HomeMy WebLinkAbout2022-08-03 Utilities Advisory Commission Agenda PacketMATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
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UTILITIES ADVISORY COMMISSION – SPECIAL MEETING
AUGUST 3, 2022 – 6:00 PM
CHAMBERS/ZOOM Webinar
NOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
Supporting materials are available online at https://www.cityofpaloalto.org/gov/boards/uac/default.asp on Thursday, 5 days
preceding the meeting.
Join Zoom Webinar Here Meeting ID: 966 9129 7246 Phone: 1 (669) 900-6833
Pursuant to AB 361 Utilities Advisory Commission meetings will be held as “hybrid” meetings with the
option to attend by teleconference or in person. To maximize public safety while still maintaining
transparency and public access, members of the public can choose to participate from home or attend in
person. Members of the public who wish to participate by computer or phone can find the instructions
at the end of this agenda. Masks are strongly encouraged if attending in person. The meeting will be
broadcast on Cable TV Channel 26, live on Midpen Media Center at https://midpenmedia.org, and live
on YouTube at https://www.youtube.com/c/cityofpaloalto. 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 6:00 pm – 6:05 pm
II. AGENDA REVIEW AND REVISIONS 6:05 pm – 6:10 pm
III. ORAL COMMUNICATIONS 6:10 pm – 6:25 pm
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.
IV. APPROVAL OF THE MINUTES 6:25 pm – 6:30 pm
Approval of the Minutes of the Utilities Advisory Commission Meeting Held on June 08, 2022
V. UNFINISHED BUSINESS
VI. UTILITIES DIRECTOR REPORT 6:30 pm – 6:45 pm
VII. NEW BUSINESS
1. Adoption of a Resolution Authorizing Use of Teleconferencing for Utilities Advisory
Commission Meetings During Covid-19 State of Emergency (Action) 6:45 pm – 6:50 pm
2. Discussion and Presentation on Sea Level Rise (Discussion) 6:50 pm – 7:35 pm
Chairman: Lauren Segal Vice Chair: A.C. Johnston Commissioners: John Bowie, Lisa Forssell, Phil Metz, Greg Scharff, and Loren Smith Council Liaison: Alison Cormack
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
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.
3. Discussion of Preliminary Internet Survey Results and Financial Business Models for Palo
Alto Fiber (Discussion) 7:35 pm – 9:05 pm
4. Staff Recommends the Utilities Advisory Commission Consider and Adopt an Attendance
Policy (Action) 9:05 pm – 9:30 pm
VIII. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
INFORMATIONAL REPORTS
Utilities' Quarterly Report Update for Q3 of FY2022
IX. FUTURE TOPICS FOR UPCOMING MEETING
SUPPLEMENTAL INFORMATION - The materials below are provided for informational purposes, not for
action or discussion during UAC Meetings (Govt. Code Section 54954.2(a)(3)).
12-Month Rolling Calendar Public Letter(s) to the UAC
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
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.
• 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.
• 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.
• 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.
• When called, please limit your remarks to the time limit allotted.
• 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
City of Palo Alto (ID # 14608)
Utilities Advisory Commission Staff Report
Meeting Date: 8/3/2022 Report Type: IV. APPROVAL OF THE MINUTES
City of Palo Alto Page 1
Title: Approval of the Minutes of the Utilities Advisory Commission Meeting
Held on June 08, 2022
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Staff recommends that the UAC consider the following motion:
Commissioner ______ moved to approve the draft minutes of the June 8, 2022 meeting
as submitted/Amended.
Commissioner ______ seconded the motion.
Attachments:
• Attachment A: Draft Minutes
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Utilities Advisory Commission Minutes Approved on: Page 1 of 8
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF June 8, 2022 SPECIAL MEETING
CALL TO ORDER
Chair Segal called the meeting of the Utilities Advisory Commission (UAC) to order at 6:02 p.m.
Present: Chair Segal, Vice Chair Johnston, Commissioners Bowie, Forssell, Metz and Scharff
Absent: Commissioner Smith
AGENDA REVIEW AND REVISIONS
None.
ORAL COMMUNICATIONS
None.
APPROVAL OF THE MINUTES
Chair Segal invited comments on the May 4, 2022 UAC draft meeting minutes.
Commissioner Forssell noted pg. 3 pckt pg. 7 typo in Item 1 Commissioner Scharff elected Vice Chair Segal
as Chair, it should read nominated.
Vice Chair Johnston mentioned pg. 2 pckt pg. 6 under Director’s Report, 4th paragraph, 6th line, it reads
produce around 245 this FY, there is no units of measure, Dave Yuan said the unit of measure is gigawatt. He
continued with Pg. 7 pckt pg. 11 in the 4th paragraph, beginning with “in reply to Commission Forssell” 4th
line down it reads roughly $10 dollars it should read $10 million. Commissioner Metz commented on pg. 2
pckt pg. 6 under Director’s Report, 4th paragraph, 6th line, the unit of measure was gigawatt hours not
gigawatts per hour.
