 to $2/month of their electricity bill. An expansion of CPAU’s residential TOU rate is not contemplated until 2025. Medium and large commercial customers currently do have the option to elect to be on TOU rates; one customer is on the TOU rate. 19 All customer programs prioritized for implementation are evaluated based on the following criteria. 1) customer satisfaction, 2) equity among customers, 3) GHG emission reduction, 4) efficiency sa ving, 5) cost effectiveness. Customer satisfaction means that customer interests unrelated to efficiency and carbon (such as resiliency) are also taken into account. The availability of dedicated funding sources and the existence of regulatory mandates can also drive program prioritization. City of Palo Alto Page 9 Progress on the EV customer programs and the full portfolio of customer programs was presented to the Commission in in July 2020 (Demand Side Managment (DSM) Customer Programs, Update on EV Customer Programs). Actions Planned Progress To date • Revise and update the portfolio of customer programs • Broadly completed as discussed with the Commission in October 2019. The pace of implementing the sustainability programs is currently under discussion with Council. • A number of DER related customer pilot projects are being evaluated, a list of projects is provided in Attachment B. Attachment B outlines potential DER related customer programs that would help facilitate and integrate DERs. The implementation of pilot project(s) will be highly dependent on the project value and staffing resources needed for implementation. NEXT STEPS Staff will continue to take a comprehensive approach to integrating customer-sited DERs to lower overall cost, reduce greenhouse gas emissions, and increase the resiliency of the community. As illustrated below, as Palo Alto implements AMI and the level of DER penetration increases, greater focus and resources would be devoted to more fully integrat ing DERs in to the electric supply and distribution system to optimally serve all CPAU customers. Illustrative Phases of DER Integration within the Context of DER Adoption Curve Source: Adopted from CAISO presentation Resource Impact Staff’s main role related to programs on customer premises in the past has been related to energy efficiency and solar PV. Expansion of staff’s role in implementing customer programs City of Palo Alto Page 10 related to EVs, building electrification, and energy storage resulted in internal evaluation of priorities in 2019. Staffing changes and de-prioritization of projects (such as discontinuing commercial DR program and delaying the implementation of an ESS pilot project) were made in 2019 and will be re-evaluated regularly. Staffing for program implementation has been a limiting factor in implementation of building electrification programs and will continue to be a limiting factor for expansion of programs related to most other DERs as well, with the exception of EV programs, which staff has prioritized. Any acceleration of EV related customer programs/plans or building electrification programs to meet the community’s 80% by 2030 greenhouse gas reduction goals will require additional staffing. Policy Impacts The policies referenced here are part of various plans, including the Utilities Strategic Plan, the Sustainability and Climate Action Plan (S/CAP), and the Electric Integrated Resource Plan (EIRP). Environmental Review The Utilities Advisory Commission’s discussion of this informational report does not meet the definition of a project under Public Resources Code 21065 and therefore California Environmental Quality Act (CEQA) review is not required. Attachments: • Attachment D: VMWare Presentation • Attachment E: Staff Presentation Confidential │©2020 VMware, Inc. Community Microgrid Project Overview Nicola Acutt VP Sustainability July 16, 2020 Attachment D Confidential │ ©2020 VMware, Inc. Presentation Outline 2 Vision Objectives Scope Status Use Cases Timeline Next Steps vmware® Confidential │ ©2020 VMware, Inc.3 Designed to serve both VMware and the Palo Alto community Vision: Build the First Community Microgrid in Silicon Valley Sustainability & Innovation Efficiency & Resilience Community Stewardship Edge Technology Leadership •GHG emission reductions •Local renewables •True additionality in renewables •Innovation in system design and operation •Optimize energy management •Increase resiliency in case of outages •Potential for Demand Response and other opportunities •Lead integration of renewables, batteries, & microgrids into regional grid •Provide emergency response capabilities and community support •Integrate Edge technology into microgrid •Explore open source applications •Learning system to capture and use data at Edge Confidential │ ©2020 VMware, Inc.4 “Force for Good” •The future requires innovation for our people, planet, and products •In alignment with 2030 Sustainability Strategy goals and initiatives Increasing Need for Resiliency •CA power outages •Projected rolling blackouts •Greater impacts/losses projected Collaboration and Partnerships •CPAU’s awareness on the need for innovation •Mobile Emergency Operations Center connecting to the Microgrid Proof of Concept (PoC) •Stanford’s interest and commitment •Share “playbook” statewide and nationwide for increased adoption of microgrids VMW’s Expertise •Resolving network infrastructure & congestion challenges •Edge technology initiatives •Continuous learnings from the Microgrid PoC Leveraging technology to produce positive environmental, community, & business results Objectives Sustainability Innovation Efficiency & Resilience Community Stewardship Edge Technology Leadership Objectives Confidential │ ©2020 VMware, Inc.5 1.Creekside G Building –Existing Borrego solar installation •132kW(ac) •223.59 MWh/year –New battery •500kW(ac) inverter •1.02 MWh –New MEOC Connection 2.Hilltop G Building –Existing Borrego solar installation •120kW(ac) •240.55 MWh/year –New battery •500kW(ac) inverter •1.02 MWh –New MEOC Connection Microgrid PoC will encompass two buildings supported by two batteries PoC Scope: Designed to Test Business Capabilities Equipment NOTE: Solar generation data based on PVSYST calculation before COD. Generation & storage data subject to change. Rooftop Solar Battery Storage Legend: MEOC Connectivity Confidential │ ©2020 VMware, Inc.6 CSG permits received, HTG permits expected in July Status: Construction Now Underway Battery DesignConstruction Site Updates •Battery container made in the USA. •Container dimensions: L x W x H = 32’ x 9’8” x 9’7” * Confidential │ ©2020 VMware, Inc.7 4-hour resiliency full building Islanding of critical load Islanding of critical load and ancillary connectivity (e.g. MEOC) Peak shifting mode Demand Response Operating Mode Grid Services Interaction with VMware Building Management System Potential Microgrid Use Cases Confidential │ ©2020 VMware, Inc.8 OCT 15: Battery installation complete; begin testing & commissioning JUL 31: HTG permit response expected Upcoming Milestones Q2 FY’21 Q3 FY’21 Q4 FY’21 May June July August September October November JUL 13: CSG permits received; construction begins AUG 24: Begin battery installation NOV 30: Substantial Completion Date MAY 14: Utility relocation permit received * Pending COVID-related excusable delays Confidential │ ©2020 VMware, Inc.9 Next Steps •Continue collaboration with CPAU on Microgrid PoC use cases •Capture learnings from PoC to plan for next phase of Community Microgrid •Continue development of innovative microgrid control technology Confidential │ ©2020 VMware, Inc. Thank You AUGUST 5, 2020 www.cityofpaloalto.org/ev Update on Distributed Energy Resources in Palo Alto 1 Demand Response Attachment E 2 DER PLANNING FOCUS AREAS •Business Strategy & Operational Planning •Electric Supply Planning & Operations •Distribution Planning & Operations •Customer Retail Rate Design •Customer Program Design 3 Estimated Number of DERs & Associated Impacts on Electrical Loads in 2019 3 4 2019-20 PROGRESS HIGHLIGHTS •RFP for AMI system implementation issued and proposals being evaluated •Implemented My CPAU customer portal –Phase I •Technical Assistance Program to assist customers install EV chargers + cash rebates •Facilitating community microgrid at VMware •Analyzing impact of DERs on distribution transformer loading 5 IMPLEMENTATION PLANS 2020-22 •Implement My CPAU Customer Portal –Phase II (single sign on with customer engagement tools from WaterSmart and Uplight) •Continue to implement existing customer programs, particularly EV chargers for multi-family homes •Further enhancement to DER customer programs – particular focus on income qualified customers •Pilot building electrification friendly retail rates •AMI system implementation Questions? Input? 6 City of Palo Alto (ID # 11391) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: One Water Concept by Professor Luthy Title: Discussion and Presentation by Professor Richard Luthy on "One Water" Resource Approach From: City Manager Lead Department: Utilities Recommendation This is a presentation and no action is request ed. Executive Summary Professor Luthy will present to the Utilities Advisory Commission on the topic of “One Water”, an integrated planning and implementation approach to managing finite water resources for long-term resilience and reliability, meeting both community and ecosystem needs. Attachment A, Urban Stormwater to Enhance Water Supply, is background material. Professor Luthy will be available to answer questions. Background Richard G. Luthy is the Silas H. Palmer Professor of Civil and Environmental Engineering at Stanford University. He is the Director of the NSF Engineering Research Center for Re-inventing the Nation’s Urban Water Infrastructure (ReNUWIt), a four-university consortium that seeks more sustainable solutions to urban water challenges in the arid west. His area of teaching and research is environmental engineering and water quality with applications to water reuse, stormwater use, and systems-level analysis of urban water challenges. His research addresses management of persistent organic contaminants and contaminants of emerging concern in natural systems that are engineered to improve water quality and protect the environment and human health. Professor Luthy is a past chair of the National Research Council's Water Science and Technology Board and a former President of the Association of Environmental Engineering and Science Professors. He chaired the NRC's Committee on the Beneficial Use of Stormwater and Graywater. He is a registered professional engineer, a board-certified environmental engineer, and a member of the National Academy of Engineering. Attachments: •Attachment A: Urban Stormwater to Enhance Water Supply Staff: Karla Dailey Urban Stormwater to Enhance Water Supply Richard G. Luthy,*,†Sybil Sharvelle, ‡and Peter Dillon § †Department of Civil and Environmental Engineering, Stanford University, Engineering Research Center for Re-inventing the Nation’s Urban Water Infrastructure (ReNUWIt), Stanford, California 94305, United States ‡Department of Civil and Environmental Engineering, Colorado State University, Fort Collins, Colorado 80523, United States §CSIRO Land and Water, PMB, Glen Osmond SA 5064 and NCGRT, Flinders University, GPO Box 2100, Adelaide, SA 5001, Australia ABSTRACT:The capture, treatment, and recharge of urban runoff can augment water supplies for water-scarce cities. This article describes trends in urban stormwater capture for potable water supply using examples from the U.S. and Australia. In water-limited climates, water supply potential exists for large scale stormwater harvesting and recharge, such as neighborhood-scale and larger projects. The beneficial use of urban stormwater to meet nonpotable water demands has been successfully demonstrated in the U.S. and internationally. However, in terms of potable water use in the U.S., the lack of a regulatory framework and uncertainty in treatment and water quality targets are barriers to wide-scale adoption of urban stormwater for recharge, which is not so evident in Australia. More data on urban stormwater quality, particularly with respect to pathogens and polar organic contaminants, are needed to better inform treatment requirements. New technologies hold promise for improved operation and treatment, but must be demonstrated in field trials. Stormwater treatment systems may be needed for large-scale recharge in highly urbanized areas where source control is challenging. The co-benefits of water supply, urban amenities, and pollution reduction are important for financing, public acceptance and implementationbut are rarely quantified. ■INTRODUCTION Many cities, including those in Australia and the U.S. west and southeast, experience chronic or episodic water supply shortages. Water shortages in semi-arid regions are ever more evident in the 21st Century due to population growth, economic development, and impacts of climate change. 1 These same cities face challenges with managing urban runoff to control nutrient loads and pollution. This incongruity of not enough water for urban supply and yet environmental degradation due to runoff has changed thinking on stormwater management. Harvesting urban stormwater for water supply is being viewed as a resource that may alleviate local water shortages and benefit receiving water quality. 2 However, there remain unknowns on risks and benefits for use of urban stormwater as a new water supply that limit acceptance of this practice in the U.S. This feature examines trends in urban stormwater capture for potable water supply and irrigation, via aquifer recharge, and discusses acceptance, treatment, regu- lations, and risk. The focus is on larger-scale systems, such as neighborhood-scale and larger, to make an impact on the water supply from urban runoff in dry climates for water-scarce cities. Current U.S. and Australian examples are used to demonstrate what has been done, how risks are managed, and opportunities for innovation. Stormwater infrastructure is designed foremost for flood protection, and this priority drove major stormwater infra- structure investments in the 20th Century. Los Angeles, for example, with its Mediterranean climate is prone to flooding, and the city’s extensive stormwater network was designed to route runoff to the ocean as quickly and efficiently as possible. While effective for flood control, this conveys polluted stormwater runoff that impacts coastal water quality. 3 This need for environmental protection along with the challenge of becoming more self-reliant for water supplies is changing how we manage and use stormwater in the 21st Century. 4 Community knowledge about water lends support for water- related projects such as stormwater use. Surveys in Australia show that greater water knowledge is associated with conservation and support for alternative water sources. 5 Similarly bond measures in northern and southern California pass by two-thirds majority when the voters understand the benefits of improvements to water quality and supply, and environmental protection. Changing Perspective on Stormwater Management. Water rights may constrain what is feasible for stormwater capture. For inland areas like much of the western U.S. and Australia, stormwater capture and use may impinge on downstream water rights dependent on that runoff.In Colorado, for example, it is only recently that rainwater from rooftop gutters was allowed for nonpotable outdoor usesand Published:February 26, 2019 Feature pubs.acs.org/estCite This:Environ. Sci. Technol.2019, 53, 5534-5542 © 2019 American Chemical Society 5534 DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 Do w n l o a d e d v i a S T A N F O R D U N I V o n J u l y 1 8 , 2 0 1 9 a t 1 5 : 2 3 : 2 4 ( U T C ) . Se e h t t p s : / / p u b s . a c s . o r g / s h a r i n g g u i d e l i n e s f o r o p t i o n s o n h o w t o l e g i t i m a t e l y s h a r e p u b l i s h e d a r t i c l e s . Attachment A only with rain barrels with a combined capacity of 110 gallons. For coastal cities the capture of stormwater does not impinge on water rights, since the water would otherwise have been discharged to the ocean. Some coastal cities, for example, San Diego, lack aquifers and sufficient rainfall for stormwater capture to significantly impact water supply. Thus, depending on water law and local conditions, beneficial use of urban stormwater will help drought-proof cities by reducing dependence on imported water or unsustainable groundwater withdrawals. The specter of water-scarce cities in the U.S., Australia, and elsewhere highlight the need for long-term conservation measures and regional drought planning to achieve resilience to future droughts and climate change. Conservation, water reuse, desalination, water banking, and stormwater use will help diversify water supplies for cities. Among these options, stormwater is now viewed in a new lightless as solely a flood control problem and more as an opportunity for water supply augmentation and greening semi-arid urban areas. Water scarcity and pollutants in runoff from municipal separate stormwater sewer systems (MS 4s) led California to define stormwater as a water resource with the goal of increasing the use of stormwater over 2007 levels by one million acre-ft/yr (1.2 B m 3) by 2030. 6 Some information is available on the costs, benefits, and risks of urban stormwater use, but in general such practical information beyond the simplest applications is limited. Urban stormwater for groundwater recharge poses risk of groundwater contamination and requires robust data, careful design and appropriate operation and maintenance to mitigate those risks. 7,8 Project Size and Storage.Stormwater capture projects can be divided into three main categories depending on size and use. 9 Centralized recharge projects capture stormwater in large infrastructure systems,suchasspreadingbasins. Distributed, or neighborhood, stormwater recharge systems include green streets, park retrofits, and dry wells. Distributed systems for direct on-site use employ tanks or cisterns. For stormwater systems with frequent events throughout the year, detention storage requirements may be small and can be addressed using tanks and small impoundments. 2 For storm- water systems with seasonal or intermittent flows, large storage is required by dams or aquifer recharge. Subsurface storage in shallow aquifers, if they are available, is preferred because storage capacity already exists and it only has to be accessed. While stormwater yields are climate-dependent, coupling stormwater with aquifer recharge may give reliable and resilient supplies. 10 Cities that already have overdrafted aquifers that contain potable water would have a significant cost advantage for storing and recovering treated stormwater. 2 Impact of Future Stormwater Capture on a City’s Water Supply.Examples from Southern California and Southern Australia are illustrative of the potential impact of urban stormwater capture on future water supplies. Currently the City of Los Angeles captures about 64000 acre-ft/yr (79 Mm3/yr) of stormwater through existing centralized capture and incidental distributed recharge. 11 This number could increase by an additional 115000-194000 acre-ft/yr (142- 239 M m 3/yr) under the City’s long-term Stormwater Capture Master Plana 2- to 4-fold increase from today’s value. Whether or not these goals are achieved depends on technical and financial feasibility, managing and preventing groundwater contamination, assumptions about land use, and sustained political will. Considering that Los Angeles’water needs are estimated at about 711000 acre-ft/yr (880 M m 3/yr) in 2035, it is clear that stormwater capture could play an important role Figure 1.National Park Service constructed large stormwater cisterns under the National Mall for turf irrigation (center photo). Stormwater is processed through microscreens and ultraviolet light disinfection (right photo). On-site stormwater use is attractive where rainfall is more uniform throughout the year. (Right and left photos by the authors, center photo National Park Service). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5535 in diversifying the city’s water supply and reducing the need for imported water. The Millennium Drought in Australia caused a shift in attitude about stormwater management and new thinking on how to capture and store urban stormwater. 12,13 For Greater Adelaide, a city with a Mediterranean climate, the plan is to triple the amount of stormwater harvesting from 16000 acre- ft/yr (20 M m 3/yr) in 2013 to 48000 acre-ft/yr (60 M m 3/yr) in 2050. 14 This increase could accommodate about half the growth in water demand expected by 2050. 14 Seawater desalination has also been initiated at Adelaide with a plant capacity of 72 MGD (100 M m 3/yr) installed for potable supplies. But, managed aquifer recharge with stormwater can produce irrigation and potable water at one-third and one-half the costs, respectively, of the optimum cost of desalination. 15 During the Millennium Drought, desalination was imple- mented very quickly at Adelaide and the plant is now operated at minimal capacity to keep it in a functioning condition as a backup measure for drought security. Given the range in climatic and geographic conditions across California and Australia, cities with different challenges respond differently to water scarcity. A comparison point is San Diego and Perth. Both have embraced seawater desalination and water recycling for augmenting potable water supplies. 1,4,16 But Perth has also developed stormwater harvesting for nonpotable use. Examples of Stormwater Capture for Use.Stormwater capture in large cisterns may be practical in locales where rainfall and demand are more uniform throughout the year. One example is Washington, DC. where the National Park Service built a stormwater capture system on the National Mall for turf irrigation (Figure 1). Four 250000-gallon cisterns (totaling 3800 m 3) collect runoff from the Mall’s turf and walkways. The stormwater capture and treatment system is the primary water source for irrigation, reducing potable water demand and harmful stormwater discharges. 2,17,18 The storm- water is treated in underground facilities using microscreens (25 μm) and ultraviolet disinfection. The microscreens prevent fouling of the irrigation system, while the UV disinfection system is deemed important to reduce health risk to the large number of visitors that frequent the National Mall. Similarly, stormwater harvesting in Royal Park, Melbourne, Australia employs a cistern. The runoff passes through a sediment trap, wetlands, and open-water storage, followed by UV disinfection and holding in a 1.3 M gal (5000 m 3) underground tank prior to use for irrigation. The water is applied through spray irrigation at night to minimize human health risks. 19 In arid regions with Mediterranean climate, cisterns are impractical owing to the asynchronous nature of rainfall and water demand, which requires storing large amounts of water for six to eight months during the dry season. In this case urban aquifers can store stormwater by infiltration. In Los Angeles, CA, U.S., for example, the Rory M. Shaw Wetlands Park in the Sun Valley neighborhood is being built to capture up to 900 acre-ft/yr (1.1 M m 3/yr) of urban runoff.3,20 The collected stormwater will be pumped to an adjacent infiltration system that takes advantage of the permeable media in this area. This neighborhood-scale project contributes to water supply while converting a blighted landscape into 46 acres (19 Ha) of green space and recreation. Dry wells, also called vadose zone wells or leaky wells, are vertical pipe-like devices with coarse media and an open bottom and holes in the walls that percolate water to the surrounding soil (Figure 2). The only treatment may be a sediment trap to remove debris or a geotextile fabric to further prevent clogging. 21 In California, dry wells are used with caution due to the concern that they provide a conduit for contaminants to enter the groundwater. 22 Dry wells in New Jersey are prohibited in industrial or other areas where toxic chemicals might be used, whereas in Pennsylvania dry wells are permitted in industrial areas with restrictions, but not along Figure 2.Curbside dry well installation with vegetation in Los Angeles. The system comprises three chambersone for particle settling with the second and third chambers allowing percolation from the base into crushed rock or by an overflow pipe in the third chamber set into crushed rock. (photo by the authors). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5536 roadways. Some newer designs consist of three parts: a vegetated pretreatment feature, a structural pretreatment sedimentation well, and the dry well itself, which contains layers of sand or gravel. The goal of this design is to maximize the removal of particle-associated pollutants, reduce clogging of the dry well, and promote efficient infiltration. These types of designs are implemented in Los Angeles in the San Fernando Valley, as shown in Figure 2.23,24 However, data on actual water volume infiltrated and water quality in such dry wells are lacking. A water partnership in South Australia undertook a multiyear research project that evaluated the quality of stormwater, treatment requirements, risk management, and public acceptance of various stormwater use options. The primary case study was in Salisbury, a suburb of Adelaide. 15 Focus groups cited “equality”and “trust”as being of prime importance for public acceptance followed by the environ- mental benefits of stormwater harvesting to mitigate beach and marine impacts. Costs and Benefits.Unit costs of stormwater capture projects are highly variable. Among the least expensive options in terms of cost-per-volume captured are retrofi tting centralized spreading basins where the land is already available for this purpose. Unit costs increase for distributed projects because they involve more infrastructure to capture smaller flow volumes. This is illustrated by data compiled by the Southern California Stormwater Coalition. 25 The group surveyed agencies across Southern California to get a better understanding of actual capture volumes, costs, and benefits. Projects that may capture about 600 acre-ft/yr cost less than $1200/AF. Median costs for distributed projects are $25,000 per acre-foot, new centralized projects are $6,900 per acre-foot, and retrofit projects are $600 per acre-ft. Similar costs exist in Australia for larger stormwater recharge projects, 26 where stormwater harvesting is very cost competitiveespecially compared to desalination. As space for large projects is increasingly scarce, decentralized projects at parks, schools, and roadways become affordable options. Based on Los Angeles’projections for water import costs, the estimated economic value of recharged water may be $1100 per acre-ft ($0.89/m 3) or more based on lifecycle analysis.11,27 Projects with costs below these values are economically viable based solely on the water supply benefit, and cities are more likely to pursue these projects without seeking funds from external partners. However, caution must be exercised in comparison with cost of current water supplies, as much of those costs were heavily subsidized in the past and there really is not new water to be had at the old rates. Stormwater capture and use project costs can be notably less than or greater than costs for current supplies. 25 Many projects lack flow meters and do not include monitoring, in which case yields are estimated or modeled. Distributed projects offer multiple benefits, such as green space, walkways, recreation, and downstream water quality improvements. Although co-benefits are difficult to monetize, co-benefits can create partnerships, coalitions, and political momentum to bring projects to fruition. 2,15 Microbial Risk and Treatment.While regulatory frame- works and water quality requirements do exist for roof runoff capture in the U.S., 2 regulations for beneficial use of stormwater at a larger scale are sparse (Table 1). The only state that has a regulation for such projects is Minnesota. The Cities of Los Angeles, CA and San Francisco, CA and the District of Columbia have developed programs to allow for beneficial use of stormwater. These programs focus on collection of stormwater in cisterns or tanks for storage and subsequent use. These state and local programs for beneficial use of stormwater have enabled projects to move forward that serve as viable demonstrations (e.g., the National Mall). However, water quality requirements, particularly for patho- gens, are highly variable. Three of the four programs allowing use of stormwater have water quality requirements for E. coli in treated stormwater, and those requirements range from 2.2- 4615 CFU/100 mL for unrestricted irrigation and 2.2-50000 CFU/100 mL for indoor use (toilet flushing and laundry; Table I). This large range of water quality requirements and approaches for regulating treated stormwater quality for various end uses is indicative of lack of guidance to develop a risk based approach for beneficial use of stormwater in the U.S. Lack of data on pathogen concentrations in stormwater and high variability in observed pathogen concentrations 2,28 contribute to the ambiguity around setting treatment targets and water quality standards for end uses of treated stormwater. Between 2006 and 2009, a set of four national guidelines for water recycling were published by the Council of Australian Governments within the National Water Quality Management Strategy, and using common principles. These cover water recycling for nonpotable use, 29 and recycling for augmenting potable supplies, 30 stormwater harvesting and use, 31 and managed aquifer recharge. 7 For stormwater use for irrigation with no access restrictions, treatment requirements are specified for disinfection, turbidity, and iron. Disinfection criteria suggest >1.6 log reduction of virus and bacteria and >0.8 log reduction of protozoa, 15,31,32 which are less strict than the log reductions required for stormwater use for irrigation in San Francisco referenced in Table I. For managed aquifer recharge in Australia, a risk assess- ment32 and management plan 33 are undertaken to account for source water quality and its variability, native groundwater quality, and changes in water quality that occur during passage through the subsurface, such as pathogen inactivation and biodegradation of organic chemicals, as well as mobilization of metals.7 Some data are available on the maximum inactivation times in aerobic and anoxic aquifers for E. coli, salmonella and bacteriophage MS2 that can serve as a basis for precommis- sioning estimation of reduction of pathogens. 7 However, more data are needed on pathogen attenuation rates under varying aquifer conditions. Thus, validation that includes in situ chamber decay studies is recommended to provide site-specific decay rates of pathogens. To support the development of a risk based approach for use of nonpotable water in the U.S., the Water Reuse Foundation assembled a panel to outline a risk based framework for decentralized nonpotable water systems that included storm- water.34 The framework proposed is similar to the Australian guidelines previously mentioned. The approach moves away from end point analysis of water quality and toward designing systems to achieve log reduction targets (LRTs). The City of San Francisco adopted this approach and includes this in regulating LRTs for virus, bacteria, and protozoa for different end uses of stormwater (Table I). With respect to risk from pathogens, the LRTs provided by Sharvelle et al. for stormwater can serve as a basis for design of stormwater treatment systems for captured water. 34 A treatment system including 50 μm filtration and 150 mJ/cm 2 UV dose can achieve health risk based-targets for unrestricted Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5537 access irrigation (i.e., 3, 3.5, 6-log reduction of virus, bacteria, and protozoa, respectively). Addition of slow sand filtration would increase performance 35 and lower the required UV dose. While the LRTs recommended by Sharvelle et al. 34 provide a basis for treatment requirements for on-site use of stormwater, there was large uncertainty in those values. Due to limited data on pathogen concentrations characterized by large variability, 28 the approach adopted by Sharvelle et al. 34 to estimate LRTs for stormwater use for various end uses was to consider dilution with raw sewage. Thus, LRTs were provided for stormwater with a 10 -1 and 10 -3 dilution of sewage water. The basis for these dilutions was observed concentration of pathogens in stormwater. 28 The LRTs for stormwater based on sewage dilution were intended to provide decision makers with the range of likely impacts from human contamination based on age of infrastructure, potential for leaky sewers, and measurement of pathogens or indicator organisms in collected stormwater. The recommended LRTs provide a path to enable projects designed to meet human health targets to move forward. However, the LRTs should be better informed by more data on pathogens in stormwater and the reduction targets may be overly conservative, resulting in stormwater treatment systems that are costlier and more energy intensive than needed to provide an acceptable level of risk. Chemical Contaminants in Urban Runoff.Pollutants most frequently detected in urban runoff include metals, bacteria, nutrients, salts, and petroleum hydrocarbons. 36,37 This reflectsthefactthatmoststormwatermonitoring programs have focused on regulated contaminants for protection of aquatic ecosystems and beach water quality. Although found in urban stormwater runoff, these contami- nants are not necessarily a threat to the underlying ground- water because they are often removed as they percolate into the ground. 36,38,39 In contrast, recent studies report the presence of unregulated moderately polar trace organic contaminants (e.g.,flame retardants, biocides, plastic additives, perfluorinated compounds) in stormwater runoff.40,41 Some of these chemical contaminants could pose larger threats to drinking water than the contaminants that have driven discharge permits, that is, total maximum daily loads (TMDLs). For example, widely used urban insecticides (e.g., fipronil) have been detected in urban residential runoff,40,42 and found in dry wells (e.g., bifenthrin), and predicted to migrate in time through the vadose zone under dry wells. 43 Australia provides guidelines for design and operation of large stormwater infiltration via managed aquifer recharge. 7 However, where the aquifer is relied on for contaminant removal, in situ or laboratory studies are required to confirm attenuation of microbial and chemical contaminants. Standard design criteria do not exist in the U.S. or Australia due to limited data on chemical and microbial contaminant attenuation in aquifers, which depends on environmental conditions, such as temperature and redox state, presence of nutrients and cometabolites, and aquifer materials 2,44,45 Additional treatment beyond what is achieved in the aquifer may be needed for uses outside of low exposure irrigation and industrial uses. 15 At the spreading grounds in Los Angeles County the inflow is monitored for suspended solids and the flow is bypassed if the suspended solids exceed 500 mg/L. This is done to prevent clogging but may also divert the so-called first-flush that is expected to contain the highest pollution levels. While runoff quality from upper watershed areas may rightly focus onTa b l e I . S u m m a r y o f T r e a t m e n t T a r g e t s a n d W a t e r Q u a l i t y R e q u i r e m e n t s f o r B e n e fici a l U s e o f S t o r m w a t e r i n t h e U . S . ( N S , N o t S p e c i fied ) un r e s t r i c t e d i r r i g a t i o n in d o o r u s e ( t o i l e t flus h i n g o r l a u n d r y ) wa t e r q u a l i t y pa r a m e t e r s t a t e o f M N a Di s t r i c t o f C o l u m b i a b Lo s A n g e l e s , CA c d Sa n F r a n c i s c o , C A e Di s t r i c t o f C o l u m b i a b Lo s A n g e l e s , CA c d Sa n F r a n c i s c o , C A e BO D 5 NS NS 10 m g / L N S NS 10 m g / L tu r b i d i t y 3 N T U NS 2 N T U 2 N T U NS 2 N T U 2 N T U TS S 5 m g / L NS 10 m g / L N S NS 10 m g / L N S pH 6 -9N S 6 -9N S NS 6-9N S ch l o r i d e 5 0 0 m g / L NS NS NS NS NS NS zi n c 2 m g / L ( l o n g - t e r m ) ; 1 0 mg / L ( s h o r t - t e r m ) 15 m g / L NS NS 16 0 m g / L NS NS co p p e r 0 . 2 m g / L ( l o n g - t e r m ) ; 5 m g / L ( s h o r t - t e r m ) NS NS NS NS NS NS pa t h o g e n s / in d i c a t o r s E. c o l i : 1 2 6 C F U / 10 0 m L E. c o l i : 4 6 1 5 C F U / 1 0 0 mL Cr y p t o . : 0 . 0 3 3 oo c y s t s / L E. c o l i : 2 . 2 CF U / 10 0 m L Vi r u s : 3 . 0 - l o g r e d u c t i o n Pr o t o z o a : 2. 5 - l o g re d u c t i o n Ba c t e r i a : 2. 0 - l o g r e d u c t i o n E. c o l i : 5 0 0 0 0 CF U / 1 0 0 m L Cr y p t o . : 0. 3 2 0 o o c y s t s / L E. c o l i : 2 . 2 CF U / 10 0 m L Vi r u s : 3 . 5 - l o g r e d u c t i o n Pr o t o z o a : 3. 5 - l o g re d u c t i o n Ba c t e r i a : 3. 0 - l o g r e d u c t i o n a Mi n n e s o t a P o l l u t i o n C o n t r o l A g e n c y , 2 0 1 7 . b DD O E , 2 0 1 3 . c Ca n a l s o t r e a t t o C A T i t l e 2 2 w a t e r q u a l i t y e q u i v a l e n c e . d Lo s A n g e l e s C o u n t y D e p a r t m e n t o f P u b l i c H e a l t h , 2 0 1 6 . e Ci t y a n d C o u n t y o f S a n Fr a n c i s c o , 2 0 1 7 . Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5538 suspended solids, the capture and recharge of urban runoff introduces other concerns. The urban stormwater recharge project in the Sun Valley neighborhood of Los Angeles, for example, employs hydrodynamic swirl-type separators with a filter to remove suspended solids, oils, and metals. 46 In Australia design practices for stormwater harvesting rely on general stormwater pollution control technologies like sedi- ment traps, swales, wetlands, and ponds, 47 and for managed aquifer recharge further engineered treatments or controls are applied as required to meet the water quality requirements for use of recovered water. 7 Because dry wells provide shorter contaminant residence times through the vadose zone, concerns have been raised about the safety and use of these engineered subsurface infiltration systems. 39 Dry wells that penetrate a significant thickness of the vadose zone could compromise water quality by bypassing natural contaminant attenuation processes and could be vulnerable to point source illicit discharges. 48 Opportunities for Improved Design and Manage- ment.Better monitoring and implementation of new technologies for urban runoff capture and infiltration practices are necessary to protect local drinking water supplies, while increasing the confidence of regulatory agencies. 8,49-52 As we look ahead toward evermore urban stormwater capture and recharge for water supply, we can invoke advancements in monitoring, performance assessment, and innovation. Improved monitoring should focus on temporal variability, including the degree to which dry-weather versus wet weather flows contain higher levels of pesticides, automotive, and commercial chemicals. Polar and moderately soluble organic contaminants need greater attention, as these contaminants are more likely to affect groundwater quality. Passive samplers for polar trace organic measurements may offer considerable advantages for spatial and temporal resolution and correlating with land use. 42,53 New treatment technologies, such as low-cost biochar filters,54 reactive media, or solar-powered oxidative processes could be incorporated into designs to enhance pollutant removal. Mixed-media filters show promise. For example,field tests in Sonoma, CA demonstrated that the combination of woodchips and biochar is very effective for managing nitrate, metals, and trace organic contaminants. 55 Aged woodchip reactors with 33% weight biochar removed trace organic contaminants. Under conditions expected in stormwater treatment systems, breakthrough of the most polar trace organic contaminants (i.e., 2,4-D) would take many years based on reasonable assumptions about land area devoted to capture basins, number of bed volumes that may be treated, and maintenance for control of clogging. 55 Further research on costs and performance leading to scientifically informed standards are fundamental to improved watershed-scale stormwater management. 56 It is only recently that stormwater management is beginning to catch up with other sectors on the “internet of things.”A systemic challenge with urban stormwater management is that current approaches are essentially static solutions to a dynamic problem. But, advances in sensing and forecasting can make stormwater capture more dynamic through interconnectivity and real-time decision making. 57 Wireless communications, low-cost sensors and controllers can proactively control such Figure 3.Cost-effective opportunities exist to enhance urban water supplies by joining stormwater and recycled water for groundwater recharge through spreading basins that receive intermittent stormwater deliveries. 27,61 Assessment of regional multisupply groundwater recharge projects benefit from optimization and planning tools to evaluate system costs and trade-offs, and dynamic control. (courtesy J. Bradshaw from LADWP and LACFCD sources). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5539 systems in response to changing conditions wherein storm- water treatment and infiltration can be coupled with weather forecasting. In this way control decisions can be made in real time for more efficient treatment considering anticipated flows,58 such as by draining or filling detention basins. Longer holding times in detention basins have shown improvements in water quality through sedimentation and increased exposure to sunlight.59 In drought-prone regions where stormwater capture can contribute to water supply, real-time control can improve both the quality and quantity of water recharged. 57 Regardless of the approach, side-by-side field studies are needed to benchmark efficiencies under real-world conditions to gauge how installed facilities perform and to quantify the benefits of technology improvements. 60 Conditioning with actual stormwater is an essential experimental protocol for the evaluation of long-term robustness in a range of urban environments. Laboratory experiments are useful in under- standing the mechanisms behind the removal of contaminants, and such tests with field-aging is the best approach to mimic field conditions because materials change following exposure to stormwater and microbes. Synergies with Other Urban Water Supply Trends.As semi-arid cities rethink how they manage water in all its forms, stormwater capture will play a significant role to ensure sustainable water supplies (e.g., Hagekhalil et al.; 3 Luthy and Sedlak1). However, two emerging strategies for increasing water suppliescollecting stormwater runoff and recycling treated wastewaterare usually viewed separately, which can create costly and under-utilized infrastructure. Instead, considering these strategies together offers opportunities for significant synergies. For example, systems that deliver recycled water to existing stormwater spreading basins in Los Angeles would take advantage of both the spreading basins’significant unused capacity and the city’s substantial potential to produce recycled water, thereby creating an integrated, cost-effective groundwater replenishment system. 27,61 As illustrated in Figure 3, the complexity of these integrated systems in terms of capacity and location requires decision- support methods to evaluate various design options for bringing recycled water to underutilized stormwater spreading basins and to optimize these designs by engineering considerations such as infrastructure life cycle costs, energy use, and water quantity and quality. An example for the City of Los Angeles illustrates trade-offs between centralized and decentralized configurations and highlights the potential for decentralized inland systems to deliver up to 44500 acre-ft/yr of recycled water to spreading basins at costs significantly less than a centralized system delivering recycled water from the coast.61 Outlook.Capturing and using urban stormwater runoff for water supply can help alleviate water scarcity in semi-arid regions. This is a new paradigm that views stormwater as a water source and not solely a flood or pollution problem. As illustrated by examples in the U.S. and Australia, significant water demand reduction potential exists for large-scale stormwater harvesting and use. This push is being driven also by compliance with municipal separate stormwater sewer TMDL regulations and parcel taxes to fund stormwater capture projects.62 Aquifer recharge is attractive in regions with Mediterranean climates due to the need to store large quantities of water for long periods. While beneficial use of stormwater to meet nonpotable water demand has been successfully demonstrated, there is much less experience for large-scale urban stormwater infiltration for potable supply and designs are just emerging. The lack of a regulatory framework and uncertainty in treatment and water quality targets is a barrier to wide-scale adoption of stormwater use projects. More data on stormwater quality and system performance, particularly with respect to pathogens and polar organic contaminants, are needed to better inform treatment targets. New technologies for treatment and real-time control can help improve both the quantity and quality of recharged water. Successful neighborhood and larger-scale stormwater capture, treat, and recharge projects provide co-benefits of water security, urban amenities, and pollution reduction, which are important for public acceptance and financing. ■AUTHOR INFORMATION Corresponding Author *E-mail:luthy@stanford.edu. ORCID Richard G. Luthy:0000-0003-0274-0240 Notes The authors declare no competing financial interest. ■ACKNOWLEDGMENTS This work was supported by the National Science Foundation Engineering Research Center Program for Reinventing the Nation’s Urban Water Infrastructure (ReNUWIt) cooperative agreement 1028968, and the Sustainability Research Network (SRN) cooperative agreement 1444758. Reported Australian case studies were supported by the National Water Commission, Goyder Institute for Water Research, CSIRO Water for a Healthy Country Flagship Research Program, City of Salisbury, and Adelaide and Mount Lofty Ranges Natural Resources Management Board. ■REFERENCES (1) Luthy, R. G.; Sedlak, D. L. 