Commissioner Vice Chair Johnston moved to approve the draft minutes of the May 4, 2022 meeting as
amended.
Commissioner Scharff seconded the motion.
The motion carried 6-0 with Chair Segal, Vice Chair Johnston and Commissioners Bowie, Forssell, Metz, and
Scharff voting yes.
Commissioner Smith absent
UNFINISHED BUSINESS
None.
DRAFT
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Utilities Advisory Commission Minutes Approved on: Page 2 of 8
UTILITIES DIRECTOR REPORT
Dave Yuan, Strategic Business Manager, delivered the Director's Report.
Water Supply Update: Snowpack and precipitation for the Hetch Hetchy system are both well below normal,
however storage is in relatively good shape. As of May 8, 2022, total Regional Water System storage was 74%
full (normal system storage for this time of year is 83%). On May 24, 2022 SFPUC increased its call for Regional
Water Systemwide water use reductions from 10% to 11%, which will mean Palo Alto’s voluntary cutback will
increase to 9% or 10%. For January through May 2022, Palo Alto’s water usage exceeded its budget by about
5% cumulatively.
On May 24, 2022 the State Board adopted emergency regulations that require urban water suppliers to
implement Stage 2 drought actions and ban irrigation of ornamental turf with potable water in commercial,
industrial, and institutional sectors, except to ensure the health of trees, or to address an immediate health
and safety need. Staff plan to recommend that City Council implement Stage 2 of the Water Shortage
Contingency Plan which will require restaurants to serve water to customers only upon request and require
hotels and motels to provide guests with the option of not having linens laundered daily. Additionally, staff
plan to recommend Council implement water use restrictions limiting potable irrigation of ornamental
landscapes and lawn to two days per week except to ensure the health of trees and other perennial non-turf
plantings.
Hydroelectric Update: As we’ve discussed previously, the 2021-2022 water year has turned out to be the
third straight very dry year for California. As of May 31, precipitation totals in Northern and Central California
are about 25-35% below average for this time of year (after being above average through January). Water
levels at the state’s largest reservoirs remain very low too – across Northern and Central California, most
reservoirs are about 30-50% below their average levels for this point in time. As a result, Palo Alto’s
hydroelectric projections for FY 2022 and FY 2023 are now very low—they are projected to produce around
245 GWh this fiscal year, which is about 51% of the long-term average level of hydro output, and 305 GWh
in FY 2023, which is 65% of the long-term average level.
Summer Electric Grid Challenges: This summer, staff expect the electric grid to be strained. In preparation
for this situation, we are developing messaging to inform customers of actions they can take to help the
system and themselves including pre-cooling, pre-charge EVs and batteries, and using appliances between
10am-4pm on hot days, then avoid using AC, charging cars & batteries, and major appliances from 4-
9pm each day.
New Business Programs: Businesses can now take advantage of newly launched programs from CPAU
offering free consultations, site assessments, and rebates for facility efficiency upgrades, including a flagship
“concierge” service called the Business Energy Advisor, and equipment rebates through the Business
Customer Rebates program. Find out more at cityofpaloalto.org/commercialprograms
Upcoming events: Details and registration at cityofpaloalto.org/workshops
June 15: Electrify Your Ride, 7-8pm. review available electric vehicles and e-bikes as well as charging at home
and on the road, incentives, and total cost of ownership. You’ll have the chance to ask the questions you’ve
always wondered about EVs and e-bikes.
June 18: MSC Open House, 10am-2pm. Join City staff as we showcase some of the “behind the scenes” work
that we do for the Palo Alto community. Watch the Utilities Line Crew Pole Climbing demonstrations every
hour at 10:30 a.m., 11:30 a.m., 12:30 p.m., and 1:30 p.m. Bring your friends and family for a fun and
educational day featuring displays, food, music, and other activities!
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Utilities Advisory Commission Minutes Approved on: Page 3 of 8
NEW BUSINESS
ITEM 1: ACTION: Adoption of a Resolution Authorizing Use of Teleconferencing for Utilities Advisory
Commission Meeting During Covid-19 State of Emergency.
ACTION: Vice Chair Johnston moved Staff recommendation that the Utilities Advisory Commission (UAC)
Adopt a Resolution (Attachment A) authorizing the use of teleconferencing under Government Code Section
54953(e) for meetings of the Utilities Advisory Commission (UAC) and its committees due to the Covid-19
declared state of emergency.
Seconded by Commissioner Metz
Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Bowie, Forssell, Metz, and
Scharff voting yes.