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(11) Los Angeles Department of Water and Power Stormwater Capture Master Plan; Los Angeles, CA, August, 2015. (12) Government of South Australia Stormwater Strategy: The Future of Stormwater Management; Department for Water: Adelaide, South Australia, 2011. (13) Kretschmer, P.Managed Aquifer Recharge Schemes in the Adelaide Metropolitan Area; Government of South Australia, Depart- ment of Environment, Water and Natural Resources: Adelaide, South Australia, 2017. (14) Government of South Australia Water for Good: A Plan to Ensure our Water Future to 2050;Office for Water Security: Adelaide, South Australia, June, 2010. (15) Dillon, P.; Page, D.; Dandy, G.; Leonard, R.; Tjandraatmadja, G.; Vanderzalm, J.; Rouse, K.; Barry, K.; Gonzalez, D.; Myers, B. Managed Aquifer Recharge and Urban Stormwater Use Options: Summary of Research Findings; Goyder Institute for Water Research: Adelaide, South Australia, 2014. (16) San Diego Water Authority Seawater Desalination.https:// www.sdcwa.org/seawater-desalination (February 5, 2019). (17) National Capital Planning Commission The Mall: Irrigation, Drainage, Water Collection and Relandscaping, Preliminary and Final Review; Washington, DC, April, 2013. (18) Stachowicz, M.Personal Communication; National Park Service, Washington, DC, 2014, 2015. (19) City of Melbourne Royal Park Stormwater Harvesting Project; March, 2013. (20) Los Angeles County Flood Control District.Sun Valley Watershed, Strathern Wetlands Park Project (Fact Sheet); Los Angeles, CA, 2012. (21) Hunters Council.Vegetated Drainage Devices, Practice Note #5; Environment Division, Hunters Councils Inc.: New South Wales, Australia, 2013. (22) California Office of Environmental Health Hazard Assessment Dry Wells: Uses, Regulations, and Guidelines in California and Elsewhere [Fact Sheet]; September 25, 2014. (23) Los Angeles Department of Water and Power Branford Street Dry Well Details, Sun Valley EDA Public Improvements Project; Los Angeles, CA, 2015. (24) Los Angeles Department of Water and Power.Laurel Canyon Boulevard Green Street Project (Fact Sheet); Los Angeles, CA, 2015. (25) Southern California Water Coalition.Stormwater Capture: Enhancing Recharge &Direct Use Through Data Collection; April, 2018. (26) Dillon, P.; Pavelic, P.; Page, D.; Beringen, H.; Ward, J.Managed Aquifer Recharge: An Introduction; National Water Commission: Canberra, Australia, February, 2009. (27) Bradshaw, J. L.; Osorio, M.; Schmitt, T. G.; Luthy, R. G., System modeling, optimization, and analysis of recycled water and dynamic stormwater deliveries to spreading basins for urban groundwater recharge.Water Resour. Res.2019;inpress. DOI: 10.1029/2018WR024411 (28) Schoen, M. E.; Ashbolt, N. J.; Jahne, M. A.; Garland, J. Risk- based enteric pathogen reduction targets for non-potable and direct potable use of roof runoff,stormwater, and greywater.Microbial Risk Analysis 2017,5,32-43. (29) Natural Resource Management Ministerial Council; Environ- ment Protection and Heritage Council; Australian Health Ministers Conference.Australian Guidelines for Water Recycling: Managing Health and Environmental Risks (Phase 1), 2006. (30) Natural Resource Management Ministerial Council; Environ- ment Protection and Heritage Council; National Health and Medical Research Council.Australian Guidelines for Water Recycling: Managing Health and Environmental Risks (Phase 2) Augmentation of Drinking Water Supplies, 2008. (31) Natural Resource Management Ministerial Council; Environ- ment Protection and Heritage Council; National Health and Medical Research Council.Australian Guidelines for Water Recycling: Managing Health and Environmental Risks (Phase 2) Stormwater Harvesting and Reuse, 2009. (32) Page, D.; Gonzalez, D.; Dillon, P.; Vanderzalm, J.; Vadakattu, G.; Toze, S.; Sidhu, J.; Miotlinski, K.; Torkzaban, S.; Barry, K. Managed Aquifer Recharge and Urban Stormwater Use Options: Public Health and Environmental Risk Assessment. Final Report; Goyder Institute for Water Research: Adelaide, South Australia, 2013. (33) Page, D.; Gonzalez, D.; Naumann, B.; Dillon, P.; Vanderzalm, J.; Barry, K.Stormwater Managed Aquifer Recharge Risk Based Management Plan, Parafield Stormwater Harvesting System, Stormwater Supply to the Mawson Lakes Recycled Water Scheme, Industrial Uses and Public Open Space Irrigation; Goyder Institute for Water Research: Adelaide, South Australia, 2013. (34) Sharvelle, S.; Ashbolt, N.; Clerico, E.; Holquist, R.; Leverenz, H.; Olivieri, A.Risk Based Framework for the Development of Public Health Guidance for Decentralized Non-potable Water Systems, Final Report of WE&RF Project No. SIWM10C15; the National Water Research Institute for the Water Environment & Reuse Foundation.: Alexandria, VA, 2017. (35) Guchi, E. Review on Slow Sand Filtration in Removing Microbial Contamination and Particles from Drinking Water. American Journal of Food and Nutrition 2015,3 (2), 47-55. (36) Dallman, S.; Spongberg, M. Expanding Local Water Supplies: Assessing the Impacts of Stormwater Infiltration on Groundwater Quality.Professional Geographer 2012,64 (2), 232-249. (37) Makepeace, D. K.; Smith, D. W.; Stanley, S. J. Urban Stormwater Quality - Summary of Contaminant Data.Crit. Rev. Environ. Sci. Technol.1995,25 (2), 93-139. (38) Jurgens, B. C.; Burow, K. R.; Dalgish, B. A.; Shelton, J. L. Hydrogeology, Water Chemistry, and Factors Affecting the Transport of Contaminants in the Zone of Contribution of a Public-Supply Well in Modesto, Eastern San Joaquin Valley, California; U.S. Geological Survey, 2008. (39) Edwards, E. C.; Harter, T.; Fogg, G. E.; Washburn, B.; Hamad, H. Assessing the effectiveness of drywells as tools for stormwater management and aquifer recharge and their groundwater contami- nation potential.J. Hydrol.2016,539, 539-553. (40) Gan, J.; Bondarenko, S.; Oki, L.; Haver, D.; Li, J. X. Occurrence of Fipronil and Its Biologically Active Derivatives in Urban Residential Runoff.Environ. Sci. Technol.2012,46 (3),1489-1495. (41) Grebel, J.E.;Mohanty, S. K.; Torkelson, A. A.; Boehm, A. B.; Higgins, C. P.; Maxwell, R. M.; Nelson, K. L.; Sedlak, D. L. Engineered Infiltration Systems for Urban Stormwater Reclamation. Environ. Eng. Sci.2013,30 (8), 437-454. (42) Wolfand, J. M.; Seller, C.; Bell, C. D.; Cho, Y.-M.; Oetjen, K.; Hogue, T. S.; Luthy, R. G. Occurrence of Urban-use Pesticides and Management with Enhanced Stormwater Control Measures at the Watershed Scale.Environ. Sci. Technol.2019. (43) Nelson, C.; Washburn, B.; Lock, B.Assessing the Risks of Using Dry Wells for Stormwater Management and Groundwater Recharge: The Results of the Elk Grove Dry Well Project (Fact Sheet);CAOffice of Environmental Health Hazard Assessment, Submitted to City of Elk Grove, CA, 2017. (44) Kazner, C.; Wintgens, T.; Dillons, P. Water reclamation technologies for safe managed aquifer recharge.Water reclamation technologies for safe managed aquifer recharge 2012,460, 460. (45) Dillon, P.; Toze, S.; Pavelic, P.; Skjemstad, J.; Davis, G.; Miller, R.; Correll, R.; Kookana, R.; Ying, G.; Herczeg, A.; Fildebrandt, S.; Banning, N.; Gordon, C.; Wall, K.; Nicholson, B.; Vanderzalm, J.; Le Gal La Salle, C.; Gilbert, M.; Ingrand, V.; Guinamant, J.-L.; Stuyfzand, P.; Prommer, H.; Greskowiak, J.; Swift, R.; Hayes, M.; O’Hara, G.; Mee, B.; Johnson, I.Water Quality Improvements during Aquifer Storage and Recovery; Goyder Institute for Water Research: Adelaide, South Australia, 2003. (46) Higgins, K.; Roth, C., Sun Valley Park Storm Water Infiltration Basin Demonstration Project. In Impacts of Global Climate Change, 2005;p1. Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5541 (47) Hatt, E.; Fletcher, D.; Deletic, A. Hydraulic and pollutant removal performance of stormwater filters under variable wetting and drying regimes.Water Sci. Technol.2007,56 (12), 11-19. (48) U.S. Environmental Protection Agency The Class V Under- ground Injection Control Study. Vol. 3 Storm Water Drainage Well; Washington, DC, 1999. (49) Dillon, P. Future management of aquifer recharge.Hydrogeol. J. 2005,13 (1), 313-316. (50) Los Angeles Department of Water and Power.2010 Urban Water Management Plan; Los Angeles, CA, 2010. (51) Mitchell, V. G.; Deletic, A.; Fletcher, T. D.; Hatt, B. E.; McCarthy, D. T. Achieving multiple benefits from stormwater harvesting.Water Sci. Technol.2007,55 (4), 135-144. (52) Rauch, W.; Seggelke, K.; Brown, R.; Krebs, P. Integrated approaches in urban storm drainage: Where do we stand?Environ. Manage.2005,35 (4), 396-409. (53) Page, D.; Miotlinski, K.; Gonzalez, D.; Barry, K.; Dillon, P.; Gallen, C. Environmental monitoring of selected pesticides and organic chemicals in urban stormwater recycling systems using passive sampling techniques.J. Contam. Hydrol.2014,158,65-77. (54) Ulrich, B. A.; Im, E. A.; Werner, D.; Higgins, C. P. Biochar and Activated Carbon for Enhanced Trace Organic Contaminant Retention in Stormwater Infiltration Systems.Environ. Sci. Technol. 2015,49 (10), 6222-6230. (55) Ashoori, N.; Teixido, M.; Spahr, S.; LeFevre, G. H.; Sedlak, D. L.; Luthy, R. G. Evaluation of pilot-scale biochar-amended woodchip bioreactors to remove nitrate, metals, and trace organic contaminants from urban stormwater runoff.Water Res.2019,154,1-11. (56) Roy, A. H.; Wenger, S. J.; Fletcher, T. D.; Walsh, C. J.; Ladson, A. R.; Shuster, W. D.; Thurston, H. W.; Brown, R. R. Impediments and solutions to sustainable, watershed-scale urban stormwater management: lessons from Australia and the United States.Environ. Manage.2008,42 (2), 344-359. (57) Kerkez, B.; Gruden, C.; Lewis, M.; Montestruque, L.; Quigley, M.; Wong, B.; Bedig, A.; Kertesz, R.; Braun, T.; Cadwalader, O.; Poresky, A.; Pak, C. Smarter Stormwater Systems.Environ. Sci. Technol.2016,50 (14), 7267-7273. (58) Quigley, M.; Rangarajan, S.; Pankani, D.; Henning, D. New directions in real-time and dynamic control for stormwater manage- ment and low impact development. In Proceedings of the World Environmental and Water Resources Congress, Honolulu, Hawai’i, USA, 12-16 May, 2008 2008; 030-030. (59) Gilpin, A.; Barrett, M., Interim Report on the Retrofitofan Existing Flood Control Facility to Improve Pollutant Removal in an Urban Watershed.World Environmental and Water Resources Congress 2014: Water Without Borders. 2014 World Environmental and Water Resources Congress. Proceedings, 2014; pp 65-74. (60) Zhang, K.; Randelovic, A.; Page, D.; McCarthy, D. T.; Deletic, A. The validation of stormwater biofilters for micropollutant removal using in situ challenge tests.Ecological Engineering 2014,67,1-10. (61) Bradshaw, J. L.; Ashoori, N.; Osorio, M.; Luthy, R. G.Modeling Cost, Energy, And Total Organic Carbon Trade-Offs for Stormwater Spreading Basin Systems Receiving Recycled Water Produced Using Membrane-Based, Ozoone-Based, And Hybrid Advanced Treatment Trains; Environmental Science & Technology, 2019; DOI: 10.1021/acs.est.9b00184, web release Jan. 31, 2019. (62)Los Angeles County Flood Control District Measure W, Safe, Clean Water Parcel Tax. (September 12). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5542 City of Palo Alto (ID # 11391) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: One Water Concept by Professor Luthy Title: Discussion and Presentation by Professor Richard Luthy on "One Water" Resource Approach From: City Manager Lead Department: Utilities Recommendation This is a presentation and no action is request ed. Executive Summary Professor Luthy will present to the Utilities Advisory Commission on the topic of “One Water”, an integrated planning and implementation approach to managing finite water resources for long-term resilience and reliability, meeting both community and ecosystem needs. Attachment A, Urban Stormwater to Enhance Water Supply, is background material. Professor Luthy will be available to answer questions. Background Richard G. Luthy is the Silas H. Palmer Professor of Civil and Environmental Engineering at Stanford University. He is the Director of the NSF Engineering Research Center for Re-inventing the Nation’s Urban Water Infrastructure (ReNUWIt), a four-university consortium that seeks more sustainable solutions to urban water challenges in the arid west. His area of teaching and research is environmental engineering and water quality with applications to water reuse, stormwater use, and systems-level analysis of urban water challenges. His research addresses management of persistent organic contaminants and contaminants of emerging concern in natural systems that are engineered to improve water quality and protect the environment and human health. Professor Luthy is a past chair of the National Research Council's Water Science and Technology Board and a former President of the Association of Environmental Engineering and Science Professors. He chaired the NRC's Committee on the Beneficial Use of Stormwater and Graywater. He is a registered professional engineer, a board-certified environmental engineer, and a member of the National Academy of Engineering. Attachments: •Attachment A: Urban Stormwater to Enhance Water Supply Staff: Karla Dailey Urban Stormwater to Enhance Water Supply Richard G. Luthy,*,†Sybil Sharvelle, ‡and Peter Dillon § †Department of Civil and Environmental Engineering, Stanford University, Engineering Research Center for Re-inventing the Nation’s Urban Water Infrastructure (ReNUWIt), Stanford, California 94305, United States ‡Department of Civil and Environmental Engineering, Colorado State University, Fort Collins, Colorado 80523, United States §CSIRO Land and Water, PMB, Glen Osmond SA 5064 and NCGRT, Flinders University, GPO Box 2100, Adelaide, SA 5001, Australia ABSTRACT:The capture, treatment, and recharge of urban runoff can augment water supplies for water-scarce cities. This article describes trends in urban stormwater capture for potable water supply using examples from the U.S. and Australia. In water-limited climates, water supply potential exists for large scale stormwater harvesting and recharge, such as neighborhood-scale and larger projects. The beneficial use of urban stormwater to meet nonpotable water demands has been successfully demonstrated in the U.S. and internationally. However, in terms of potable water use in the U.S., the lack of a regulatory framework and uncertainty in treatment and water quality targets are barriers to wide-scale adoption of urban stormwater for recharge, which is not so evident in Australia. More data on urban stormwater quality, particularly with respect to pathogens and polar organic contaminants, are needed to better inform treatment requirements. New technologies hold promise for improved operation and treatment, but must be demonstrated in field trials. Stormwater treatment systems may be needed for large-scale recharge in highly urbanized areas where source control is challenging. The co-benefits of water supply, urban amenities, and pollution reduction are important for financing, public acceptance and implementationbut are rarely quantified. ■INTRODUCTION Many cities, including those in Australia and the U.S. west and southeast, experience chronic or episodic water supply shortages. Water shortages in semi-arid regions are ever more evident in the 21st Century due to population growth, economic development, and impacts of climate change. 1 These same cities face challenges with managing urban runoff to control nutrient loads and pollution. This incongruity of not enough water for urban supply and yet environmental degradation due to runoff has changed thinking on stormwater management. Harvesting urban stormwater for water supply is being viewed as a resource that may alleviate local water shortages and benefit receiving water quality. 2 However, there remain unknowns on risks and benefits for use of urban stormwater as a new water supply that limit acceptance of this practice in the U.S. This feature examines trends in urban stormwater capture for potable water supply and irrigation, via aquifer recharge, and discusses acceptance, treatment, regu- lations, and risk. The focus is on larger-scale systems, such as neighborhood-scale and larger, to make an impact on the water supply from urban runoff in dry climates for water-scarce cities. Current U.S. and Australian examples are used to demonstrate what has been done, how risks are managed, and opportunities for innovation. Stormwater infrastructure is designed foremost for flood protection, and this priority drove major stormwater infra- structure investments in the 20th Century. Los Angeles, for example, with its Mediterranean climate is prone to flooding, and the city’s extensive stormwater network was designed to route runoff to the ocean as quickly and efficiently as possible. While effective for flood control, this conveys polluted stormwater runoff that impacts coastal water quality. 3 This need for environmental protection along with the challenge of becoming more self-reliant for water supplies is changing how we manage and use stormwater in the 21st Century. 4 Community knowledge about water lends support for water- related projects such as stormwater use. Surveys in Australia show that greater water knowledge is associated with conservation and support for alternative water sources. 5 Similarly bond measures in northern and southern California pass by two-thirds majority when the voters understand the benefits of improvements to water quality and supply, and environmental protection. Changing Perspective on Stormwater Management. Water rights may constrain what is feasible for stormwater capture. For inland areas like much of the western U.S. and Australia, stormwater capture and use may impinge on downstream water rights dependent on that runoff.In Colorado, for example, it is only recently that rainwater from rooftop gutters was allowed for nonpotable outdoor usesand Published:February 26, 2019 Feature pubs.acs.org/estCite This:Environ. Sci. Technol.2019, 53, 5534-5542 © 2019 American Chemical Society 5534 DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 Do w n l o a d e d v i a S T A N F O R D U N I V o n J u l y 1 8 , 2 0 1 9 a t 1 5 : 2 3 : 2 4 ( U T C ) . Se e h t t p s : / / p u b s . a c s . o r g / s h a r i n g g u i d e l i n e s f o r o p t i o n s o n h o w t o l e g i t i m a t e l y s h a r e p u b l i s h e d a r t i c l e s . Attachment A only with rain barrels with a combined capacity of 110 gallons. For coastal cities the capture of stormwater does not impinge on water rights, since the water would otherwise have been discharged to the ocean. Some coastal cities, for example, San Diego, lack aquifers and sufficient rainfall for stormwater capture to significantly impact water supply. Thus, depending on water law and local conditions, beneficial use of urban stormwater will help drought-proof cities by reducing dependence on imported water or unsustainable groundwater withdrawals. The specter of water-scarce cities in the U.S., Australia, and elsewhere highlight the need for long-term conservation measures and regional drought planning to achieve resilience to future droughts and climate change. Conservation, water reuse, desalination, water banking, and stormwater use will help diversify water supplies for cities. Among these options, stormwater is now viewed in a new lightless as solely a flood control problem and more as an opportunity for water supply augmentation and greening semi-arid urban areas. Water scarcity and pollutants in runoff from municipal separate stormwater sewer systems (MS 4s) led California to define stormwater as a water resource with the goal of increasing the use of stormwater over 2007 levels by one million acre-ft/yr (1.2 B m 3) by 2030. 6 Some information is available on the costs, benefits, and risks of urban stormwater use, but in general such practical information beyond the simplest applications is limited. Urban stormwater for groundwater recharge poses risk of groundwater contamination and requires robust data, careful design and appropriate operation and maintenance to mitigate those risks. 7,8 Project Size and Storage.Stormwater capture projects can be divided into three main categories depending on size and use. 9 Centralized recharge projects capture stormwater in large infrastructure systems,suchasspreadingbasins. Distributed, or neighborhood, stormwater recharge systems include green streets, park retrofits, and dry wells. Distributed systems for direct on-site use employ tanks or cisterns. For stormwater systems with frequent events throughout the year, detention storage requirements may be small and can be addressed using tanks and small impoundments. 2 For storm- water systems with seasonal or intermittent flows, large storage is required by dams or aquifer recharge. Subsurface storage in shallow aquifers, if they are available, is preferred because storage capacity already exists and it only has to be accessed. While stormwater yields are climate-dependent, coupling stormwater with aquifer recharge may give reliable and resilient supplies. 10 Cities that already have overdrafted aquifers that contain potable water would have a significant cost advantage for storing and recovering treated stormwater. 2 Impact of Future Stormwater Capture on a City’s Water Supply.Examples from Southern California and Southern Australia are illustrative of the potential impact of urban stormwater capture on future water supplies. Currently the City of Los Angeles captures about 64000 acre-ft/yr (79 Mm3/yr) of stormwater through existing centralized capture and incidental distributed recharge. 11 This number could increase by an additional 115000-194000 acre-ft/yr (142- 239 M m 3/yr) under the City’s long-term Stormwater Capture Master Plana 2- to 4-fold increase from today’s value. Whether or not these goals are achieved depends on technical and financial feasibility, managing and preventing groundwater contamination, assumptions about land use, and sustained political will. Considering that Los Angeles’water needs are estimated at about 711000 acre-ft/yr (880 M m 3/yr) in 2035, it is clear that stormwater capture could play an important role Figure 1.National Park Service constructed large stormwater cisterns under the National Mall for turf irrigation (center photo). Stormwater is processed through microscreens and ultraviolet light disinfection (right photo). On-site stormwater use is attractive where rainfall is more uniform throughout the year. (Right and left photos by the authors, center photo National Park Service). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5535 in diversifying the city’s water supply and reducing the need for imported water. The Millennium Drought in Australia caused a shift in attitude about stormwater management and new thinking on how to capture and store urban stormwater. 12,13 For Greater Adelaide, a city with a Mediterranean climate, the plan is to triple the amount of stormwater harvesting from 16000 acre- ft/yr (20 M m 3/yr) in 2013 to 48000 acre-ft/yr (60 M m 3/yr) in 2050. 14 This increase could accommodate about half the growth in water demand expected by 2050. 14 Seawater desalination has also been initiated at Adelaide with a plant capacity of 72 MGD (100 M m 3/yr) installed for potable supplies. But, managed aquifer recharge with stormwater can produce irrigation and potable water at one-third and one-half the costs, respectively, of the optimum cost of desalination. 15 During the Millennium Drought, desalination was imple- mented very quickly at Adelaide and the plant is now operated at minimal capacity to keep it in a functioning condition as a backup measure for drought security. Given the range in climatic and geographic conditions across California and Australia, cities with different challenges respond differently to water scarcity. A comparison point is San Diego and Perth. Both have embraced seawater desalination and water recycling for augmenting potable water supplies. 1,4,16 But Perth has also developed stormwater harvesting for nonpotable use. Examples of Stormwater Capture for Use.Stormwater capture in large cisterns may be practical in locales where rainfall and demand are more uniform throughout the year. One example is Washington, DC. where the National Park Service built a stormwater capture system on the National Mall for turf irrigation (Figure 1). Four 250000-gallon cisterns (totaling 3800 m 3) collect runoff from the Mall’s turf and walkways. The stormwater capture and treatment system is the primary water source for irrigation, reducing potable water demand and harmful stormwater discharges. 2,17,18 The storm- water is treated in underground facilities using microscreens (25 μm) and ultraviolet disinfection. The microscreens prevent fouling of the irrigation system, while the UV disinfection system is deemed important to reduce health risk to the large number of visitors that frequent the National Mall. Similarly, stormwater harvesting in Royal Park, Melbourne, Australia employs a cistern. The runoff passes through a sediment trap, wetlands, and open-water storage, followed by UV disinfection and holding in a 1.3 M gal (5000 m 3) underground tank prior to use for irrigation. The water is applied through spray irrigation at night to minimize human health risks. 19 In arid regions with Mediterranean climate, cisterns are impractical owing to the asynchronous nature of rainfall and water demand, which requires storing large amounts of water for six to eight months during the dry season. In this case urban aquifers can store stormwater by infiltration. In Los Angeles, CA, U.S., for example, the Rory M. Shaw Wetlands Park in the Sun Valley neighborhood is being built to capture up to 900 acre-ft/yr (1.1 M m 3/yr) of urban runoff.3,20 The collected stormwater will be pumped to an adjacent infiltration system that takes advantage of the permeable media in this area. This neighborhood-scale project contributes to water supply while converting a blighted landscape into 46 acres (19 Ha) of green space and recreation. Dry wells, also called vadose zone wells or leaky wells, are vertical pipe-like devices with coarse media and an open bottom and holes in the walls that percolate water to the surrounding soil (Figure 2). The only treatment may be a sediment trap to remove debris or a geotextile fabric to further prevent clogging. 21 In California, dry wells are used with caution due to the concern that they provide a conduit for contaminants to enter the groundwater. 22 Dry wells in New Jersey are prohibited in industrial or other areas where toxic chemicals might be used, whereas in Pennsylvania dry wells are permitted in industrial areas with restrictions, but not along Figure 2.Curbside dry well installation with vegetation in Los Angeles. The system comprises three chambersone for particle settling with the second and third chambers allowing percolation from the base into crushed rock or by an overflow pipe in the third chamber set into crushed rock. (photo by the authors). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5536 roadways. Some newer designs consist of three parts: a vegetated pretreatment feature, a structural pretreatment sedimentation well, and the dry well itself, which contains layers of sand or gravel. The goal of this design is to maximize the removal of particle-associated pollutants, reduce clogging of the dry well, and promote efficient infiltration. These types of designs are implemented in Los Angeles in the San Fernando Valley, as shown in Figure 2.23,24 However, data on actual water volume infiltrated and water quality in such dry wells are lacking. A water partnership in South Australia undertook a multiyear research project that evaluated the quality of stormwater, treatment requirements, risk management, and public acceptance of various stormwater use options. The primary case study was in Salisbury, a suburb of Adelaide. 15 Focus groups cited “equality”and “trust”as being of prime importance for public acceptance followed by the environ- mental benefits of stormwater harvesting to mitigate beach and marine impacts. Costs and Benefits.Unit costs of stormwater capture projects are highly variable. Among the least expensive options in terms of cost-per-volume captured are retrofi tting centralized spreading basins where the land is already available for this purpose. Unit costs increase for distributed projects because they involve more infrastructure to capture smaller flow volumes. This is illustrated by data compiled by the Southern California Stormwater Coalition. 25 The group surveyed agencies across Southern California to get a better understanding of actual capture volumes, costs, and benefits. Projects that may capture about 600 acre-ft/yr cost less than $1200/AF. Median costs for distributed projects are $25,000 per acre-foot, new centralized projects are $6,900 per acre-foot, and retrofit projects are $600 per acre-ft. Similar costs exist in Australia for larger stormwater recharge projects, 26 where stormwater harvesting is very cost competitiveespecially compared to desalination. As space for large projects is increasingly scarce, decentralized projects at parks, schools, and roadways become affordable options. Based on Los Angeles’projections for water import costs, the estimated economic value of recharged water may be $1100 per acre-ft ($0.89/m 3) or more based on lifecycle analysis.11,27 Projects with costs below these values are economically viable based solely on the water supply benefit, and cities are more likely to pursue these projects without seeking funds from external partners. However, caution must be exercised in comparison with cost of current water supplies, as much of those costs were heavily subsidized in the past and there really is not new water to be had at the old rates. Stormwater capture and use project costs can be notably less than or greater than costs for current supplies. 25 Many projects lack flow meters and do not include monitoring, in which case yields are estimated or modeled. Distributed projects offer multiple benefits, such as green space, walkways, recreation, and downstream water quality improvements. Although co-benefits are difficult to monetize, co-benefits can create partnerships, coalitions, and political momentum to bring projects to fruition. 2,15 Microbial Risk and Treatment.While regulatory frame- works and water quality requirements do exist for roof runoff capture in the U.S., 2 regulations for beneficial use of stormwater at a larger scale are sparse (Table 1). The only state that has a regulation for such projects is Minnesota. The Cities of Los Angeles, CA and San Francisco, CA and the District of Columbia have developed programs to allow for beneficial use of stormwater. These programs focus on collection of stormwater in cisterns or tanks for storage and subsequent use. These state and local programs for beneficial use of stormwater have enabled projects to move forward that serve as viable demonstrations (e.g., the National Mall). However, water quality requirements, particularly for patho- gens, are highly variable. Three of the four programs allowing use of stormwater have water quality requirements for E. coli in treated stormwater, and those requirements range from 2.2- 4615 CFU/100 mL for unrestricted irrigation and 2.2-50000 CFU/100 mL for indoor use (toilet flushing and laundry; Table I). This large range of water quality requirements and approaches for regulating treated stormwater quality for various end uses is indicative of lack of guidance to develop a risk based approach for beneficial use of stormwater in the U.S. Lack of data on pathogen concentrations in stormwater and high variability in observed pathogen concentrations 2,28 contribute to the ambiguity around setting treatment targets and water quality standards for end uses of treated stormwater. Between 2006 and 2009, a set of four national guidelines for water recycling were published by the Council of Australian Governments within the National Water Quality Management Strategy, and using common principles. These cover water recycling for nonpotable use, 29 and recycling for augmenting potable supplies, 30 stormwater harvesting and use, 31 and managed aquifer recharge. 7 For stormwater use for irrigation with no access restrictions, treatment requirements are specified for disinfection, turbidity, and iron. Disinfection criteria suggest >1.6 log reduction of virus and bacteria and >0.8 log reduction of protozoa, 15,31,32 which are less strict than the log reductions required for stormwater use for irrigation in San Francisco referenced in Table I. For managed aquifer recharge in Australia, a risk assess- ment32 and management plan 33 are undertaken to account for source water quality and its variability, native groundwater quality, and changes in water quality that occur during passage through the subsurface, such as pathogen inactivation and biodegradation of organic chemicals, as well as mobilization of metals.7 Some data are available on the maximum inactivation times in aerobic and anoxic aquifers for E. coli, salmonella and bacteriophage MS2 that can serve as a basis for precommis- sioning estimation of reduction of pathogens. 7 However, more data are needed on pathogen attenuation rates under varying aquifer conditions. Thus, validation that includes in situ chamber decay studies is recommended to provide site-specific decay rates of pathogens. To support the development of a risk based approach for use of nonpotable water in the U.S., the Water Reuse Foundation assembled a panel to outline a risk based framework for decentralized nonpotable water systems that included storm- water.34 The framework proposed is similar to the Australian guidelines previously mentioned. The approach moves away from end point analysis of water quality and toward designing systems to achieve log reduction targets (LRTs). The City of San Francisco adopted this approach and includes this in regulating LRTs for virus, bacteria, and protozoa for different end uses of stormwater (Table I). With respect to risk from pathogens, the LRTs provided by Sharvelle et al. for stormwater can serve as a basis for design of stormwater treatment systems for captured water. 34 A treatment system including 50 μm filtration and 150 mJ/cm 2 UV dose can achieve health risk based-targets for unrestricted Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5537 access irrigation (i.e., 3, 3.5, 6-log reduction of virus, bacteria, and protozoa, respectively). Addition of slow sand filtration would increase performance 35 and lower the required UV dose. While the LRTs recommended by Sharvelle et al. 34 provide a basis for treatment requirements for on-site use of stormwater, there was large uncertainty in those values. Due to limited data on pathogen concentrations characterized by large variability, 28 the approach adopted by Sharvelle et al. 34 to estimate LRTs for stormwater use for various end uses was to consider dilution with raw sewage. Thus, LRTs were provided for stormwater with a 10 -1 and 10 -3 dilution of sewage water. The basis for these dilutions was observed concentration of pathogens in stormwater. 28 The LRTs for stormwater based on sewage dilution were intended to provide decision makers with the range of likely impacts from human contamination based on age of infrastructure, potential for leaky sewers, and measurement of pathogens or indicator organisms in collected stormwater. The recommended LRTs provide a path to enable projects designed to meet human health targets to move forward. However, the LRTs should be better informed by more data on pathogens in stormwater and the reduction targets may be overly conservative, resulting in stormwater treatment systems that are costlier and more energy intensive than needed to provide an acceptable level of risk. Chemical Contaminants in Urban Runoff.Pollutants most frequently detected in urban runoff include metals, bacteria, nutrients, salts, and petroleum hydrocarbons. 36,37 This reflectsthefactthatmoststormwatermonitoring programs have focused on regulated contaminants for protection of aquatic ecosystems and beach water quality. Although found in urban stormwater runoff, these contami- nants are not necessarily a threat to the underlying ground- water because they are often removed as they percolate into the ground. 36,38,39 In contrast, recent studies report the presence of unregulated moderately polar trace organic contaminants (e.g.,flame retardants, biocides, plastic additives, perfluorinated compounds) in stormwater runoff.40,41 Some of these chemical contaminants could pose larger threats to drinking water than the contaminants that have driven discharge permits, that is, total maximum daily loads (TMDLs). For example, widely used urban insecticides (e.g., fipronil) have been detected in urban residential runoff,40,42 and found in dry wells (e.g., bifenthrin), and predicted to migrate in time through the vadose zone under dry wells. 43 Australia provides guidelines for design and operation of large stormwater infiltration via managed aquifer recharge. 7 However, where the aquifer is relied on for contaminant removal, in situ or laboratory studies are required to confirm attenuation of microbial and chemical contaminants. Standard design criteria do not exist in the U.S. or Australia due to limited data on chemical and microbial contaminant attenuation in aquifers, which depends on environmental conditions, such as temperature and redox state, presence of nutrients and cometabolites, and aquifer materials 2,44,45 Additional treatment beyond what is achieved in the aquifer may be needed for uses outside of low exposure irrigation and industrial uses. 15 At the spreading grounds in Los Angeles County the inflow is monitored for suspended solids and the flow is bypassed if the suspended solids exceed 500 mg/L. This is done to prevent clogging but may also divert the so-called first-flush that is expected to contain the highest pollution levels. While runoff quality from upper watershed areas may rightly focus onTa b l e I . S u m m a r y o f T r e a t m e n t T a r g e t s a n d W a t e r Q u a l i t y R e q u i r e m e n t s f o r B e n e fici a l U s e o f S t o r m w a t e r i n t h e U . S . ( N S , N o t S p e c i fied ) un r e s t r i c t e d i r r i g a t i o n in d o o r u s e ( t o i l e t flus h i n g o r l a u n d r y ) wa t e r q u a l i t y pa r a m e t e r s t a t e o f M N a Di s t r i c t o f C o l u m b i a b Lo s A n g e l e s , CA c d Sa n F r a n c i s c o , C A e Di s t r i c t o f C o l u m b i a b Lo s A n g e l e s , CA c d Sa n F r a n c i s c o , C A e BO D 5 NS NS 10 m g / L N S NS 10 m g / L tu r b i d i t y 3 N T U NS 2 N T U 2 N T U NS 2 N T U 2 N T U TS S 5 m g / L NS 10 m g / L N S NS 10 m g / L N S pH 6 -9N S 6 -9N S NS 6-9N S ch l o r i d e 5 0 0 m g / L NS NS NS NS NS NS zi n c 2 m g / L ( l o n g - t e r m ) ; 1 0 mg / L ( s h o r t - t e r m ) 15 m g / L NS NS 16 0 m g / L NS NS co p p e r 0 . 2 m g / L ( l o n g - t e r m ) ; 5 m g / L ( s h o r t - t e r m ) NS NS NS NS NS NS pa t h o g e n s / in d i c a t o r s E. c o l i : 1 2 6 C F U / 10 0 m L E. c o l i : 4 6 1 5 C F U / 1 0 0 mL Cr y p t o . : 0 . 0 3 3 oo c y s t s / L E. c o l i : 2 . 2 CF U / 10 0 m L Vi r u s : 3 . 0 - l o g r e d u c t i o n Pr o t o z o a : 2. 5 - l o g re d u c t i o n Ba c t e r i a : 2. 0 - l o g r e d u c t i o n E. c o l i : 5 0 0 0 0 CF U / 1 0 0 m L Cr y p t o . : 0. 3 2 0 o o c y s t s / L E. c o l i : 2 . 2 CF U / 10 0 m L Vi r u s : 3 . 5 - l o g r e d u c t i o n Pr o t o z o a : 3. 5 - l o g re d u c t i o n Ba c t e r i a : 3. 0 - l o g r e d u c t i o n a Mi n n e s o t a P o l l u t i o n C o n t r o l A g e n c y , 2 0 1 7 . b DD O E , 2 0 1 3 . c Ca n a l s o t r e a t t o C A T i t l e 2 2 w a t e r q u a l i t y e q u i v a l e n c e . d Lo s A n g e l e s C o u n t y D e p a r t m e n t o f P u b l i c H e a l t h , 2 0 1 6 . e Ci t y a n d C o u n t y o f S a n Fr a n c i s c o , 2 0 1 7 . Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5538 suspended solids, the capture and recharge of urban runoff introduces other concerns. The urban stormwater recharge project in the Sun Valley neighborhood of Los Angeles, for example, employs hydrodynamic swirl-type separators with a filter to remove suspended solids, oils, and metals. 46 In Australia design practices for stormwater harvesting rely on general stormwater pollution control technologies like sedi- ment traps, swales, wetlands, and ponds, 47 and for managed aquifer recharge further engineered treatments or controls are applied as required to meet the water quality requirements for use of recovered water. 7 Because dry wells provide shorter contaminant residence times through the vadose zone, concerns have been raised about the safety and use of these engineered subsurface infiltration systems. 39 Dry wells that penetrate a significant thickness of the vadose zone could compromise water quality by bypassing natural contaminant attenuation processes and could be vulnerable to point source illicit discharges. 48 Opportunities for Improved Design and Manage- ment.Better monitoring and implementation of new technologies for urban runoff capture and infiltration practices are necessary to protect local drinking water supplies, while increasing the confidence of regulatory agencies. 8,49-52 As we look ahead toward evermore urban stormwater capture and recharge for water supply, we can invoke advancements in monitoring, performance assessment, and innovation. Improved monitoring should focus on temporal variability, including the degree to which dry-weather versus wet weather flows contain higher levels of pesticides, automotive, and commercial chemicals. Polar and moderately soluble organic contaminants need greater attention, as these contaminants are more likely to affect groundwater quality. Passive samplers for polar trace organic measurements may offer considerable advantages for spatial and temporal resolution and correlating with land use. 42,53 New treatment technologies, such as low-cost biochar filters,54 reactive media, or solar-powered oxidative processes could be incorporated into designs to enhance pollutant removal. Mixed-media filters show promise. For example,field tests in Sonoma, CA demonstrated that the combination of woodchips and biochar is very effective for managing nitrate, metals, and trace organic contaminants. 55 Aged woodchip reactors with 33% weight biochar removed trace organic contaminants. Under conditions expected in stormwater treatment systems, breakthrough of the most polar trace organic contaminants (i.e., 2,4-D) would take many years based on reasonable assumptions about land area devoted to capture basins, number of bed volumes that may be treated, and maintenance for control of clogging. 55 Further research on costs and performance leading to scientifically informed standards are fundamental to improved watershed-scale stormwater management. 56 It is only recently that stormwater management is beginning to catch up with other sectors on the “internet of things.”A systemic challenge with urban stormwater management is that current approaches are essentially static solutions to a dynamic problem. But, advances in sensing and forecasting can make stormwater capture more dynamic through interconnectivity and real-time decision making. 57 Wireless communications, low-cost sensors and controllers can proactively control such Figure 3.Cost-effective opportunities exist to enhance urban water supplies by joining stormwater and recycled water for groundwater recharge through spreading basins that receive intermittent stormwater deliveries. 27,61 Assessment of regional multisupply groundwater recharge projects benefit from optimization and planning tools to evaluate system costs and trade-offs, and dynamic control. (courtesy J. Bradshaw from LADWP and LACFCD sources). Environmental Science & Technology Feature DOI:10.1021/acs.est.8b05913 Environ. Sci. Technol.2019, 53, 5534-5542 5539 systems in response to changing conditions wherein storm- water treatment and infiltration can be coupled with weather forecasting. In this way control decisions can be made in real time for more efficient treatment considering anticipated flows,58 such as by draining or filling detention basins. Longer holding times in detention basins have shown improvements in water quality through sedimentation and increased exposure to sunlight.59 In drought-prone regions where stormwater capture can contribute to water supply, real-time control can improve both the quality and quantity of water recharged. 57 Regardless of the approach, side-by-side field studies are needed to benchmark efficiencies under real-world conditions to gauge how installed facilities perform and to quantify the benefits of technology improvements. 60 Conditioning with actual stormwater is an essential experimental protocol for the evaluation of long-term robustness in a range of urban environments. Laboratory experiments are useful in under- standing the mechanisms behind the removal of contaminants, and such tests with field-aging is the best approach to mimic field conditions because materials change following exposure to stormwater and microbes. Synergies with Other Urban Water Supply Trends.As semi-arid cities rethink how they manage water in all its forms, stormwater capture will play a significant role to ensure sustainable water supplies (e.g., Hagekhalil et al.; 3 Luthy and Sedlak1). However, two emerging strategies for increasing water suppliescollecting stormwater runoff and recycling treated wastewaterare usually viewed separately, which can create costly and under-utilized infrastructure. Instead, considering these strategies together offers opportunities for significant synergies. For example, systems that deliver recycled water to existing stormwater spreading basins in Los Angeles would take advantage of both the spreading basins’significant unused capacity and the city’s substantial potential to produce recycled water, thereby creating an integrated, cost-effective groundwater replenishment system. 27,61 As illustrated in Figure 3, the complexity of these integrated systems in terms of capacity and location requires decision- support methods to evaluate various design options for bringing recycled water to underutilized stormwater spreading basins and to optimize these designs by engineering considerations such as infrastructure life cycle costs, energy use, and water quantity and quality. An example for the City of Los Angeles illustrates trade-offs between centralized and decentralized configurations and highlights the potential for decentralized inland systems to deliver up to 44500 acre-ft/yr of recycled water to spreading basins at costs significantly less than a centralized system delivering recycled water from the coast.61 Outlook.Capturing and using urban stormwater runoff for water supply can help alleviate water scarcity in semi-arid regions. This is a new paradigm that views stormwater as a water source and not solely a flood or pollution problem. As illustrated by examples in the U.S. and Australia, significant water demand reduction potential exists for large-scale stormwater harvesting and use. This push is being driven also by compliance with municipal separate stormwater sewer TMDL regulations and parcel taxes to fund stormwater capture projects.62 Aquifer recharge is attractive in regions with Mediterranean climates due to the need to store large quantities of water for long periods. While beneficial use of stormwater to meet nonpotable water demand has been successfully demonstrated, there is much less experience for large-scale urban stormwater infiltration for potable supply and designs are just emerging. The lack of a regulatory framework and uncertainty in treatment and water quality targets is a barrier to wide-scale adoption of stormwater use projects. More data on stormwater quality and system performance, particularly with respect to pathogens and polar organic contaminants, are needed to better inform treatment targets. New technologies for treatment and real-time control can help improve both the quantity and quality of recharged water. Successful neighborhood and larger-scale stormwater capture, treat, and recharge projects provide co-benefits of water security, urban amenities, and pollution reduction, which are important for public acceptance and financing. ■AUTHOR INFORMATION Corresponding Author *E-mail:luthy@stanford.edu. ORCID Richard G. Luthy:0000-0003-0274-0240 Notes The authors declare no competing financial interest. ■ACKNOWLEDGMENTS This work was supported by the National Science Foundation Engineering Research Center Program for Reinventing the Nation’s Urban Water Infrastructure (ReNUWIt) cooperative agreement 1028968, and the Sustainability Research Network (SRN) cooperative agreement 1444758. Reported Australian case studies were supported by the National Water Commission, Goyder Institute for Water Research, CSIRO Water for a Healthy Country Flagship Research Program, City of Salisbury, and Adelaide and Mount Lofty Ranges Natural Resources Management Board. ■REFERENCES (1) Luthy, R. G.; Sedlak, D. L. 