Commissioner Smith absent
ITEM 2: ACTION: Staff Recommendation That the Utilities Advisory Commission Recommend the City Council
Adopt the 2022 Annual Water Shortage Assessment Report
Lisa Bilir, Resource Planner, reported the City must annually conduct a Water Supply and Demand Assessment
and submit an annual Water Shortage Assessment Report to the Department of Water Resources. If the
report is not submitted, the City may be disqualified from State grants and loans. The report projected the
upcoming water supply and demand for Fiscal Year (FY) 2023. The demand projection shows unconstrained
water demand, which is water demand without water use restrictions. The supply projection shows the water
budgets provided to Palo Alto by its water supplier, San Francisco Public Utilities Commission (SFPUC). The
report compares demand and supply and outlines current and proposed demand reduction actions. The
exercise identified there was a 7 percent shortage gap between the unconstrained demand and the water
supply and there was no water shortage gap for recycled water. To cover the gap, Staff proposed to move to
Stage II water use restrictions per the State Board Emergency Regulations and Governor’s EO N-10-21 as well
as adopt a 2-day per week water restrictions of ornamental landscape and lawn.
In answer to Vice Chair Johnston’s query regarding determining the baseline for anticipated unconstrained
demand, Bilir remarked Water Shortage Assessment Report followed the procedures outlined in the 2021
Urban Water Management Plan, which was to use a demand model from the Bay Area Water Supply and
Conservation Agency (BAWSCA) to forecast the numbers for FY 2023. The current recycled water supply was
the same as the recycled water demand listed in the report. Vice Chair Johnston commented it would be
useful to understand the City’s actual water demand compared to the assumptions in the report. In answer
to Vice Chair’s Johnston’s query regarding Staff confidence to cover the gap, Bilir noted the City had to meet
the water budgets provided by the SFPUC. Staff was hopeful the new measures would bring the City into
compliance with the requirements. Water demand in the City had been increased by Covid-19 and associated
impacts of staying home as well as January – March 2022 being the driest in recorded history. In answer to
Vice Chair Johnson’s inquiry if there were penalties for not successfully meeting the report, Bilir explained if
SFPUC did not see enough system-wide reduction then they would implement mandatory reductions in the
Fall. Vice Chair Johnston stated many of the items listed in table five were already implemented and
wondered if the measures would have an incremental impact. Bilir highlighted Palo Alto currently did not
have water restrictions for watering days. Vice Chair Johnston recommended Staff explore ways to measures
the success rate for the new water cutbacks.
In response to Commissioner Forssell’s query regarding watering commercial non-functional turf and how
Staff developed the figures in the report, Bilir remarked Staff did not have estimates for water savings from
the State’s commercial non-functional turf requirements. The Urban Water Management Plan gave a best
estimate on how much each measure would accomplish towards the shortage gap. Commissioner Forssell
believed the estimate for drinking water in restaurants was too high. Bilir stated Staff could update that
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Utilities Advisory Commission Minutes Approved on: Page 4 of 8
number. In response to her question as to why the recycled water supply decreased in the winter months,
Bilir explained that the assumption in the table was that supply was set to equal demand because there was
enough supply to meet the demand.
In reply to Commissioner Scharff’s inquiry regarding less water supply in winter months and why there were
more water supply in the months of June and July, Bilir explained the monthly volumes were calculated based
on the City’s past patterns, SFPUC provided an amount that was assigned to the City for each month based
on the total annual reduction from FY 2019-2020 levels of 8 percent. Staff believed it made sense to do the
report on an annual basis because the City was not seeing a water shortage in specific months throughout
the year. Commissioner Scharff did not want to see restrictions placed on water usage if it was not needed.
He expressed concern that folks would lose thousands of dollars of landscaping and trees if they only are
allowed to water two times a week. In answer to his query regarding next steps, Bilir noted Staff would bring
the plan and proposals to Council on June 20, 2022 for review and adoption and would describe the feedback
from UAC Commissioners in that report.
In reply to Chair Segal’s request regarding the break down of potable water for residential and commercial,
Bilir answered residential was 64 percent. Chair Segal understood the report was required by the State but
believed it would not have a great impact on the City in terms of mitigating drought. In respond to her inquiry
regarding challenges for the next report and community outreach, Bilir believed the report was flexible and
could be changed easily. She noted that community outreach was included in the water use restrictions plan
being presented to the City Council on June 20, 2022. Dave Yuan, Strategic Business Manager, added the City
was hiring an hourly water coordinator to help educate and advise folks who were not following the
restrictions.
Council Member Cormack emphasized the water supply was based on the City’s demand from the past and
there was a lower demand in the winter months because folks were not irrigating.
ACTION: Vice Chair Johnston moved Staff recommendation that the Utilities Advisory Commission (UAC)
recommends Council adopt the 2022 Annual Water Shortage Assessment Report.
Second by Commissioner Metz
Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Bowie, Forssell, Metz, and
Scharff voting yes.
Commissioner Smith absent
ITEM 3: DISCUSSION: Discussion and Update to the 2022 Wildfire Safety Mitigation Plan
Heather Dauler, Acting Compliance Manager, stated in the year 2020 the State began requiring a Wildfire
Safety Mitigation Plan; CPAU submitted our first plan to the Wildfire Safety Advisory Board that year. The
plan is required to contain 14 specific elements and pertains to potentially catastrophic line-ignited wildfires.
As such, the City’s plan mainly addresses wildfire in the Foothills. State law requires updates to the plans
annually, but does not define what “update” means, nor does it speak about the scope of the plan. The
Wildfire Safety Advisory Board reviewed the 2021 plan updates for all California electric utilities and
expressed they wanted to see more than a simple update of projects. Staff included a status update for the
projects identified in the plan as well as provided more details and context about each project. The additions
to the plan are intended to provide more details as requested but also not to strain too far from the legal
scope and direction of the law. State law also requires a comprehensive revision every 3-years. Staff will work
with other departments as well as an independent evaluator to review the future comprehensive revised
plan and present the final product to the UAC prior to July of 2023.
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Utilities Advisory Commission Minutes Approved on: Page 5 of 8
Vice Chair Johnston acknowledged that the plan contained many projects that the City will be doing and
requested an update on the progress of those projects in the future.
In reply to Chair Segal’s question regarding vacant positions, Dauler confirmed that even if the position was
vacant, there were Staff with the expertise available to work on the plan’s projects.
ACTION: None.
ITEM 4: ACTION: Staff Request for UAC Feedback on the Development of the Electric Utility’s Integrated
Resource Plan
Jim Stack, Senior Resource Planner, remarked that the development of the plan would take a year and a half
and the City drafted a new plan every 5-years. An Integrated Resource Plan (IRP) is a long-term roadmap for
meeting a utility’s forecasted demand through a combination of supply-side and demand-side resources. It
provides an analysis framework for identifying the most cost-effective and least-risk portfolio of resources.
Key factors that are considered in IRPs are loading order, regulatory compliance, climate goals, customer
preferences, cost and risk management. IRPs were required under Senate Bill (SB) 350 (2015) to ensure
system and local reliability, minimize impacts to ratepayer’s bills, and several others.
Lena Perkins, Senior Resource Planner, acknowledged that the Western Base Resource (WBR) contract was
recently approved for renewal for the years 2025 through 2054, but the City has until June 30, 2024 to reduce
its share or terminate the contract. The WBR contract supplies roughly 40 percent of the City’s electricity and
the annual cost is approximately $12 million. The California-Oregon Transmission (COTP) project is a 340-
mile-long project between Southern Oregon and Central California. The City’s shared of the COTP was 51
megawatts (MW) but due to the low utilization the City laid off its share from the year 2008 to 2023. Moving
forward the City has to decide whether to renegotiate the layoff, extend the layoff, or use the project for the
City’s needs.
In answer to Commissioner Forssell’s request what the term ‘layoff’ meant, Perkins explained that a layoff
was reversible whereas a total sale was not.
Stack shared the objectives of the IRP project was to fully comply with SB 350, make decisions on the WBR
contract as well as the COTP, and conduct community engagement. The IRP scope is quite broad but it is not
intended to be an update of the Utility Strategic Plan and is not intended to be used to design new customer
programs. Nor would it design new Sustainability Climate Action Plan (S/CAP) initiatives or provide serious
distribution system planning. The next steps include issuing a renewable energy/storage Request for
Proposals (RFP), contracting for supply portfolio modeling software, using that software to perform a
portfolio optimization analysis, working with a consultant to analyze post-layoff uses for COTP, and soliciting
public input on the direction of the supply portfolio. Staff will be returning to the UAC in future meetings to
discuss Staff’s work on the IRP.
Vice Chair Johnston looked forward to working with Staff on a new IRP. He believed it was important to
understand the City’s load and what the S/CAP programs will do to the projected load. In reply to Vice Chair
Johnston’s request for a summary of the RFP, Stack responded the RFP was seeking available options that
could potentially replace the WBR if the City chose not to renew the contract. Staff planned to share the
proposals and recommendations around the end of 2022 or early 2023 with the UAC. Vice Chair Johnston
commented that knowing the results of the RFP would help inform the November 2022 discussion regarding
the WBR and COTP contracts. He predicted it was more cost-effective for the City to license the optimization
software and have staff run the models in-house instead of paying a consultant to do that for the City. Stack
noted the intention was to lease the software and then run the models in-house. Vice Chair Johnston
acknowledged it had always been hard to receive public input and encouraged staff to think of more creative
ways to engage the public.
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Utilities Advisory Commission Minutes Approved on: Page 6 of 8
Gary Lindgren displayed a figure of the City’s electricity demand. On one day in 2021, natural gas contributed
to the demand by 56.8 percent. California needed more generating capacity to ensure that rolling blackouts
do not occur. He encouraged the City to continue to use low-cost renewable electricity sources, focus on new
energy sources with storage for energy uses at night hours, and discontinue the carbon offset program. Now
was the time to not increase electricity demand but increase storage.
In response to Commissioner Metz’s questions, Perkins explained the City may not wish to continue the WBR
contract because of how the resource and the cost were changing. Council’s action for S/CAP was going to
have priority over the IRP and the load forecast would be used as an input in the S/CAP process. The City did
not want to base its 30-year procurement commitments on programs that did not have City-wide support.