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Technol.2019, 53, 5534-5542 5542 City of Palo Alto (ID # 11468) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: Fiber Network Expansion Project by Magellan Advisors Title: Discussion and Presentation of the Fiber Network Expansion Project by Magellan Advisors From: City Manager Lead Department: Utilities Discussion John Honker and Jory Wolf from Magellan Advisors will present to the Utilities Advisory Commission an informational overview of the City’s Fiber Network Expansion project. The four (4) phases of the Fiber Network Expansion plan are as follows: 1.Phase 1 seeks a high-level design and cost estimate for fiber expansion to support Advanced Metering Infrastructure (AMI), Supervisory Control and Data Acquisition (SCADA), and wireless communication for City field staff and other City services; 2.Phase 2 seeks a detailed engineering design and cost estimate for fiber expansion to support AMI, SCADA, and wireless communication for City field staff and other City services; 3.Phase 3 seeks a business case and high-level design for a citywide Fiber-to-the-Premise (FTTP) network. The FTTP network and high-level design in the business case should expand on the fiber network for AMI, SCADA and wireless communication; and 4.Phase 4 seeks a detailed engineering design, cost estimate and a phased deployment approach for FTTP. Council approved Phase 1 of the fiber network expansion project on June 1, 2020 (Staff Report # 11368). The City awarded all four phases to Magellan; however, agreements covering each phase must be approved, with the work completed and accepted by the Council before the City decides whether to proceed with the next phase. Staff: Dave Yuan FIBER NETWORK EXPANSION PROJECT UAC PRESENTATION AUGUST 5, 2020 8/5/2020 Attachment A 2 ABOUT MAGELLAN & OUR CLIENTS 100 Electric Utility Clients 300 Municipal Clients 2 Million Miles of Fiber Engineered 1 Million Homes With Access to Fiber Turnkey Implementation Including Project, Construction Management & Inspections 50 Networks Implemented & Active Today 8/5/2020 3 PALO ALTO FIBER EXPANSION PROJECT Phase 1 High Level Design & Cost Estimate Planning & High-Level Design for AMI, SCADA, Wireless Phase 2 Detailed Backbone Engineering Design Aerial & Underground Design, Standards & Construction Package Phase 3 Fiber To The Premise Business Case Assessment of Possible Alternatives for FTTP Phase 4 Fiber To The Premise Engineering Design If a Viable Option is Found and the City Decides to Move Forward, Detailed Engineering for FTTP 6-7 Months 5-7 Months 5-6 Months 12 Months 8/5/2020 Current Phase Started Jul 18, 2020 4 Focus: Expansion of fiber to meet internal City & CPAU needs Inventory the current fiber network Develop needs assessment for fiber expansion Review current and future applications Identify locations, capacity and network architecture for: AMI Smart Grid SCADA Public Safety Wireless Smart City Applications Document these requirements formally in a Design Strategy report Update City fiber and wireless policies Provide to City for review and feedback PHASE 1: HIGH-LEVEL DESIGN & COST ESTIMATE 8/5/2020 5 PHASE 2: DETAILED ENGINEERING & COST ESTIMATE Focus: Preparation of engineering plans for construction of the network developed in Phase 1 Engineering for backbone fiber expansion Based on phase 1 needs analysis Placement of conduit, fiber, structures Focused on meeting the internal needs of the City and CPAU Permit authorities and quantities Update City construction standards Create construction prints Develop final bill of materials Develop construction bid package 8/5/2020 6 PHASE 3: EVALUATION OF FIBER TO THE PREMISE Focus: Evaluate possible alternatives for fiber to the premise (FTTP) Incremental, lower cost and lower risk approaches over time Assess opportunities to use Phase 1 network to lower deployment costs Find companion projects that could aid in deployment Integration with electric rebuilds & undergrounding Alignment with existing capital projects Fiberhood or phased deployment Assess the role wireless last mile could play Workshop the potential options with the City City to decide on next steps 8/5/2020 7 Focus: If the City chooses to move forward with FTTP: Develop engineering plans and bill of materials Deployment approach and project plan Construction prints and permitting Construction bid package Construction phasing RFP for construction contractor Evaluation and selection of contractor PHASE 4: DETAILED DESIGN & COST ESTIMATES 8/5/2020 City of Palo Alto (ID # 11468) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: Fiber Network Expansion Project by Magellan Advisors Title: Discussion and Presentation of the Fiber Network Expansion Project by Magellan Advisors From: City Manager Lead Department: Utilities Discussion John Honker and Jory Wolf from Magellan Advisors will present to the Utilities Advisory Commission an informational overview of the City’s Fiber Network Expansion project. The four (4) phases of the Fiber Network Expansion plan are as follows: 1.Phase 1 seeks a high-level design and cost estimate for fiber expansion to support Advanced Metering Infrastructure (AMI), Supervisory Control and Data Acquisition (SCADA), and wireless communication for City field staff and other City services; 2.Phase 2 seeks a detailed engineering design and cost estimate for fiber expansion to support AMI, SCADA, and wireless communication for City field staff and other City services; 3.Phase 3 seeks a business case and high-level design for a citywide Fiber-to-the-Premise (FTTP) network. The FTTP network and high-level design in the business case should expand on the fiber network for AMI, SCADA and wireless communication; and 4.Phase 4 seeks a detailed engineering design, cost estimate and a phased deployment approach for FTTP. Council approved Phase 1 of the fiber network expansion project on June 1, 2020 (Staff Report # 11368). The City awarded all four phases to Magellan; however, agreements covering each phase must be approved, with the work completed and accepted by the Council before the City decides whether to proceed with the next phase. Staff: Dave Yuan FIBER NETWORK EXPANSION PROJECT UAC PRESENTATION AUGUST 5, 2020 8/5/2020 Attachment A 2 ABOUT MAGELLAN & OUR CLIENTS 100 Electric Utility Clients 300 Municipal Clients 2 Million Miles of Fiber Engineered 1 Million Homes With Access to Fiber Turnkey Implementation Including Project, Construction Management & Inspections 50 Networks Implemented & Active Today 8/5/2020 3 PALO ALTO FIBER EXPANSION PROJECT Phase 1 High Level Design & Cost Estimate Planning & High-Level Design for AMI, SCADA, Wireless Phase 2 Detailed Backbone Engineering Design Aerial & Underground Design, Standards & Construction Package Phase 3 Fiber To The Premise Business Case Assessment of Possible Alternatives for FTTP Phase 4 Fiber To The Premise Engineering Design If a Viable Option is Found and the City Decides to Move Forward, Detailed Engineering for FTTP 6-7 Months 5-7 Months 5-6 Months 12 Months 8/5/2020 Current Phase Started Jul 18, 2020 4 Focus: Expansion of fiber to meet internal City & CPAU needs Inventory the current fiber network Develop needs assessment for fiber expansion Review current and future applications Identify locations, capacity and network architecture for: AMI Smart Grid SCADA Public Safety Wireless Smart City Applications Document these requirements formally in a Design Strategy report Update City fiber and wireless policies Provide to City for review and feedback PHASE 1: HIGH-LEVEL DESIGN & COST ESTIMATE 8/5/2020 5 PHASE 2: DETAILED ENGINEERING & COST ESTIMATE Focus: Preparation of engineering plans for construction of the network developed in Phase 1 Engineering for backbone fiber expansion Based on phase 1 needs analysis Placement of conduit, fiber, structures Focused on meeting the internal needs of the City and CPAU Permit authorities and quantities Update City construction standards Create construction prints Develop final bill of materials Develop construction bid package 8/5/2020 6 PHASE 3: EVALUATION OF FIBER TO THE PREMISE Focus: Evaluate possible alternatives for fiber to the premise (FTTP) Incremental, lower cost and lower risk approaches over time Assess opportunities to use Phase 1 network to lower deployment costs Find companion projects that could aid in deployment Integration with electric rebuilds & undergrounding Alignment with existing capital projects Fiberhood or phased deployment Assess the role wireless last mile could play Workshop the potential options with the City City to decide on next steps 8/5/2020 7 Focus: If the City chooses to move forward with FTTP: Develop engineering plans and bill of materials Deployment approach and project plan Construction prints and permitting Construction bid package Construction phasing RFP for construction contractor Evaluation and selection of contractor PHASE 4: DETAILED DESIGN & COST ESTIMATES 8/5/2020 City of Palo Alto (ID # 11363) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: Integration of DERs in Palo Alto Title: Discussion and Update on the Adoption and Integration of Distributed Energy Resources in Palo Alto From: City Manager Lead Department: Utilities Recommendation This report provides information to facilitate the Commission discussion and feedback on the City’s activities to facilitate customer adoption of distributed energy resource (DER) technology, and initiatives to optimally integrate DERs into the City’s electric supply and distribution system for the benefit of all residents and businesses in Palo Alto. No action is required at this time. Executive Summary In January 2019, the Utility Advisory Commission (UAC) discussed DER1 related activities and the staff’s work plan for the three-year period 2019-2021. These workplan areas were: a) business strategic and operational planning, b) electric supply planning and operations, c) distribution system planning and operations, d) customer retail rate design, and e) customer program design. Considerable progress has been made under these work areas. The activities include: a) evaluation of advanced metering infrastructure (AMI vendor proposal with expectation to begin AMI implementation in Q3 2021, b) implementation of MyCPAU customer portal, c) formulation of customer programs to facilitate DER adoption, including launch of technical assistance program to assist multi-family, non-profits and mixed use properties to install electric vehicle (EV) chargers, d) coordinate the integration and optimization of a large solar photovoltaic (PV) + Energy Storage System (ESS) based microgrid system at a commercial campus to improve resiliency, and e) evaluate distribution transformer loading at four locations with high penetration of EV registrations. The report further details the progress and future activities planned. 1 California Public Utilities Code 769 defines “distributed energy resources” as distributed renewable generation resources such as solar photovoltaics (PV), energy efficiency (EE), energy storage (ES), electric vehicles (EV), and demand response (DR) technologies. Staff: Shiva Swaminathan City of Palo Alto Page 2 Background DERs are electrical energy resources connected to the City of Palo Alto Utilities (CPAU) electric distribution grid that can significantly change the location, timing, and magnitude of C PAU’s electric loads. These resources are primarily sited at customer premises, behind the utility electric meter, and include solar photovoltaic (PV), energy efficiency (EE), energy storage systems (ESS), electric vehicles (EVs), demand response (DR) technologies, heat pump water heaters (HPWH), and heat pump space heating (HPSH) systems. The goal of the DER related activities and workplan,2 as discussed with the UAC in January 2019, is to facilitate customer adoption of DERs and to enhance the value of customer sited DERs to all members of the Palo Alto community by using DERs to lower overall cost, lower greenhouse gas emissions, and increase the resiliency of the community while avoiding or mitigating any potential negative impacts from DER growth. Attachment A provides an overview of the impact of DER technologies have on different facets of CPAU operations and related work planning documents.3 Attachment B provides a summary of initiatives being considered to integrate DERs into the distribution system and the electric supply portfolio. Table 1 below summarizes the estimated number of DERs and magnitude of DERs loads in Palo Alto at the end of 2019. Detailed assumptions made to estimate the energy and capacity impacts of these systems are listed in Attachment C. 2 https://www.cityofpaloalto.org/civicax/filebank/documents/68309 3 These work plan documents include the Electric Integrated Resources Plan (2018), Distribution System Assessment (2018), and the updated Customer Programs Work Plan (2019) currently being implemented. City of Palo Alto Page 3 Table 1: Overview of Estimated Number of DERs and Associated Impact on Electrical Load in 20194 DER System Approximate # of DER Systems5 Impact on Electrical Load Impact on Total Electrical Load (% of total load) Energy6 (MWh) Capacity (MW) (connected) 7 Energy8 Peak Demand Reduction9 EV 4,000-4,500 +13,000 +10 to +15 +1.4% +0.5% to +2% (summer) +1% to +4% (winter) PV 1,223 -24,000 -15 -2.6% -3% to -6% (Summer) 0% (Winter) EE > 40,000 -64,000 -7 to -15 -7.3% -4% to -8% DR none - - - - ESS 20 - +/- 0.21 - - HPWH 44 +40 +0.06 - - HPSH 30-50 not estimated not estimated - - The estimated greenhouse gas (GHG) reduction potential for each DER unit is currently estimated to be as outlined below10. Estimates of GHG Reduction Potential of Each DER Systems 4 These estimates are calculated based on technologies deployed primarily since 2007, and reflect the total impact observed through the end of 2019. 5 The estimated numbers for PV and ESS are based on city/permitting records; the EE and HPWH estimates are based on rebates processed by CPAU, with EE measures varying widely from LED light bulbs to commercial HVAC upgrades; the EV estimate is based on DMV data for registered EVs in Palo Alto. 6 EVs and HPWHs increase the electrical loads on the distribution system and the energy supply needs, while PV, and EE will lower the electrical loads. DR programs tend not to have any net impact on energy consumption. 7 For PV the capacity is the addition of inverter capacity of each connected system, with a degradation factor applied to account for the age of the system. For ESS it is the estimated capacity of all 20 systems. The capacity impact of EE is harder to estimate. The capacity of the HPWH could range from 0.5 kW to 5 kW depending on the mode of operation; the average is assumed to be 1.4kW making the total capacity for the 44 systems to be 60 kW. For EV, the charging capacity at home could range from 1kW to 15kW, for this estimate it is assumed to be 2 to 3kW per EV registered in Palo Alto. 8 The fraction of the energy impact associated with each DER was computed by dividing Palo Alto’s annual electricity consumption in 2019, which was 908,851 MWh. 9 Impact on peak demand is based on “coincident demand,” which is the largest electric demand in MW during the 15-minute period of a given year when the entire Palo Alto electric load peaks – a peak of 140 to 180 MW depending on the season. 10 Though Palo Alto’s electric supply is carbon neutral, in the margins, any hourly energy consumption changes in Palo Alto rely on California-wide grid electricity which has a carbon content. This estimate assumes the marginal carbon content of electricity in the CAISO grid to 0.15 to 0.6 MT/MWh in any given hour, and 0.15 to 0.3 MT/MWh for solar production hours. These are direct emissions and do not include losses in the system or upstream emissions related to fossil fuel production and distribution. City of Palo Alto Page 4 DER System Estimates of GHG Reduction Potential (CO2e Metric Tons) Notes/Assumptions EV 1.5 to 3 MT/EV/year Depends on miles travelled in a year PV 1 to 2 MT/year Assumes a 5kW south facing home PV system EE 0.15 to 0.6 MT/MWh conserved Depends on time of day and season DR 0.1 to 0.4MT/MWh For a load shifting program; from solar production period to non-solar production period ESS 0 to 2MT/year Depending on operating mode for 13kWh unit; back- up mode, to daily cycling to maximize GHG reduction HPWH 0.6 to 1.2 MT/year For a residential unit, depending on extent of use HPSH ~1MT/year Residential central unit In 2021, staff will provide an update of the impacts of DERs on the long term electrical loads and the community’s GHG reduction goals (through 2030); the assessment will incorporate impacts of COVID-19, customer resiliency needs triggered by wildfire risk perceptions, and progress in meeting community’s greenhouse gas reduction goals. A prior long term assessment was discussed by the Commission in November 2017.11 Discussion This report will discuss progress on the following five DER planning focus areas and thirteen associated actions under them, as discussed with the UAC in January 2019. A. Business Strategic and Operational Planning B. Electric Supply Planning and Operations C. Distribution Planning and Operations D. Customer Retail Rate Design E. Customer Program Design To effectively manage DER growth, CPAU’s planning and operational activities related to electricity supply, the distribution system, and customer programs are closely coordinated. In addition, retail rates must be designed to remain cost-based while sending economically efficient price signals to customers who are considering DER investment and to collect sufficient revenues to maintain a reliable utility system. Overall utility business strategies must also be aligned to effectively integrate DERs. The report discusses the progress made on each of these five areas over the past 18 months. A. Business Strategic and Operational Planning To effectively take advantage of the opportunities created by DER adopti on, and to avoid potential negative impacts, CPAU needs to put certain fundamental technologies in place, most 11 https://www.cityofpaloalto.org/civicax/filebank/documents/61748 City of Palo Alto Page 5 importantly Advanced Metering Infrastructure (AMI). There are also potential opportunities and impacts related to the way DERs could affect utility loads and utility finances. CPAU needs to evaluate these opportunities and impacts to effectively take advantage of them or mitigate them, as applicable. Actions Planned Progress To date • Begin planning to implement an AMI system as described in the Utilities Smart Grid Assessment and Utilities Technology Implementation Plan. • Request for Proposals (RFP) for AMI system issued, and responses were received on 6/9/2020. Progress on evaluations and selection process will be discussed with the UAC in the Fall. Final selection planned for Q1 2021, implementation of AMI and other related projects planned for 2021-2024. See June 2020 report for details.12 • The AMI meter data management system vendor selection will ensure customers are aware and have access to high quality utility consumption information and associated analytical tools and enable customers to share their data. • Single-sign-on feature for customer portal to be implemented in Q4 2020. Implementation of additional customer engagement features using single sign-on is in progress (improved consumption dashboards and home energy and water reports). • In the process of finalizing specifications to implement a new customer information system (CIS). Implementation planned for 2021-2024, in coordination with AMI implementation. • Implementation of advanced utility rates (time of use) to more fully integrate DERs is not planned until 2025. A pilot all-electric home rate will be implemented earlier. • Undertake a competitive assessment of the impact of DERs on the electric utility finances and competitiveness • Preliminary research work done, timeline for completion of project depends on staff time availability but is tentatively planned to be completed in mid-2021. B. Electricity Supply Planning and Operations The Electric Integrated Resource Plan (EIRP) considers the electric supply provided by customer- sited DERs and supply from central resources located outside Palo Alto. In accordance with the EIRP, staff will continue to use the ‘avoided cost’ methodology13 to compare the economic merits of electric supply options from DER resources within Palo Alto and from resources outside Palo Alto on an equal basis.14 The current estimated avoided cost of CPAU’s energy 12 http://cityofpaloalto.org/civicax/filebank/documents/77113 13 The EIRP contemplates pursuing an optimal mix of supply and demand resources (Strategy #2) and procuring flexible utility scale resource supplies to effectively meet changes in customer loads due to DER adoption (Strategy #6) 14 The avoided cost methodology computes the cost of meeting customer loads from outside energy resources (supply resources), and then uses this cost benchmark to evaluate the economics of DER resources (demand side resources) –with DER resources preferred when the cost of DER resources is at or below the avoided cost benchmark. This methodology to compare supply and demand resources ensures energy is economically sourced City of Palo Alto Page 6 supply in FY 2021 is 10.4 cents/kWh, and it is 13 to 15 cents/kWh for energy supply from a PV system based within Palo Alto15. Large commercial scale DERs (PV, ESS and DR systems) will also impact day-to-day operations to optimally meet the community’s hourly loads. Any large variation in DER operations at a customer sites16 will require coordination with CPAU as well as the NCPA, the City’s scheduling coordinator, and CAISO, the state’s grid operator. Except for the planned VMWare community microgrid project17 staff is not aware of any other large project that could have such impacts in the next few years. Attachment D provides details of the VMware project. Actions Planned Progress To date • Continue to update electrical load forecast based on anticipated growth of DERs and incorporate it into supply resource plans. • On-going annual activity for budgeting, rates and supply planning purposes. Long term (10 year) forecast will be updated again in 2021. • Continue to evaluate DERs as an alternative to supply resources from outside the City. • On-going activity when facilitating DER adoption by customers. ‘Avoided cost’ methodology for energy and capacity is used to compare external supplies with DER supplies. These methodologies are being used to coordinate and optimize the PV+ESS at the VMware campus. C. Electric Distribution Planning and Operations The Assessment of Distribution System to Integrate DERs discussed with the UAC in April 2018 found the following: for all CPAU customers. Resiliency and other local benefits are also considered for DERs. 15 Under CPAU’s CLEAN (Clean Local Energy Assessible Now) program PV projects could be developed and output sold to CPAU at a fixed prices over a long term contract. CPAU also compensates for the excess electricity generated by customer PV systems and exported to the distribution grid at the Net Energy Metering 2 (NEM2) rate. 16 For a 180MW load like Palo Alto, DER resources such as Demand Response or Energy Storage systems in the order of 3MW+ are considered a large variation and will require operational coordination with Northern California Power Agency (NCPA), CPAU’s scheduling coordinator with the CAISO transmission operator. 17 VMware’s proof of concept (PoC) community microgrid project contemplates the installation of two battery ESSs at two separate buildings on campus that currently have solar PV systems on their roofs. Each of the battery systems will be 500kW/1MWh in size and will be coupled with two existing PV systems (120kW and 130kW) to provide improved supply reliability for the campus. In addition, two separate connection spots and receptacles will be reserved for the City’s emergency operating vehicles to be set-up and powered in the event of an emergency/power outage situation. The PV+ESS system could also potentially help shift energy from the less valuable solar production period of 10am to 2pm to more valuable periods between 4 and 9pm. The system will furthermore be tested for its technical capability to inject reactive power into the distribution system to improve the system’s power factor. Upon successful implementation of this PoC system, feasibility of a campus- wide microgrid system is also being evaluated by VMware. City of Palo Alto Page 7 • The nine electric substations and 68 high voltage feeders have sufficient capacity to accommodate PV and EV growth in the residential sector through 2030 (this 2018 conclusion will be re-evaluated in 2021) • Staff should closely monitor distribution transformer loadings in residential neighborhoods which have a very high penetration of EVs. • Sufficient feeder capacity exists in the commercial sector to accommodate EV load growth. • Development of large PV systems (>500 kW) may have system impacts related to ‘reverse flow’ on lightly loaded distribution feeders. As such, each of the larger projects are evaluated on a case-by-case basis. In addition to evaluating DER options as alternatives to electric supply purchases, DERs sited at a specific location on the distribution system may have the potential to avoid additional distribution system investment by CPAU. This would be dependent on the amount, type, reliability, and operational characteristics of the DER, and the customer ’s load response should the DER capacity not be available. In light of CPAU’s responsibility to serve customer loads even if the DER is offline, and the technical and economic potential for such opportunities using the corresponding avoided costs, no such economically prudent opportunities to reduce distribution system investments via DER investments were found or anticipated in the near future. Actions Planned Progress To date • Update mapping of customer meters to distribution transformers serving customers to assess transformer loading • On-going process to ensure accuracy of electric meter to transformer connectivity maps. • Identify distribution transformers that have the potential to overload • On-going, with existing analytical tools that have proven well to date, with no transformer failures due to overloading. • Initial assessment underway with four transformers to refine the tools for customer EV charging patterns (see Attachment B for details). • Evaluate a standardized policy and connection fee for residential customers requesting electrical panels larger than 200 Amperes and implement if feasible; similar initiative to aid commercial customers • Evaluation planned, but no progress in the last year due to lack of staff availability. Currently planned for 2021 • Explore the potential to integrate smart inverter capability to meet the operational needs of the distribution systems • Plan to test the capability of the VMware microgrid ESS to inject reactive power into the distribution system to improve system power factor during times of need. • Facilitate the implementation of customer- initiated and owned microgrid projects • An estimated ~20 residential customers have PV+ESS based microgrids in their homes, with a equivalent number of projects in the permitting phase. • Facilitating VMware microgrid project. City of Palo Alto Page 8 D. Customer Retail Rate Design The most important DER-related rate design task will be time-of-use (TOU) rate implementation once AMI meters become available, currently planned for 2021-24. TOU rates enable CPAU to send economically efficient price signals to customers who are contemplating DER investments to optimally meet their electricity needs18. Actions Planned Progress To date • Evaluate an all-electric home or building electrification friendly retail rate • Initial assessment underway – recommendation for implementation of a pilot scale program under consideration. Implementation will depend on staffing priorities and rate design issues. • Evaluate utility bill discounts for EV customers • A number of programs are under consideration. Bill discount for income qualified customers and DC fast charger locations under consideration for 2021. Low Carbon Fuel Standard (LCFS) funds would be utilized for such discounts. • Analyze, forecast, and monitor the impact of DER adoption on rate design, in order to fairly treat all customers and to maintain the financial health of the utility • On-going evaluation, with major long-term evaluation update planned for late 2021. • A preliminary evaluation of standby rates for large solar PV and ESS is underway within the context of the VMware microgrid project. Evaluation finalization and discussion with UAC planned in 2021 depending on staff availability. • Minimum bill rate design and implementation in progress. E. Planning & Implementing Customer Programs & Communications In October 2019 the Commission discussed the planning and implementation framework for customer programs. As discussed in that report, the goals of customer programs have shifted in recent years, with the focus on traditional energy efficiency and renewable energy expanding to include sustainability and carbon reduction programs. This shift includes a major focus on DERs such as electric vehicles and building electrification technologies to achieve sustainability goals and ESS to meet reliability/resiliency needs of individual customers19. 