COTP could transmit wind or hydro energy from the Northwest to California and such resources could be an
option for the City. Stack remarked the RFP was seeking physical energy that could be delivered to California;
unbundled RECs and offsets are not eligible to respond to the RFP.
Commissioner Forssell wanted to see a closer look of the effect of drought on the WBR contract. She believed
any future planning should assume that drought is the new normal. In reply to her query if the $12 million
was the new cost going forward for the WBP, Perkins answered that was a historical figure. In answer to
Commissioner Forssell’s inquiry regarding low utilization of the COTP and how to use it after the layoff ends,
Perkins noted there was low utilization generally. The City could use it as a designated resource or enter into
an options construct. In reply to Commissioner Forssell’s request regarding which items would be action
items for the UAC, Stack believed the portfolio optimization analysis results and approval of the final IRP
would be actionable items. In answer to Commissioner Forssell’s query if the WBR contract decision would
be included in the final IRP, Stack answered yes but the timing was flexible on that decision.
Commissioner Bowie was concerned about having the WBR contract and COTP being included in the IRP
before the load forecast scenario was complete. The outcomes of the load forecast would determine the
approach and value to the City of Palo Alto of those resources. Stack remarked the discussions about the
WBR contract and COTP were included to provide a deeper background about those resources, not to make
a final decision on them. In response to his question regarding if the IRP would consider implementation of
the S/CAP, Perkins remarked the IRP was based on committed actions and what was reflected in the load
forecast. In answer to Commissioner Bowie’s query regarding the hydro rate adjuster, Perkins answered that
part of the discussion will include evaluating the value of the resources to the market and to the City’s
portfolio. Stack acknowledged the City’s portfolio has a heavy concentration of hydro energy and it was
crucial to have a hydro rate adjuster as a result. If the City decided to reduce or discontinue the WBR contract
then it would be less crucial to have the hydro rate adjuster in place.
Commissioner Forssell noted she was interested in hearing more about evaluating the merits of rebalancing
the Electric Supply Portfolio to lower its seasonal and daily market price exposure.
In answer to Chair Segal’s inquiry regarding the WBR contract and the City’s priorities in the contract, Perkins
confirmed that hydro generation was not the primary purpose of the resource overall; its primary purposes
are to provide irrigation, wildlife habitat, and recreation. Stack confirmed large hydro was still not considered
a renewable energy resource in the State of California. Chair Segal noted that though the contracts with WBR
and COTP were long-term contracts. The City had the option every 5-years to renew or discontinue the WBR
contract and could initiate a layoff anytime with the COTP.
Council Member Cormack recommended Staff hold a study session with Council and the UAC given the
complexity of the IRP as well as provide information to the public at the October 2022 S/CAP community
workshop.
Chair Segal mentioned the upcoming electric vehicle community event and suggestion Staff provide
information about the future of energy at the event.
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ACTION: None.
ITEM 5: DISCUSSION: Discussion of Advanced Metering Infrastructure Opt-Out and Electric Meter Remote
Disconnect and Reconnect Policies
Dave Yuan, Strategic Business Manager, reported Staff was seeking feedback on both policies and would be
returning to the UAC in August 2022 for approval of the policies. The Customer Opt-Out Policy allowed
customers to opt-out of the Advanced Metering Infrastructure (AMI) program. The Utilities Department
encouraged folks to participate in the AMI program and provided education on the benefits of the AMI
program. If folks do not want to be in the program, they could contact customer service and put their name
on the list. The department required folks who opt-out to participate in the customer reads own meter
program. The program required the customer to sign a form acknowledging the fees, terms and conditions
of the program. Customers must provide access to their meter once a year to allow for inspections.
Customers must opt-out at the account level and the opt-out must be completed by the account holder.
Customers who could not participate in the opt-out program if they had a history of equipment tampering,
accounts that were not current, obstructed meters and meters located on sites that were deemed
inaccessible or hazardous. Customers could opt-in to the AMI program at any time free of charge. The set up
fees for the Opt-Out program included a one-time fee of $100 and then $25 monthly. The program also had
a low-income program with a setup fee of $50 and a monthly fee of $10.
In answer to Commissioner Forssell’s question if commercial customers could opt-out and the reason why
folks opt-out, Yuan answered the program only applied to residential customers and some commercial
customers were already on a smart meter system. Customers who have meters in their backyard often chose
to participate in the customers reads own meter program.
Vice Chair Johnston supported the concept of having a lower set of fees for low-income folks. He understood
that the fees associated with the Opt-Out Program were cost recovery and Yuan confirmed that is correct.
Vice Chair Johnston believed it was very important to base the fees on cost. Pacific Gas and Electric (PG&E)
had a proposal that had significantly less fees than Palo Alto’s and it was important to be able to justify the
fees.
In answer to Commissioner Metz’s query regarding time of use implementation, Yuan remarked opt-out
customers would not be eligible to participate in the time of use program because they would not have the
infrastructure.
Chair Segal echoed Vice Chair Johnston’s comment regarding justification of the costs and fees.
Commissioner Bowie commented that if time of use rates are implemented, the City will have to evaluate
how to make sure the opt-out program does not become an incentive to avoid time of use rates. Yuan
confirmed that will be explore further when Staff begins formulating time of use rates.
Yuan continued the presentation and moved to the Electric Meter Remote Disconnect and Reconnect Policy.
The policy will allow Staff to remotely turn off a meter without being physically present. The pilot program
will include 500 meters placed at strategic locations within the city. The City will reserve the right to
disconnect an electric meter if the account has been closed for move out, an outstanding bill with no agreed
upon resolution or the meter is in a hazardous condition. Once the concerns about the account have been
resolved, the City will reconnect the meter within one full business day. The customer has full responsibility
to ensure that all equipment and appliances are reconnected and the service is restored.
In reply to Commissioner Forssell’s inquiry regarding remote disconnects and City-wide deployment of AMI,
Yuan explained only 500 customers will have the remote disconnect feature. Staff wanted to test out the
technology before deploying it city-wide. The program was only for the electricity utility and not gas. In reply
to Commissioner Forssell’s question regarding potential hazards customers are responsible for, Yuan
answered leaving any appliances on while they are not in use.
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Vice Chair Johnston understood the City does not have many accounts that have to be disconnected due to
non-payments. If an account does become delinquent, he assumed the City provided plenty of notices and
warning before the utility is turned off. Yuan confirmed that is correct and that policy of noticing would not
change with the new Disconnect Policy.
In answer to Commissioner Bowie’s query regarding the cost effectiveness of remote disconnect, Yuan
explained it will be more cost effective than dispatching a service team to the premise. The disconnect
technology will only be placed on meters where there are many move outs and ins.
Chair Segal highlighted that one of the benefits was reconnecting customers faster. If there was a concern
about cyber security, she encouraged the City to test the equipment first instead of waiting for an incident
to happen.
Commissioner Forssell shared she supported the proposed policies and was happy to see a program for low-
income customers.
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
None.
FUTURE TOPICS FOR UPCOMING MEETINGS: June 01, 2022
Vice Chair Johnston requested an update in August or September of 2022 on the modernization of the
electrical grid project.
Commissioner Metz wanted to see S/CAP, the fiber-to-the-home (FTTH) strategy and DER agenized for a
future meeting.
Chair Segal requested an informational item about vacant and filled Staff positions.
In reply to Commissioner Forssell’s inquiry regarding quarterly reports and the One Water Plan, Dave Yuan,
Strategic Business Manager explain one was a financial report and one was a program report. Karla Dailey,
Acting Assistant Director of Utilities confirmed the UAC will be reviewing the One Water Plan soon.
NEXT SCHEDULED MEETING: August 3, 2022
Commissioner Forssell moved to adjourn. Commissioner Metz seconded the motion. The motion carried 5-0
with Chair Segal, Vice Chair Johnston, and Commissioners Bowie, Forssell, and Metz voting yes.
Commissioners Scharff and Smith absent
Meeting adjourned at 8:35 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
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City of Palo Alto (ID # 14588)
Utilities Advisory Commission Staff Report
Meeting Date: 8/3/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Adoption of a Resolution Authorizing Use of Teleconferencing for
Utilities Advisory Commission Meetings During Covid -19 State of Emergency
From: Director of Utilities
Lead Department: Utilities
Recommendation
Adopt a Resolution (Attachment A) authorizing the use of teleconferencing under Government
Code Section 54953(e) for meetings of the Utilities Advisory Commission (UAC) and its
committees due to the Covid-19 declared state of emergency.
Background
In February and March 2020, the state and the County declared a state of emergency due to
the Covid-19 pandemic. Both emergency declarations remain in effect.
On September 16, 2021, the Governor signed AB 361, a bill that amends the Brown Act,
effective October 1, 2021, to allow local policy bodies to continue to meet by
teleconferencing during a state of emergency without complying with restrictions in State
law that would otherwise apply, provided that the policy bodies make certain findings at
least once every 30 days.
AB 361, codified at California Government Code Section 54953(e), empowers local policy bodies
to convene by teleconferencing technology during a proclaimed state of emergency under the
State Emergency Services Act in any of the following circumstances:
(A) The legislative body holds a meeting during a proclaimed state of emergency, and
state or local officials have imposed or recommended measures to promote social
distancing.
(B) The legislative body holds a meeting during a proclaimed state of emergency for the
purpose of determining, by majority vote, whether as a result of the emergency,
meeting in person would present imminent risks to the health or safety of
attendees.
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(C) The legislative body holds a meeting during a proclaimed state of emergency and has
determined, by majority vote, pursuant to subparagraph (B) (B), that, as a result of
the emergency, meeting in person would present imminent risks to the health or
safety of attendees. (Gov. Code § 54953(e)(1).)