18 CPAU had a pilot-scale residential TOU rate from 2015-2019 to serve interested customers, as part of the CustomerConnect advanced meter pilot. Approximately 100 customers participated and save an average $1 to $2/month of their electricity bill. An expansion of CPAU’s residential TOU rate is not contemplated until 2025. Medium and large commercial customers currently do have the option to elect to be on TOU rates; one customer is on the TOU rate. 19 All customer programs prioritized for implementation are evaluated based on the following criteria. 1) customer satisfaction, 2) equity among customers, 3) GHG emission reduction, 4) efficiency sa ving, 5) cost effectiveness. Customer satisfaction means that customer interests unrelated to efficiency and carbon (such as resiliency) are also taken into account. The availability of dedicated funding sources and the existence of regulatory mandates can also drive program prioritization. City of Palo Alto Page 9 Progress on the EV customer programs and the full portfolio of customer programs was presented to the Commission in in July 2020 (Demand Side Managment (DSM) Customer Programs, Update on EV Customer Programs). Actions Planned Progress To date • Revise and update the portfolio of customer programs • Broadly completed as discussed with the Commission in October 2019. The pace of implementing the sustainability programs is currently under discussion with Council. • A number of DER related customer pilot projects are being evaluated, a list of projects is provided in Attachment B. Attachment B outlines potential DER related customer programs that would help facilitate and integrate DERs. The implementation of pilot project(s) will be highly dependent on the project value and staffing resources needed for implementation. NEXT STEPS Staff will continue to take a comprehensive approach to integrating customer-sited DERs to lower overall cost, reduce greenhouse gas emissions, and increase the resiliency of the community. As illustrated below, as Palo Alto implements AMI and the level of DER penetration increases, greater focus and resources would be devoted to more fully integrat ing DERs in to the electric supply and distribution system to optimally serve all CPAU customers. Illustrative Phases of DER Integration within the Context of DER Adoption Curve Source: Adopted from CAISO presentation Resource Impact Staff’s main role related to programs on customer premises in the past has been related to energy efficiency and solar PV. Expansion of staff’s role in implementing customer programs City of Palo Alto Page 10 related to EVs, building electrification, and energy storage resulted in internal evaluation of priorities in 2019. Staffing changes and de-prioritization of projects (such as discontinuing commercial DR program and delaying the implementation of an ESS pilot project) were made in 2019 and will be re-evaluated regularly. Staffing for program implementation has been a limiting factor in implementation of building electrification programs and will continue to be a limiting factor for expansion of programs related to most other DERs as well, with the exception of EV programs, which staff has prioritized. Any acceleration of EV related customer programs/plans or building electrification programs to meet the community’s 80% by 2030 greenhouse gas reduction goals will require additional staffing. Policy Impacts The policies referenced here are part of various plans, including the Utilities Strategic Plan, the Sustainability and Climate Action Plan (S/CAP), and the Electric Integrated Resource Plan (EIRP). Environmental Review The Utilities Advisory Commission’s discussion of this informational report does not meet the definition of a project under Public Resources Code 21065 and therefore California Environmental Quality Act (CEQA) review is not required. Attachments: • Attachment D: VMWare Presentation • Attachment E: Staff Presentation Confidential │©2020 VMware, Inc. Community Microgrid Project Overview Nicola Acutt VP Sustainability July 16, 2020 Attachment D Confidential │ ©2020 VMware, Inc. Presentation Outline 2 Vision Objectives Scope Status Use Cases Timeline Next Steps vmware® Confidential │ ©2020 VMware, Inc.3 Designed to serve both VMware and the Palo Alto community Vision: Build the First Community Microgrid in Silicon Valley Sustainability & Innovation Efficiency & Resilience Community Stewardship Edge Technology Leadership •GHG emission reductions •Local renewables •True additionality in renewables •Innovation in system design and operation •Optimize energy management •Increase resiliency in case of outages •Potential for Demand Response and other opportunities •Lead integration of renewables, batteries, & microgrids into regional grid •Provide emergency response capabilities and community support •Integrate Edge technology into microgrid •Explore open source applications •Learning system to capture and use data at Edge Confidential │ ©2020 VMware, Inc.4 “Force for Good” •The future requires innovation for our people, planet, and products •In alignment with 2030 Sustainability Strategy goals and initiatives Increasing Need for Resiliency •CA power outages •Projected rolling blackouts •Greater impacts/losses projected Collaboration and Partnerships •CPAU’s awareness on the need for innovation •Mobile Emergency Operations Center connecting to the Microgrid Proof of Concept (PoC) •Stanford’s interest and commitment •Share “playbook” statewide and nationwide for increased adoption of microgrids VMW’s Expertise •Resolving network infrastructure & congestion challenges •Edge technology initiatives •Continuous learnings from the Microgrid PoC Leveraging technology to produce positive environmental, community, & business results Objectives Sustainability Innovation Efficiency & Resilience Community Stewardship Edge Technology Leadership Objectives Confidential │ ©2020 VMware, Inc.5 1.Creekside G Building –Existing Borrego solar installation •132kW(ac) •223.59 MWh/year –New battery •500kW(ac) inverter •1.02 MWh –New MEOC Connection 2.Hilltop G Building –Existing Borrego solar installation •120kW(ac) •240.55 MWh/year –New battery •500kW(ac) inverter •1.02 MWh –New MEOC Connection Microgrid PoC will encompass two buildings supported by two batteries PoC Scope: Designed to Test Business Capabilities Equipment NOTE: Solar generation data based on PVSYST calculation before COD. Generation & storage data subject to change. Rooftop Solar Battery Storage Legend: MEOC Connectivity Confidential │ ©2020 VMware, Inc.6 CSG permits received, HTG permits expected in July Status: Construction Now Underway Battery DesignConstruction Site Updates •Battery container made in the USA. •Container dimensions: L x W x H = 32’ x 9’8” x 9’7” * Confidential │ ©2020 VMware, Inc.7 4-hour resiliency full building Islanding of critical load Islanding of critical load and ancillary connectivity (e.g. MEOC) Peak shifting mode Demand Response Operating Mode Grid Services Interaction with VMware Building Management System Potential Microgrid Use Cases Confidential │ ©2020 VMware, Inc.8 OCT 15: Battery installation complete; begin testing & commissioning JUL 31: HTG permit response expected Upcoming Milestones Q2 FY’21 Q3 FY’21 Q4 FY’21 May June July August September October November JUL 13: CSG permits received; construction begins AUG 24: Begin battery installation NOV 30: Substantial Completion Date MAY 14: Utility relocation permit received * Pending COVID-related excusable delays Confidential │ ©2020 VMware, Inc.9 Next Steps •Continue collaboration with CPAU on Microgrid PoC use cases •Capture learnings from PoC to plan for next phase of Community Microgrid •Continue development of innovative microgrid control technology Confidential │ ©2020 VMware, Inc. Thank You AUGUST 5, 2020 www.cityofpaloalto.org/ev Update on Distributed Energy Resources in Palo Alto 1 Demand Response Attachment E 2 DER PLANNING FOCUS AREAS •Business Strategy & Operational Planning •Electric Supply Planning & Operations •Distribution Planning & Operations •Customer Retail Rate Design •Customer Program Design 3 Estimated Number of DERs & Associated Impacts on Electrical Loads in 2019 3 4 2019-20 PROGRESS HIGHLIGHTS •RFP for AMI system implementation issued and proposals being evaluated •Implemented My CPAU customer portal –Phase I •Technical Assistance Program to assist customers install EV chargers + cash rebates •Facilitating community microgrid at VMware •Analyzing impact of DERs on distribution transformer loading 5 IMPLEMENTATION PLANS 2020-22 •Implement My CPAU Customer Portal –Phase II (single sign on with customer engagement tools from WaterSmart and Uplight) •Continue to implement existing customer programs, particularly EV chargers for multi-family homes •Further enhancement to DER customer programs – particular focus on income qualified customers •Pilot building electrification friendly retail rates •AMI system implementation Questions? Input? 6 City of Palo Alto (ID # 11370) Utilities Advisory Commission Staff Report Report Type: Agenda Items Meeting Date: 8/5/2020 City of Palo Alto Page 1 Summary Title: Utilities Quarterly Report for Q3 FY2020 Title: Utilities Quarterly Informational Report for Q3 Fiscal Year 2020 From: City Manager Lead Department: Utilities Recommendation This report is for information only. No action is required. Executive Summary This is an update on water, gas, electric, wastewater collection and fiber utilities, efficiency programs, legislative/regulatory issues, utility-related capital improvement programs, operations reliability impact measures and a utility financial summary, and is for the Utilities Advisory Commission’s (UAC’s) information. This update has been prepared to keep the UAC apprised of the major issues that are facing the water, gas, electric, wastewater collection and fiber utilities. Items of special interest for Q3 FY 2020 include: •COVID Impacts: The economic impacts of the pandemic did not begin to manifest until Q4 of FY 2020, so there are no financial impacts noted in this report. However, staff will report on COVID-19 financial impacts to the utility in future reports. This report notes anticipated impacts related to the pandemic where information is available. •Electric Utility: Despite low precipitation, the electric utility is currently projected to end the fiscal year with a more favorable financial position than was originally projected in the FY 2020 Financial Plan. Thanks to later season rains, precipitation is at 63% of average for the year in the watersheds associated with the City’s hydroelectric projects (up from 50% as of the Q2 Quarterly Report), but this still means that hydroelectric generation in calendar year 2020 will be lower than average. However, these effects will be felt more in FY 2021 than in FY 2020. For the current fiscal year, FY 2020, hydroelectric generation is projected to be roughly average due to the wet rainy season in early CY 2019 which translated into above average hydroelectric generation in late CY 2019. Hydroelectric generation is projected to be lower than average for FY 2021. Based on current projections, lower hydroelectric generation is expected to result in over $3 million in additional costs to the electric utility. However, reserves are adequate to absorb these additional costs, and other factors are contributing to a more favorable financial position for the electric utility than previously projected. First, electric load in FY 2020 is shaping up to be higher than forecasted in the FY 2020 Financial Plan, however load is expected to decline in Q4 due to the pandemic. Second, the Staff: Eric Wong City of Palo Alto Page 2 utility has found opportunities to sell surplus energy and generating capacity that were not available in previous years, and prices for these products are currently higher due to the demands of new Community Choice Aggregators. Third, there were one-time savings in maintenance and construction spending due to difficulty filling vacant positions and hiring contractors. Some of these factors may continue into future years, and others, like maintenance and construction savings, are not projected to continue. (pages 3, 24, 27) • Gas Utility: Gas supply prices remain lower than last year, though market prices rose in the winter months (November through February) more than forecasted. Gas customers have experienced savings due to purchasing discounted gas from MuniGas that will reduce annual costs by about $1 million per year. This is the first full year this agreement has been in effect and customer savings through Q3 FY 2020 have been approximately $650,000. Gas customers have seen some savings in FY 2020 due to delays by the CPUC in approving PG&E’s proposed increases to gas transmission rates, though these increases are expected to occur in Q3 FY 2020. The year-end financial position for the gas utility is projected to be approximately $400,000 lower than projected in the FY 2020 Financial Plan. This accounts for the impacts of the COVID-19 pandemic. While sales are expected to decrease in Q4 of 2019, consumption is generally substantially lower in these months than in the winter, minimizing the impact to the gas utility. (pages 9-11, 25, 27) • Water Utility: Precipitation has been low in California in 2020, at 40% to 50% of normal in the Bay Area and 60% of normal in the watershed that feeds the Hetch Hetchy system. Reservoirs in the Hetch Hetchy system were fairly full due to strong precipitation in 2019, but while the Hetch Hetchy Reservoir is expected to fill completely this year it only represents a small portion of total storage. Storage associated with a water banking agreement the SFPUC has with Turlock and Modesto Irrigation Districts in Don Pedro Reservoir, which represents most of the water used to manage droughts, is not expected to fill. Water consumption and costs for Q1 through Q3 FY 2020 were roughly 2% higher than forecasted due to the dry weather (up from 0.7% above as of Q2). Combined with the impacts of COVID-19 shelter in place orders in Q4 of FY 2020, sales are projected to be roughly 2% below forecasts by end of year. However, revenues are still projected to be higher than the FY 2020 Financial Plan forecast due to higher than expected interest on reserves and changes in the value of the City’s investments. Expenses are currently projected to be significantly lower than the FY 2020 Financial Plan forecast due to delays in various capital projects, but these funds are expected to be expended in the next fiscal year. (pages 12-14, 25, 27) • Wastewater Utility: The change in financial position for the Wastewater Collection Utility is roughly in line with the FY 2020 Financial Plan – a decrease in reserves due to expenses being higher than revenues. However, the decrease in reserves is smaller than expected in the FY 2020 Financial Plan. Projected revenues for the Wastewater Collection utility are slightly higher than the FY 2020 Financial Plan forecast due to higher interest income and higher than expected sales revenues, while expenses were lower due to lower than anticipated operational costs. Minimal impacts to sales revenues are expected from the COVID-19 shelter in place orders due to the fact that this utility bills based on winter water consumption (though utility bill defaults may cause some impact in the long term). (page 25) • Fiber Utility: Magellan Advisors has been hired to perform a four-phase Fiber Network Expansion assessment. Work on phase one is commencing in early 2020. A fiber network rebuild project is in progress to increase capacity in areas of the dark fiber ring that are currently at capacity. This will enable the fiber utility to meet new customer requests. The current project is a new fiber backbone from Park Boulevard to Hanson Substation in the Stanford Research Park, tentatively scheduled for completion in Q4 2021. (pages 15-16) City of Palo Alto Page 3 • Efficiency Programs: Many energy efficiency programs were temporarily suspended due to shelter in place orders. Programs that can be executed outdoors or on commercial properties in compliance with County health orders have been restarted, but programs that require entering residences remain suspended. In the meantime CPAU is providing tips and tricks electronically to residents and businesses on reducing energy and water use while sheltering in place or during a suspension of business. CPAU is also exploring virtual program delivery. A summary of the City’s electric vehicle programs is provided, including the multi-family charger rebate and technical assistance program and the regional CALeVIP collaboration to provide rebates for workplace and public charging. A summary of the City’s electrification pilot programs is also provided. (pages 16-19) • Communications: A digest of major outreach efforts is provided on pages 19-20, including outreach related to the water quality, keeping sewers free of blockages, PG&E’s public safety power shutoff program, and a variety of COVID-19-related utility customer communications. • Innovation and Pilot Programs: A summary of the CPAU Program for Emerging Technologies is provided on pages 21-22. • Legislative and Regulatory: Major legislative and regulatory items are summarized on pages 22-24. Due to the impacts of COVID-19, most utility-related bills currently being tracked are inactive. Most of the remaining active bills relate to PG&E’s wildfire shutoff program (Public Safety Power Shutoff, or PSPS). Attachments: • Attachment A: Quarterly Report Q3 FY2020 Utilities Quarterly Update Third Quarter of Fiscal Year 2020 August 2020 Attachment A Quarterly Update for Third Quarter of FY 2020 August 2020 i Utilities Quarterly Update Table of Contents i. Electricity ................................................................................................................... 3 Electric Supplies ............................................................................................................................................ 3 Electric Budget and Portfolio Performance .................................................................................................. 6 ii. Natural Gas................................................................................................................. 9 Gas Supply Retail Rates ................................................................................................................................. 9 Gas Budget and Portfolio Performance ...................................................................................................... 10 iii. Water ....................................................................................................................... 12 Water Availability ........................................................................................................................................ 12 Water Budget and Portfolio Performance .................................................................................................. 14 Water Use ................................................................................................................................................... 14 iv. Fiber Optics .............................................................................................................. 15 Commercial Dark Fiber Service ................................................................................................................... 15 Request for Proposal for Phased Fiber Expansion ...................................................................................... 15 Fiber Optic Network Rebuild Project .......................................................................................................... 15 v. Efficiency Programs .................................................................................................. 16 Events and Workshops ................................................................................................................................ 17 Electrification .............................................................................................................................................. 17 Electric Vehicles .......................................................................................................................................... 18 vi. Communications Highlights ...................................................................................... 19 Current Communication and Outreach Activities ....................................................................................... 19 vii. Innovation and Pilot Programs .................................................................................. 20 Program for Emerging Technologies ........................................................................................................... 20 viii. Legislative and Regulatory Issues .............................................................................. 21 State legislation ........................................................................................................................................... 22 State regulatory proceedings ...................................................................................................................... 22 Federal legislation ....................................................................................................................................... 23 ix. Utility Financial Summary ......................................................................................... 23 Electric Utility Overview .............................................................................................................................. 23 Gas Utility Overview.................................................................................................................................... 24 Water Utility Overview ............................................................................................................................... 24 Wastewater Collection Utility Overview ..................................................................................................... 25 Fiber Optic Utility Overview ........................................................................................................................ 25 Residential Bill Comparisons ....................................................................................................................... 28 Quarterly Update for Third Quarter of FY 2020 August 2020 ii List of Figures Figure 1: Electric Supply Resource Actual and Projection ............................................................................ 4 Figure 2: CY 2020 Monthly Electric Supply Resource Projection .................................................................. 5 Figure 3: Northern California Peak Electric Prices ........................................................................................ 6 Figure 4: FY 2020 Electric Load and Resource Balance ................................................................................. 7 Figure 5: FY 2020 Electric Market Prices ....................................................................................................... 8 Figure 6: CPAU’s Gas Commodity Rates ....................................................................................................... 9 Figure 7: FY 2020 Natural Gas – Budget vs. Actual ..................................................................................... 10 Figure 8: FY 2020 Natural Gas Prices .......................................................................................................... 10 Figure 9: FY 2020 Cumulative Redwood Pipeline Cost vs. Market Benchmarks ........................................ 11 Figure 10: Bay Area Precipitation Index ...................................................................................................... 