In addition, Section 54953(e)(3) requires that policy bodies using teleconferencing reconsider
the state of emergency within 30 days of the first teleconferenced meeting after October 1,
2021, and at least every 30 days thereafter, and find that one of the following circumstances
exists:
1. The state of emergency continues to directly impact the ability of the
members to meet safely in person.
2. State or local officials continue to impose or recommend measures to
promote social distancing.
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Discussion
At this time, the circumstances in Section 54953(e)( 1)(A) exist. The Santa Clara County Health
Officer continues to recommend measures to promote outdoor activ ity, physical distancing and
other social distancing measures, such as masking, in certain contexts. (See August 2, 2021
Order.) In addition, the California Department of Industrial Relations Division of Occupational
Safety and Health (Cal/OSHA) has promulgated Section 3205 of Title 8 of the California Code of
Regulations, which requires most employers in California, including in the City, t o train and
instruct employees about measures that can decrease the spread of COVID -19, including
physical distancing and other social distancing measures.
Accordingly, Section 54953(e)(1)(A) authorizes the City to continue using teleconferencing for
public meetings of its policy bodies, provided that any and all members of the public who wish
to address the body or its committees have an opportunity to do so, and that the statutory and
constitutional rights of parties and the members of the public attend ing the meeting via
teleconferencing are protected.
To comply with public health directives and promote public safety, Palo Alto policy bodies
have been meeting via teleconference since March 2020. On September 27, 2021, the City
Council considered the format for future Council, committee, and Board and Commission
meetings. Council determined that beginning November 1, 2021, Council meetings would be
conducted using a hybrid format that allows Council Members and the public to decide
whether to attend in person, following masking and distancing protocols, or participate via
teleconference. Council directed that Council standing and ad-hoc committees and Boards
and Commissions would continue meeting via teleconference through March 2022.
Adoption of the Resolution at Attachment A will make the findings required by Section
54953(e)(3) to allow the continued use of teleconferencing for meetings of the Utilities
Advisory Commission (UAC) and its committees.
Attachments:
• Attachment A: Resolution
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NOT YET APPROVED
Resolution No. ____
Resolution Making Findings to Allow Teleconferenced Meetings Under California Government
Code Section 54953(e)
R E C I T A L S
A. California Government Code Section 54953(e) empowers local policy bodies to convene by
teleconferencing technology during a proclaimed state of emergency under the State Emergency
Services Act so long as certain conditions are met; and
B. In March 2020, the Governor of the State of California proclaimed a state of emergency
in California in connection with the Coronavirus Disease 2019 (“COVID-19”) pandemic, and that state
of emergency remains in effect; and
C. In February 2020, the Santa Clara County Director of Emergency Services and the
Santa Clara County Health Officer declared a local emergency, which declarations were
subsequently ratified and extended by the Santa Clara County Board of Supervisors, and those
declarations also remain in effect; and
D. On September 16, 2021, the Governor signed AB 361, a bill that amends the Brown Act
to allow local policy bodies to continue to meet by teleconferencing during a state of emergency
without complying with restrictions in State law that would otherwise apply, provided that the
policy bodies make certain findings at least once every 30 days; and
E. While federal, State, and local health officials emphasize the critical importance of
vaccination and consistent mask-wearing to prevent the spread of COVID-19, the Santa Clara County
Health Officer has issued at least one order, on August 2, 2021 (available online at here), that continues
to recommend measures to promote outdoor activity, physical distancing and other social distancing
measures, such as masking, in certain contexts; and
F. The California Department of Industrial Relations Division of Occupational Safety and
Health (“Cal/OSHA”) has promulgated Section 3205 of Title 8 of the California Code of Regulations,
which requires most employers in California, including in the City, to train and instruct employees
about measures that can decrease the spread of COVID-19, including physical distancing and other
social distancing measures; and
G. The Utilities Advisory Commission has met remotely during the COVID-19 pandemic and
can continue to do so in a manner that allows public participation and transparency while minimizing
health risks to members, staff, and the public that would be present with in-person meetings while
this emergency continues; now, therefore,
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NOT YET APPROVED
The Utilities Advisory Commission RESOLVES as follows:
1. As described above, the State of California remains in a state of emergency due to the
COVID-19 pandemic. At this meeting, the Utilities Advisory Commission has considered the
circumstances of the state of emergency.
2. As described above, State and County officials continue to recommend measures
to promote physical distancing and other social distancing measures, in some
settings.