12 Figure 11: Hetch Hetchy Precipitation ........................................................................................................ 13 Figure 12: SFPUC Water Deliveries ............................................................................................................. 13 Figure 13: FY 2020 Water – Budget vs. Actual ............................................................................................ 14 Figure 14: Potable Water Use ..................................................................................................................... 14 List of Tables Table 1: FY 2020 Electric Load and Generation Compared to Budget Projections ....................................... 7 Table 2: FY 2020 Electric Utility Supply Cost Summary ................................................................................ 8 Table 3: Status to date of all applications to the Program for Emerging Technologies ............................. 21 Table 4: Utilities Financials .......................................................................................................................... 26 Table 5: Operations Reserves ..................................................................................................................... 26 Table 6: Q3 FY 2020 Reserve Report from the City’s Financial System ...................................................... 27 Table 7: Residential Electric Bill Comparison .............................................................................................. 28 Table 8: Residential Natural Gas Bill Comparison ....................................................................................... 28 Table 9: Residential Water Bill Comparison ................................................................................................ 28 Table 10: Residential Wastewater Collection (Sewer) Bill Comparison ..................................................... 28 Table 11: Median Residential Overall Bill Comparison ............................................................................... 29 Quarterly Update for Third Quarter of FY 2020 August 2020 3 i. Electricity Electric Supplies Western Area Power Administration (Western) Issues While water year 2019 was an above-average precipitation year that resulted in above-average reservoir levels across the state, water year 2020[1] has shaped up to be a dry year, with significantly below-average precipitation levels. For Q3 of fiscal year (FY) 2020, Western delivered 64 GWh to the City (102% of long-term average levels, which is about 57% the amount that was delivered in Q3 of FY 2019. Because of the wet conditions in 2019, for FY 2020 as a whole, Western is projected to generate 391 GWh (2% above long-term average supply levels, and 2% above FY 2019 levels). However, for FY 2021, the current dry conditions are projected to reduce Western generation to 282 GWh (29% below long-term average levels). Calaveras Hydroelectric Project Issues NSMR storage as of May 31, 2020 was 144,841 ac-ft. The historical average storage level for NSMR for the end of May is 139,965 ac-ft. Calendar year 2020 has been dry so far. Cumulative precipitation for water year 2020 is currently at about 63% of average for this date, tracking closely with 2015 levels. Central Sierra snowpack was at 1% of April 1 average on May 31, 2020, whereas the snowpack was at 65% of April 1 average at the same time last year (May 31, 2019). However, reservoir levels are still near historical average levels due to the previous year being a wet one. For Q3 FY 2020, the Calaveras project generated 13 GWh (61% of long-term average levels, which is about 22% the amount that was delivered in Q3 of FY 2019). In FY 2020, the project is projected to generate 102 GWh (88% of long-term average levels, and 52% of FY 2019 supply levels). Electric Load and Resource Balance Palo Alto’s electric supply portfolio for CY 2020 saw significant surplus energy positions in some periods, largely owing to the previous year being an above-average hydro year. However, there were other periods that saw deficit positions as well. The City sold, on a forward basis, nearly 123,000 GWh of surplus energy during Q3 and Q4 of FY 2020 (Mar 2020 – Jun 2020) to manage the surplus position, while it purchased about 33 GWh in Q3 of FY 2020 (Jan 2020 – Feb 2020) to manage the deficit position. In addition, due to the availability of surplus carbon neutral supplies, as well as the feedback provided by the UAC, Palo Alto sold Bucket 1 RPS resources from Q1 and Q2 of FY 2020, that exceeded the City’s load on an annual basis for CY 2019. Since these transactions were index-based (plus a REC premium), they did not impact the City’s energy price exposure (and are therefore not reflected in the load-resource balance charts shown in Figure 1 and Figure 2 below). They did, however, change Palo Alto’s RPS level (to 40%), but the City still exceeded the state’s RPS compliance requirements (31% for CY 2019). CY 2020 is shaping up to be a significantly drier hydro year than CY 2019. Overall electric supply resources are projected to be deficit of load by 5% for CY 2020, and surplus to load by 9% for CY 2021. Figure 2 below shows the monthly load and resource balance for CY 2020. [1] A “water year” is defined as the 12-month period from October 1 through September 30. “Water year 2020” refers to the period from October 1, 2019 through September 30, 2020. Quarterly Update for Third Quarter of FY 2020 August 2020 4 As mentioned earlier, some of the monthly surplus/deficit positions were sold/purchased as generic energy ahead of time, while the rest were settled in the spot market through the California Independent System Operator. Figure 1: Electric Supply Resource Actual and Projection, 2019 to 2021 (as of June 24, 2020) Quarterly Update for Third Quarter of FY 2020 August 2020 5 Figure 2: CY 2020 Monthly Electric Supply Resource Projection (as of June 24, 2020) Electric Market Price History and Projections As of June 24, 2020, the price for on-peak energy for August 2020 in Northern California was $41.43 per megawatt-hour (MWh)[1], while the prices for Sep 2020 and Oct 2020 were $37.24/MWh and $37.56/MWh, respectively. These values are approximately $4.82/MWh (or 10%) lower than they were at the time of the last quarterly report.[2] On-peak prices for calendar year strips are in the range of $37/MWh to $39/MWh for 2020 through 2022. These prices are approximately $1.12/MWh higher than they were at the time of the last quarterly report. Figure 3 below illustrates historical monthly on-peak prices and projected monthly forward prices for Northern California from 2006 through 2026. [1] Note that $41.43 per megawatt-hour is equal to 4.143 cents per kilowatt-hour. [2] Market prices for the previous quarterly report were from February 20, 2020. Quarterly Update for Third Quarter of FY 2020 August 2020 6 Figure 3: Northern California Peak Electric Prices (as of June 24, 2020) Electric Budget and Portfolio Performance Electric Load, Generation, and Supply Cost Summary Compared to Budget Estimates Table 1 and Figure 4 below summarize the City’s electric supply sources through Q3 FY 2020. Load was about 1.4% lower than budget. Hydro generation from Calaveras and Western were 15.7% above budget forecasts, and solar generation was 34% above budget forecast. Due to higher than expected generation from Hydro, Solar, and Landfill resources, CPAU sold more power on the spot market than expected. Net market sales through Q3 FY 2020 were roughly 80 GWh, or 11.7% of load. Quarterly Update for Third Quarter of FY 2020 August 2020 7 Table 1: FY 2020 Electric Load and Generation Compared to Budget Projections (as of Q3 FY 2020) Figure 4: FY 2020 Electric Load and Resource Balance (as of Q3 FY 2020) Quarterly Update for Third Quarter of FY 2020 August 2020 8 Table 2 below shows CPAU’s supply cost by cost category through Q3 FY 2020. Supply costs were $1.3 million below budget, primarily due to the net effect of higher than expected transmission costs and higher market sales. Table 2: FY 2020 Electric Utility Supply Cost Summary (as of Q3 FY2020) Electric Market Prices Figure 5 shows monthly market prices. Electric market prices have been lower than budgeted through Q3 FY 2020. Figure 5: FY 2020 Electric Market Prices Quarterly Update for Third Quarter of FY 2020 August 2020 9 ii. Natural Gas Gas Supply Retail Rates The commodity portion of CPAU’s retail gas rates for all customers varies every month depending on the market price of natural gas. Figure 6 below shows the actual commodity rates charged from FY 2013 through FY 2020. Gas commodity prices in FY 2020 have been relatively low, with a small price bump during the winter season. Gas commodity prices, on average, are anticipated to remain low for the foreseeable future, due to over- production and over-supply in the market. Figure 6: CPAU’s Gas Commodity Rates—FY 2013 through Q3 FY 2020 These rates can also be found on the web at: http://www.cityofpaloalto.org/civicax/filebank/documents/30399. Muni Gas Prepay On September 15, 2014, Council adopted Resolution #9451 authorizing the City’s participation in a natural gas purchase from Municipal Gas Acquisition and Supply Corporation (MuniGas) for the City’s entire retail gas load for a period of at least 10 years. The MuniGas transaction includes a mechanism for municipal utilities to utilize their tax-exempt status to achieve a discount on the market price of gas. The program has reduced about $650K in commodity costs for customers in through Q3 FY 2020. Quarterly Update for Third Quarter of FY 2020 August 2020 10 Gas Budget and Portfolio Performance Supply Volumes and Costs: Budget vs. Actual Figure 7 compares actual natural gas supply volumes and costs with the FY 2020 budget. Natural gas consumption through Q3 FY 2020 was 2% lower than the budget forecast. Costs were 21.7% lower than budget due to lower than expected gas commodity rates and PG&E transportation rates. Figure 7: FY 2020 Natural Gas – Budget vs. Actual Figure 8 shows actual gas commodity prices at Malin, PG&E Citygate and Palo Alto Net Purchase Cost. Natural Gas prices experienced slightly higher volatility during the winter months but have returned to normal levels. Figure 8: FY 2020 Natural Gas Prices ($/MMBtu) – Malin, Citygate and Palo Alto Net Purchase Costs Quarterly Update for Third Quarter of FY 2020 August 2020 11 Value of CPAU’s Share of Redwood Pipeline Capacity Figure 9 shows the value of the Redwood gas transmission line at month-ahead market prices and the volumetric cost of using that transmission line. The Redwood pipeline allows the City to buy gas at the receipt point of Malin, Oregon and transport the gas to “PG&E Citygate”, which is normally a higher priced receipt point. The City’s share of the Redwood pipeline was a net benefit to the Gas Utility of $363K through Q3 FY 2020. This is the difference between the cumulative value of Redwood capacity of $1,145K (the difference of the monthly index prices at the ends of the Redwood pipeline in Malin, Oregon and PG&E Citygate) and the cumulative transportation cost of using the Redwood pipeline of $782K. Figure 9: FY 2020 Cumulative Redwood Pipeline Cost vs. Market Benchmarks (through Q3 FY 2020) Quarterly Update for Third Quarter of FY 2020 August 2020 12 iii. Water Water Availability Precipitation in March and April improved the overall water supply situation to about 60% of normal. High carryover of water in storage and conservation management will result in both Hetch Hetchy and Cherry Reservoirs filling by the end of the runoff season. Water Bank, however, which the SFPUC uses to manage droughts, is unlikely to fill. The figures below show the monthly precipitation for the regional system and SFPUC water deliveries to the peninsula as of June 8, 2020. Usage was up significantly during the dry month of February but has tracked relatively close to 2019 since mid-March. Figure 10: Bay Area Precipitation Index Quarterly Update for Third Quarter of FY 2020 August 2020 13 Figure 11: Hetch Hetchy Precipitation Figure 12: SFPUC Water Deliveries Quarterly Update for Third Quarter of FY 2020 August 2020 14 Water Budget and Portfolio Performance Supply Volumes and Costs: Budget vs. Actual Figure 13 below compares actual water supply volumes and costs to the FY 2020 budget projections. Actual water supply volumes and costs through Q3 FY 2020 were both about 2% higher than budget. Figure 13: FY 2020 Water – Budget vs. Actual Water Use Water use through Q3 FY 2020 was slightly higher compared to FY 2019. This could be attributed to less than usual precipitation throughout the winter/spring season. Figure 13 below shows the monthly water purchases in FY 2020, compared with FY 2017, FY 2018 and FY 2019. Figure 14: Potable Water Use Quarterly Update for Third Quarter of FY 2020 August 2020 15 iv. Fiber Optics Commercial Dark Fiber Service The total number of commercial dark fiber customers at the end of FY 2020 Q3 was 94 accounts (93 commercial accounts and 1 City account). The total number of active dark fiber service connections serving commercial and City customers is 205 (some customers have multiple connections). Commercial customers generate approximately 81% of the dark fiber license revenues. The remaining 19% of licensing revenues is from City departments. Request for Proposal for Phased Fiber Expansion In response to a City Council Motion on June 24, 2019, which directed staff to reissue the Fiber-to-the-Node (FTTN) Request for Proposals (RFP), a new RFP was issued on September 10, 2019, to solicit one or more qualified consultant(s) under a Professional Services Agreement to begin a multi-phase fiber network expansion to support Advanced Metering Infrastructure (AMI), Supervisory Control and Data Acquisition (SCADA) Systems, and Wireless Communication Technologies. A contract was recently finalized with Magellan Advisors as project consultants. Project work is expected to commence in early FY2020. This project is divided into four phases in the RFP scope of work. As phases are completed, staff will be seeking Council’s approval of the completed tasks and funding authorization for subsequent phases (2 through 4). Phase 1 seeks a high-level design and cost estimate for fiber expansion to support Advanced Metering Infrastructure (AMI), Supervisory Control and Data Acquisition (SCADA), and wireless communication for City field staff and other City services; Phase 2 seeks a detailed engineering design and cost estimate for fiber expansion to support AMI, SCADA, and wireless communication for City field staff and other City services; Phase 3 seeks a business case and high-level design for a citywide Fiber-to-the Premises (FTTP) network. The FTTP network and high-level design in the business case should expand on the fiber network for AMI, SCADA and wireless communication; and Phase 4 seeks a detailed engineering design, cost estimate and a phased deployment approach for FTTP. Fiber Optic Network Rebuild Project The rebuild project will install new aerial duct or substructure (conduit and boxes), in addition to fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity. This project will allow CPAU to meet customer requests for services. The project areas primarily cover the Stanford Research Park, Palo Alto Internet Exchange (PAIX)/Equinix at 529 Bryant, and Downtown areas. This project basically “overlays” new fiber over existing fiber routes in the network. Existing fiber will continue to serve City facilities and commercial dark fiber customers. As part of phase one of the fiber network expansion initiative, the consultant will perform a detailed audit of the existing network to determine the next steps of the rebuild project. Quarterly Update for Third Quarter of FY 2020 August 2020 16 Tentative Rebuild Work Scheduled in 2019-2020 • Field investigation of the path from Park Boulevard Substation to Hansen Way Substation and then to Hanover Substation to determine the level of substructure work required to continue the new fiber backbone. Completed February 2019. • Complete design of the new fiber backbone from Park Boulevard Substation to the Stanford Research Park area. Tentative scheduled for Q4 2020. • Install substructure for the new fiber path from Park Boulevard Substation to the Stanford Research Park area. Tentatively scheduled for Q2 2021. • Install dark fiber cable. Tentative scheduled for Q4 2021. All scheduled rebuild work noted above is tentative and subject to change. The estimated cost for the rebuild is between $500,000 and up to $1,000,000 for substructure work. Another $250,000 for the overhead portion of the work is allocated for the project. CPAU crews will perform the equipment installation, cable pulling and terminations. CPAU’s substructure contractor will install the conduit and boxes. v. Efficiency Programs All-Electric Reach Code On April 1, 2020, the new Energy Reach Code became effective, with the requirements of all-electric design for low-rise residential new construction projects, and either all-electric design or increased energy efficiency beyond the state’s requirements for non-residential new construction projects. Details of the 2019 Energy Reach Code are available from the city’s website. Staff plans to return to City Council with recommendation for all- electric design requirements for non-residential projects in early 2021. Saving Energy and Water While Sheltering in Place Staff are committed to finding additional ways to innovate and expand energy and water related programs in the shelter in place environment. Recognizing that unprecedented numbers of people are working and studying from home and will likely experience increased costs on their utility bills, we have been sending e- mails and running a social media campaign to share tips and tricks for saving energy and water and making the home environment more comfortable. View these tips online at www.cityofpaloalto.org/efficiencytips and follow us in social media with the hashtags #WePowerOn #PaloAltoProud and #PublicPower. CPAU launched a “Sustainable Kids” e-mail and social media campaign both to educate the younger Palo Alto community members about energy and water and to provide family-friendly activities for children as they spend more time at home this summer. Energy & Water Efficiency Workshops Many public events and workshops were canceled this spring in response to the COVID-19 pandemic. Our partners at the Bay Area Water Supply and Conservation Agency (BAWSCA) are offering virtual landscape workshops so you can learn how to save water and improve the sustainability of your landscape from the Quarterly Update for Third Quarter of FY 2020 August 2020 17 comfort of your own home. Palo Alto residents and businesses can take advantage of landscape rebates through our cost-sharing partnership with Valley Water. Modifications to Utilities Programs In accordance with the County order lifting restrictions on construction activities, some energy efficiency projects are resuming. Examples of allowed activities include commercial energy efficiency projects, solar installations, EV charger installations, and other work that does not require staff or consultant visits inside occupied residential dwellings. The County’s construction protocols must be followed: https://www.sccgov.org/sites/covid19/Documents/Mandatory-Directives-Construction-Projects.pdf Although all visits inside occupied residential dwellings are temporarily on hold, many Utilities programs have been modified to continue to provide value to the community. Visit www.cityofpaloalto.org/utilityprograms for the latest on program modifications. Events and Workshops For updates on future events and workshops, please visit www.cityofpaloalto.org/workshops. Electrification Induction Cooktop Loaner Program In summer 2019, the City contracted with Acterra to administer an induction cooktop loaner program. The innovative nature of the pilot made estimating the costs to run such a program difficult, and shelter-in-place orders further complicated implementation. As a result, Palo Alto and Acterra mutually agreed to terminate the pilot as of July 1, 2020. Surveys showed participants’ attitudes regarding induction cooking did shift after using a loaner. Before using the loaner, 77.5% of respondents had a very positive or somewhat positive perception of induction cooktops. This number increased to 94.9% after using the loaner. Staff is exploring other avenues for educational outreach and possible rebate programs for induction cooktops in the future. Home Electrification Readiness Assessment In October 2019, CPAU launched a new service offering home electrification readiness assessment to homeowners. This service is offered through the Home Efficiency Genie program. As of June 1, 2020, 13 readiness assessments have been completed and there are 3 scheduled to be completed once COVID in-home visits are allowed to resume. Multifamily Gas Furnace to Heat Pump Retrofit Pilot In 2018, CPAU was awarded a $300,000 grant by the Bay Area Air Quality Management District to implement a pilot to help retrofit existing in-unit gas wall furnaces with high efficiency heat pump systems at up to 3 affordable multifamily properties. The goal of the pilot is to identify the retrofit barriers, the energy savings and GHG reductions from such retrofits. To date, CPAU has contracted with a consultant to manage the pilot and has selected a candidate site (out of 5 potential sites). Contractors are preparing to bid on the furnace replacement project however, due to COVID 19 shelter in place orders, those installations are temporarily suspended. Quarterly Update for Third Quarter of FY 2020 August 2020 18 2020/2021 Electrification Work Plan In early March, staff presented the 2020/2021 Electrification Work Plan to the UAC. However, due to budget impact from the COVID-19 pandemic, staff has put a hold on the work plan and is revising the work plan to adjust for available staffing resources. Electrification Webpage In October 2019, CPAU unveiled a new electrification landing page to help homeowners electrify their home. The new Electric Panel Upgrade webpage provides information on the electric amperage required for different electric appliances including EV charger and battery storage, as well as the steps to upgrade an electric panel. Based on the contents of these webpages, an electrification brochure was also created for distribution. Graphics created for the CPAU pages were shared with other agencies including San Jose Clean Energy for their outreach material. Electrification Expo On October 10, 2019, CPAU co-hosted the Bay Area Home Electrification Expo in coordination with local partners. The Expo featured speakers, panel discussion, demonstrations, and vendor exhibits to provide hands-on education and resources to residents and building professionals wanting to further reduce their carbon footprint. Videos of the workshop presentations from the Expo can be found in the CPAU Youtube channel. Electric Vehicles EV Solutions and Technical Assistance Program The EV Technical Assistance Program (TAP) was soft launched in October 2019 with a new program website, bill insert and workshops for multifamily properties, religious centers and low-income multifamily properties. The innovative program has been duplicated by neighboring Community Choice Aggregators, Peninsula Clean Energy and Silicon Valley Clean Energy, both of which have also contracted with CLEAResult to implement their TAP programs. By the end of Q3, 75 customers expressed interest in participating in the program and 30 customers signed a Program Participation Agreement allowing CLEAResult to conduct site visits. 26 technical site visits with engineers and electricians were completed before shelter in place began on March 17th. This ‘quiet’ period was used to create a template for final reports and presentations to customer which includes 3 design scenarios for installing EV chargers, including electrical load calculations, transformer and electrical panel information and price estimates. CPAU plans to deliver final reports to all 26 customers by the end of the next quarter and help get customers who are ready to move forward, to apply for permits and begin installations. CALeVIP The California Energy Commission has partnered with five local energy agencies to launch a $33M incentive project for the installation of public electric vehicle (EV) charging stations throughout Santa Clara and San Mateo counties. This Peninsula-Silicon Valley project, is an initiative of the California Electric Vehicle Infrastructure Project (CALeVIP), which aims to develop and implement regional incentives to support statewide adoption of EVs. CPAU has committed $1M of Low Carbon Fuel Standards (LCFS) funds, to receive $1M in grant funding. This fall, these funds will become available to all eligible Palo Alto commercial customers to install Level 2 or Level 3 fast chargers over the next 2 years. CPAU completed contracting with the Center of Sustainable Energy (CSE) – the administrator for the program, in Q3. CSE hosted its first webinar Quarterly Update for Third Quarter of FY 2020 August 2020 19 to explain program details on June 23, with 188 attendees. Find more details at www.cityofpaloalto.org/calevip City of Palo Alto EV Charger Rebates In FY2020 Q1, CPAU increased rebate levels to $8,000 per EV charging port from $3,000 for multifamily properties and $5,000 for non-profits. Residential Transformer Upgrade (Utility Service Capacity Fee) fees were also raised from $3,000 to $10,000. CPAU also added a program to pay for commercial transformer upgrades (when necessary and feasible) up to $100,000 with a minimum of 10 connectors or fully wired EVSE- ready outlets. All of these incentives are funded through LCFS credits. The new and updated incentives have helped drive interest to the TAP program. We are also learning that to accommodate new EV chargers, about half of the transformers serving the non-profits and multifamily properties participating in TAP may require a new transformer. vi. Communications Highlights This section summarizes communications highlights, updates on major campaigns and noteworthy events. Copies of ads and bill inserts are available online at cityofpaloalto.org/UTLbillinsert Current Communication and Outreach Activities Don't Rush to Flush When the COVID-19 pandemic began, our wastewater operations staff noticed a high volume of sanitation wipes and other materials in the wastewater collection system. CPAU staff put out messaging that those presumably “flushable” wipes are not suitable to be flushed and can clog toilets, drains, sewer pipes, laterals and mains. Please do not flush foreign objects down toilets or drains. This can lead to sanitary sewer overflows, create dangerous health risks for our community, and pollute our waterways. Don't Fall for Utilities Scams We don’t want anyone to fall victim to fraud, so we routinely publish messaging to help our customers know how to identify and protect themselves from scams. It's Here! MyCPAU New Online Customer Site In March, CPAU launched the new online utility account management system, MyCPAU for our residential and business utility customers. MyCPAU offers new features and functionalities so customers can easily manage their utility account services online. MyCPAU has replaced our former My Utilities Account customer site, and the My Utilities Account site has been discontinued. Customer account information was automatically migrated to the new MyCPAU site. To inform customers of this, we send out email notices with a temporary password and instructions for registering on the new site. We are also providing outreach through utility bill inserts, email newsletters, printing info on utility bills, mailing postcards to everyone in Palo Alto, and sharing through social media, including with a new announcement video. Our Customer Service Representatives stand ready to answer any questions and help people use the new site. Quarterly Update for Third Quarter of FY 2020 August 2020 20 Utilities Rate Assistance and Payment Relief for Residential and Commercial Customers When the coronavirus (COVID-19) shelter in place public health order took effect, CPAU expanded payment relief and rate assistance programs to help our residential and commercial customers. The City’s initial proclamation of a local emergency in March and extension in May instituted a moratorium on disconnections for non-payment, late payment fees, and full-bill payment requirements. Customers can make partial payments, without penalty, and without risk of disconnection for non-payment. The total of missed payments (except Late Fees, which will be waived in their entirety) will continue to be owed, but customers will be eligible for an extended payment plan of up to 18 months from the proclamation termination. Residents may qualify for our Rate Assistance Program, which provides a 25% discount on gas and electricity charges and 20% discount on storm drain service fees. Both residential and commercial customers can equalize their monthly bill payment into twelve equal amounts through our Bill Payment Plan. Another helpful resource is ProjectPLEDGE, which allows commercial and residential Utilities customers in good standing with their own accounts to donate funding on a one-time or recurring basis to help another resident in Palo Alto. Residents who are struggling to pay their utility bills may apply to this program for one-time assistance. Utilities Customer Support Service staff are available through the call center at (650) 329-2161, the MyCPAU online customer account service, or by email at UtilitiesCustomerService@cityofpaloalto.org to help answer questions associated with any of these payment relief and rate assistance programs. Outreach CPAU has stepped up outreach about these financial assistance programs to get the word out to anyone needing help during this difficult time. This information is being shared in community email updates, on the Utilities and cityofpaloalto.org/coronavirus websites, in social media, and utility bill inserts. vii. Innovation and Pilot Programs Program for Emerging Technologies CPAU’s Program for Emerging Technologies, or PET, (www.cityofpaloalto.org/UTLInnovation) provides the opportunity for local businesses and organizations to submit proposals for innovative and impactful products to CPAU for review as a prospective partner. The goal is to find and nurture creative products and services that will improve customer value, save natural resources, or reduce carbon emissions. From the program’s inception in June 2012 through the second quarter of FY 2020, the program has received a total of 94 applications. Table 3 below summarizes the status of all applications through the third quarter of FY 2020. So far this year, none of the applicants have reached the threshold of value, quality, and relevance to be good fits for a pilot project. We are currently in discussions with some applicants about revising their projects and are also evaluating potential regional collaborations with promising early stage companies. In order to provide more clarity for applicants and better focus the applications on CPAU’s priorities, we are also revamping the program’s guidelines highlight what makes a compelling project pitch for CPAU. We plan to release these updated program priorities and guidelines later this calendar year, at which point we will work with local universities and accelerators to solicit high-quality applications closely aligned with CPAU’s highest priorities. Quarterly Update for Third Quarter of FY 2020 August 2020 21 In January of 2020 the CPAU sponsored the GridShift Hackathon focused on decarbonizing the energy sector with Powerhouse Ventures and Silicon Valley Clean Energy. Several of the participants work for early stage energy companies and have reached out about applying to the program. Staff has also had several follow-up discussions with a few of the most relevant companies to determine whether the program is a good fit for their current needs, and if they are a good fit for CPAU’s goals for this program, and are also exploring possible regional collaborations for projects. Academic Collaborations CPAU currently has two active academic collaborations. One collaboration is with a Stanford researcher modeling hourly all-electric load shapes for single family homes and the implications for the distribution systems, transmission system and electricity generation in California. The other collaboration is with a San Jose State researcher modeling the impacts of utility scale battery systems on the emissions of the California electricity wholesale market. Completed Projects In the first quarter of FY 2020 CPAU elected to close a one-year pilot with the start-up UrbanLeap-- a platform for streamlining intake, ranking, and tracking of innovative pilot projects within local governments. There is potential to use UrbanLeap or another platform for interdepartmental collaboration throughout the City, but the scale of the Program for Emerging Technologies does not warrant using a dedicated software as a Utilities- only solution. So far in FY 2020 CPAU has also submitted three letters of support for exceptionally promising very early-stage technologies for research grants and accelerators. Table 3: Status to date of all applications to the Program for Emerging Technologies Deadline Total Received Under Review Declined/Closed Active Completed FY 2013 13 0 11 0 2 FY 2014 15 0 11 0 4 FY 2015 15 0 11 0 3 FY 2016 14 0 9 0 5 FY 2017 10 0 7 0 3 FY 2018 10 0 9 0 1 FY 2019 9 0 5 0 4 FY 2020 8 1 2 2 3 TOTAL 94 1 65 2 25 viii. Legislative and Regulatory Issues While the City operates on the Fiscal Year (July through June), the State legislature operates on the calendar year and the federal government, on the Federal Fiscal Year (October to September). In order to provide accurate and timely information, CPAU Legislative staff notes here current issues we are working on at the time of this report, regardless of each entity’s operating year. Quarterly Update for Third Quarter of FY 2020 August 2020 22 State legislation The legislature took a COVID-19-imposed recess from mid-March to early May (for the Assembly) and mid-May (for the Senate). The truncated session and the need to spend time passing both a budget and COVID-19-related bills means that many bills, including many of the utility-related bills we were tracking, will not move forward in 2020. Below are those bills that remain active as of early June: AB 2788 (Todd) Public utilities: cooperation with immigration authorities Requires immigration authorities to obtain a court-ordered subpoena or judicial warrant to gain access to a customer’s electrical and gas consumption data. SB 862 (Dodd) Planned power outage: public safety. Adds planned de-energization events within the conditions that constitute a state of emergency and adds new requirements of IOUs regarding protocols for these events. Also requires IOUs coordinate with local governments on the location and operation of new "community resource centers" during de-energization events. SB 1099 (Dodd): Emergency backup generators: critical facilities: exemption. Requires air districts to adopt or revise their rules to allow critical facilities, as defined, to be allowed to use backup generators — without it counting towards permitted annual runtime totals — during de-energization events and for testing/maintenance. Also prevents air districts from collecting permitting fees for any such generator. SB 1185 (Moorlach). Emergency backup generators: emergency variance: operation during de-energization events. Allows operators of back-up generators to apply for an emergency variance to their permit during a public safety power shut-off (PSPS) event while also encouraging the use of natural-gas-backup generation where applicable. Additionally requires reporting from utility providers to local and state air regulators. SB 1215 (Stern): Electricity: Microgrids Proposes several changes to existing law in order to promote the use of microgrids for electrical generation, including exempting a microgrid project, as specified, that serves multiple customers from the definition. This bill also requires additional provisions, including: (1) requiring the CPUC to create a database of critical facilities and infrastructure; (2) requiring the CPUC and CAISO to develop a methodology to account for the resource adequacy value of distributed storage by March 31, 2021; and (3) implies it would require the costs of distribution system improvements necessary to operate a microgrid to be borne by all customers, not only those benefiting from the project. State regulatory proceedings Below, staff notes the issues we’ve tracked or engaged in with various agencies during the last quarter, primarily through our work with CMUA and NCPA: Energy Commission Power Source Disclosure regulations and Renewables Portfolio Standard regulations Quarterly Update for Third Quarter of FY 2020 August 2020 23 Air Resource Board Low Carbon Fuel Standard regulations Public Utilities Commission Despite the lack of jurisdictional authority over POUs, both NCPA and CMUA are tracking various PUC proceedings related to PG&E proceedings, IOU de-energization, and wildfire mitigation planning. Such proceedings may impact transmission dependent POUs or may provide insight into how future POU procedures may be viewed by the CEC. State Water Resources Control Board Water loss standards Federal legislation Much of Congress’ attention has been on passing COVID-19-related bills. We continue to monitor the below utility-related bills, none of which have had any recent action. H.R. 1497 (DeFazio) Water Quality Protection and Job Creation Act of 2019 Provides wastewater/stormwater assistance to local water agencies. A press release is here. This bill has had not action since October 2019 and may be removed from future Quarterly reports due to inactivity. H.R. 5217 (McClintock) Water Optimization for the West Act Advances water storage and provides restoration flows to the San Joaquin river without harming Central Valley Project contractors. A press release is here. The bill has not moved since its November 2019 introduction, and may be removed from future Quarterly reports due to inactivity. H.R. 5302 (McNerney) Western Water Recycling and Drought Relief Act Authorizes funding for certain recycled water projects, including two in Palo Alto. A press release is here. The bill has not moved since its December 2019 introduction, and may be removed from future Quarterly reports due to inactivity. ix. Utility Financial Summary This section describes the unaudited actual financial results for FY 2020 for all Utilities funds. The Council- adopted long-term Financial Plans for the Electric, Gas, Wastewater Collection, and Water Funds have been updated for FY 2020 and FY 2021 during the budget review process. The utility overviews below for electric, gas, water and wastewater compare sales, expenses and revenue projection from the FY 2020 Financial Plans. Electric Utility Overview Sales for the Electric Utility in FY 2020 are projected to be 0.7% higher than forecasted in the FY 2020 Financial Plan. Sales for the electric utility have been declining for several years and in the FY 2020 Financial Plan this trend was projected to continue as companies move industrial processes and data centers out of Palo Alto. However sales have not declined as much as projected in FY 2020, even given the impacts of the COVID-19 pandemic. Revenues are also projected to increase by $6.4 million or 3.8% higher than forecasted. Part of this Quarterly Update for Third Quarter of FY 2020 August 2020 24 increase was also due to favorable revenue from sales of surplus energy resulting from favorable hydroelectric generation conditions in the first half of FY 2020. Updated revenue estimates also include $1.9 million higher sales for FY 2020 than prior to the COVID-19 pandemic. Expenses are projected to be $8.5 million (5%) lower than forecasted. About $5 million can be attributed to lower than expected electricity purchase costs, and $3 million related to lower administration, resource management, operations and maintenance, engineering and customer service expenses. The lower spending in operations and maintenance is related to staffing vacancies and contract funding that remains unspent due to challenges hiring contractors in a tight labor market, and this spending is expected to be higher in future years. The Electric Supply and Distribution Operations Reserves were within the reserve guideline levels at the beginning of FY 2020 and were above the guideline range at the end of Q3 FY 2020. These funds will be used to begin repayment of a short term $10 million loan from the Electric Special Projects (ESP) reserve done in FY 2018, return the Hydroelectric Stabilization Reserve to its target levels to be used for future dry-year conditions, and to provide initial funding for a Capital Reserve intended to balance capital improvement spending year to year to stabilize rates. The Electric Utility CIP Reappropriation and Commitment Reserves totaled $16.5 million at the end of Q3 FY 2020. Gas Utility Overview Sales for the Gas Utility in FY 2020 are projected to be 0.5% lower than forecasted in the FY 2020 Financial Plan. Correspondingly, revenues are expected to be 0.7% lower than forecasted. The updated forecast includes a tentative assumption that there will be some lost revenue due to the COVID-19 related shelter in place. Expenses are projected to be 5.2% below forecasted. Operations costs are tentatively projected to be lower by about $0.9 million, but CIP costs are projected to be higher by $1 million. The Gas Operations Reserve was within the reserve guideline levels at the beginning of FY 2020 and will remain stable throughout the remaining of FY 2020. The Gas Utility CIP Re-appropriation and Commitment Reserves totaled $4.4 million at the end of Q3 FY 2020. Water Utility Overview Sales for the Water Utility in FY 2020 are projected to be 2.1% lower than forecasted in the FY 2020 Financial Plan. Revenue is projected to be $1.1 million higher in FY 2020 compared to the forecast in the FY 2020 Financial Plan. This is due to a combination of lower sales revenue offset by higher other revenue. Sales revenue projections assume a reduction due to COVID-19 impacts while other revenue including interest income was higher in FY 2019 and the updated projection for FY 2020 brings up the overall revenue forecast to 2.2% higher than projected in FY 2020. On the expense side, the most notable change from the FY 2020 Financial Plan is changes to CIP expenditures. Approximately $13.7 million in projects budgeted in FY 2019 or earlier are slated to be re-appropriated to FY 2020, the largest being Main Replacement Project 27, estimated at $7.1 million, and some seismic water system Quarterly Update for Third Quarter of FY 2020 August 2020 25 upgrades, estimated at $2.9 million. The FY 2020 Financial Plan estimated the CIP expenditure for FY 2020 to be $16.9 million while the current estimated CIP expenditure for FY 2020 is $20.8 million, of which $5.1 million will be funded through rate revenue, $13.7 will be funded through reappropriations and $1.3 million through committed funds. The Water Operations Reserve was above the reserve guideline levels at the beginning of FY 2020, however, staff plans to transfer reserves from the Operations Reserve to the Rates Stabilization Reserve and CIP Reserve over the next few years where the funds will be needed to bring the Operations Reserve below the maximum guideline levels. The Water Utility CIP Reappropriation and Commitment Reserves totaled $17.8 million at the end of Q3 FY 2020. Wastewater Collection Utility Overview Wastewater revenues in FY 2020 are projected to be 1.3% higher than forecasted in the FY 2020 Financial Plan, due to increasing revenue from sales and other income from connection fees and interest. The wastewater utility has flat fees for residential services, but bills for sewer services based on winter water use (Jan-Mar), which is a reasonable approximation of indoor water use. Because this usage occurred before the majority of shelter in place orders began in March, wastewater revenues for FY 2020 are not expected to decrease significantly as a result of the COVID-19 pandemic. Expense projections remain approximately the same. During Q1 through Q3 of FY 2020, there has been an increase of $3.4 million in CIP commitments and reappropriations. This has been funded in part by revenues but is a primary reason for the decrease in the operations reserve of $2.8 million. The Wastewater Collection Operations Reserve at the end of Q3 in FY 2020 is $2.6 million, which is below the projected reserve minimum guideline ($2.9 million) but not below the risk assessment level ($2.6 million). The CIP Commitments and Reappropriations reserve balance will be trued-up at the end of the fiscal year based on actual CIP completion, outstanding contracts and revised budget reappropriations. Any unearmarked CIP funds will be released and returned to the Operations reserve at the end of the fiscal year. In addition, revenues during the remainder of the year are expected to bring the Wastewater Collection Operations Reserve up to within the reserve guideline levels at the end of FY 2020. The Wastewater Collection Utility CIP Reappropriation and Commitment Reserves increased from $5.7 million at the beginning of FY 2020 to a total of $9.1 million at the end of Q3 FY 2020. Fiber Optic Utility Overview Fiber revenue and expenses through Q3 of FY 2020 were $3.3 million and $2.0 million respectively. Capital expenses are lower than projected, primarily due to delay of the Fiber Optic System Rebuild. There is no change in the FY 2020 revenue forecast of $5.5 million. FY 2020 expenses of $3.5 million are projected to be $0.8 million less than previously forecasted of $4.3 million. The total Fiber Optic Utility Rate Stabilization and Emergency Plant/Other Reserves totaled $31.6 million at the end of Q3 FY 2020. Quarterly Update for Third Quarter of FY 2020 August 2020 26 Table 4: Utilities Financials, Q3 FY 2020 Projections Sales Volumes Revenue $,000 Expense $,000 Net Reserve Change $,000 Electric Utility FY 20 Financial Plan 858,347 MWh 167,778 (168,637) (859) FY 20 Projections 864,778 MWh 174,165 (160,184) 13,981 Change from Financial Plan 6,431 MWh 0.7% 6,387 3.8% 8,453 (5.0%) 14,840 Gas Utility FY 20 Financial Plan 27,725,000 therms 39,381 (39,206) 175 FY 20 Projections 27,600,000 therms 39,098 (39,306) (208) Change from Financial Plan (125,000) therms (283) (100) (383) (0.5%) (0.7%) 0.3% Water Utility FY 20 Financial Plan 4,607,000 CCF 48,857 (57,732) (8,875) FY 20 Projections 4,511,000 CCF 49,948 (44,274) 5,674 Change from Financial Plan (96,000) CCF 1,091 13,458 14,549 (2.1%) 2.2% (23.3%) Wastewater Collection Utility FY 20 Financial Plan 21,911 (23,112) (1,201) FY 20 Projections 22,198 (23,081) (883) Change from Financial Plan 287 31 318 1.3% (0.1%) Fiber Optic Utility FY 20 Financial Plan 5,544 (4,326) 1,218 FY 20 Projections 5,544 (3,526) 2,018 Table 5: Operations Reserves, as of Q3 FY 2020 ($000) Electric Supply Electric Distribution Gas Water Wastewater Collection Fiber Optic * Beginning 28,709 16,536 9,966 20,652 5,390 30,358 Change 5,152 2,723 3,608 4,729 (2,769) 283 Q3 FY 2020 33,861 19,259 13,574 25,381 2,621 30,641 Reserve Minimum 17,988 8,594 5,410 7,045 2,904 444 Reserve Maximum 35,977 13,609 10,821 14,119 7,260 887 * For Fiber Optics, the Reserve is the Rate Stabilization (not the Operations) Reserve Quarterly Update for Third Quarter of FY 2020 August 2020 27 Table 6: Q3 FY 2020 Reserve Report from the City’s Financial System (‘000) Quarterly Update for Third Quarter of FY 2020 August 2020 28 Residential Bill Comparisons Table 7: Residential Electric Bill Comparison ($/month) As of February 2020 Season Usage (KWh/mo) Palo Alto PG&E Santa Clara Roseville Summer (May-Oct) 300 $41.27 $70.74 $36.96 $70.74 365 (Median) 52.18 89.76 45.27 88.70 650 107.37 174.33 81.66 173.27 1200 213.89 337.54 151.91 336.48 Table 8: Residential Natural Gas Bill Comparison ($/month) As of February 2020 Season Usage (therms per month) Palo Alto Menlo Park, Redwood City, Mountain View, Los Altos, and Santa Clara (PG&E Zone X) Roseville (PG&E Zone S) Summer (Jun-Oct) 15 $26.89 $22.22 $22.22 18(Median) 29.60 26.67 26.67 30 40.43 44.45 44.45 45 53.96 66.67 66.67 Table 9: Residential Water Bill Comparison ($/month) As of February 2020 Usage CCF/month Palo Alto Menlo Park Redwood City Mountain View Santa Clara Hayward 4 $46.89 $51.56 $54.04 $37.92 $43.47 $37.20 (Winter median) 7 70.28 74.22 72.43 58.74 62.13 54.60 (Annual median) 9 90.42 89.32 85.91 72.62 74.57 67.54 (Summer median) 14 140.77 128.97 122.66 107.32 105.67 103.24 25 251.54 217.24 217.76 225.26 174.09 181.78 Based on the FY 2013 BAWSCA survey, the fraction of SFPUC as the source of potable water supply was 100% for Palo Alto, 95% for Menlo Park, 100% for Redwood City, 87% for Mountain View, 10% for Santa Clara and 100% for Hayward. Table 10: Residential Wastewater Collection (Sewer) Bill Comparison ($/month) As of February 2020 Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward $41.37 $98.08 $81.76 $42.05 $38.44 $44.07 $34.30 Quarterly Update for Third Quarter of FY 2020 August 2020 29 Table 11: Median Residential Overall Bill Comparison ($/month) As of February 2020 Utility and Usage Palo Alto Menlo Park Redwood City Mountain View Santa Clara Hayward Electricity (365 kWh/mo) $ 52.18 $ 89.76 $ 89.76 $ 89.76 $45.27 $ 89.76 Gas (18 th/mo) 29.60 26.67 26.67 26.67 26.67 26.67 Water (9 CCF/mo) 90.42 89.32 85.91 72.62 74.57 67.54 Wastewater 41.37 98.08 81.76 42.05 44.07 34.30 TOTAL 213.57 303.83 284.10 231.10 190.58 218.27