AND BE IT FURTHER RESOLVED, That for at least the next 30 days, meetings of the Utilities Advisory
Commission and its committees will occur using teleconferencing technology. Such meetings of the
Utilities Advisory Commission and its committees that occur using teleconferencing technology will
provide an opportunity for any and all members of the public who wish to address the body and its
committees and will otherwise occur in a manner that protects the statutory and constitutional rights
of parties and the members of the public attending the meeting via teleconferencing; and, be it
FURTHER RESOLVED, That the Utilities Advisory Commission staff liaison is directed to place a resolution
substantially similar to this resolution on the agenda of a future meeting of the Utilities Advisory
Commission within the next 30 days. If the Utilities Advisory Commission does not meet within the next
30 days, the staff liaison is directed to place a such resolution on the agenda of the immediately following
meeting of the Utilities Advisory Commission.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
Staff Liaison Chair of Utilities Advisory Commission
APPROVED AS TO FORM: APPROVED:
City Attorney Department Head
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City of Palo Alto (ID # 14273)
Utilities Advisory Commission Staff Report
Meeting Date: 8/3/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Discussion and Presentation on Sea Level Rise
From: Director of Utilities
Lead Department: Utilities
Recommendation
This is a discussion item only and no recommendation is needed.
Discussion
The City of Palo Alto Utilities Advisory Commission requested a presentation regarding the
development status of Palo Alto’s Sea Level Rise Adaptation Plan. At the August 3 UAC meeting
Public Works Watershed Protection staff will present an overview of the recently completed
Sea Level Rise Vulnerability Assessment, and the forthcoming Sea Level Rise Adaptation Plan
goals, framework, and timeline for development.
The City completed a Sea Level Rise Vulnerability Assessment (Assessment) which evaluates
hazards and risks to City and community assets from increments of sea level rise between 12-84
inches. This is representative of what may occur through the year 2100 based on California
Ocean Protection Council Sea Level Rise guidance. The Assessment also discusses the sea level
rise-related impacts from rising shallow groundwater.
The Assessment will inform the subsequent development of a Sea Level Rise Adaptation Plan
(Adaptation Plan) which will address both sea level rise flood susceptibilities and rising shallow
groundwater hazards. The goals of the Plan are to 1) protect and expand habitat, 2) protect City
and community assets. Engineering, governance and education solutions would be
implemented in phases so that the right level of protection is provided at the right time and
with the ability to be adapted as the San Francisco Bay and shallow groundwater continue to
rise.
The general timeline is as follows:
• Late summer 2022:
o A staff presentation about the results of the Vulnerability Assessment and
overview of how the Plan will be developed;
o Public release of the Vulnerability Assessment;
• Fall 2022: Plan development and community meetings commence;
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• Winter 2023 request Council approval of the Plan.
Development of the Sea Level Rise Adaptation Plan will be closely coordinated with other sea
level-rise related projects and planning efforts led by staff and regional partner agencies. The
Adaptation Plan will serve as the Sea Level Rise chapter of the City of Palo Alto Sustainability
and Climate Action Plan.
Attachments:
• Attachment A: Presentation
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www.cityofpaloalto.org/sealevelrise 1www.cityofpaloalto.org/sealevelrise 1
Palo Alto Sea Level Rise Vulnerability Assessment and Adaptation Plan
Staff: Julie Weiss
tH\CITY OF
V'PALO ALT,O
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Vulnerability Assessment examines
asset exposure to 12-84” of sea
level rise with:
•Daily high tides
•100-year storm tides
•Shallow and emergent
groundwater changes
•Report discussion focuses on
36” sea level rise because that
is a turning point if no
additional action is taken
•36” near end of century (2070-
2100) and will continue to
increase after 2100
Sea Level Rise
Adaptation Plan
Development
7
Monitor
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tH\CITY OF
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City and Community Facilities and Residential Parcels
Utilities and Flood Management
Emergency Services
Natural Resources, Trees & Open SpaceTransportation
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Groundwater work peer review by
Dr. Kristina Hill, UC Berkeley
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San Francisquito Creek “Downstream Project”
Construction completed: Fall 2018
Partnership with San Francisquito Creek Joint
Powers Authority Agencies
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Palo Alto Flood Basin Tide Gate
Structure Replacement Project
•Construction starts: 2023
•Construction completed: 2027
•Project partners: Valley Water, City of Palo Alto
Shoreline II Levee Improvements
•Fall 2024: Feasibility study completion
•2030: Construction begins
•20: Construction completed
•Project partners: Valley Water, USACE, Coastal Conservancy,
City of Palo Alto
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Palo Alto Airport
Palo Alto Horizontal Levee Pilot Project
Construction starts: Fall 2023
Construction completed: Fall 2025
Byxbee Park
Flood Basin
San Francisco Bay
Palo Alto Baylands
Regional Water Quality Control Plant
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Other Adaptations Efforts
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onalr,m11 cJ ima. ll'ley ..,11 IIK.'fl roe... Oil local """ k!vot ,,..,
p,~~ ®1fi..l.wi l',ft>1 loc..lll f(,, urK ,11r .1~ r " rnut c:ron1 .1 pr
htlilf~ • polcntrat sol 'lo crca .11 bctl.'cl l\m1=' lor ooi-shoc:cs.
&CCI S~ 11 ~31iON
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Sea Level Rise Adaption Plan Goals
1.Preserve and Expand Habitat
2.Protect City and Community Assets and Private Property
a)Protect -keep Bay water out (e.g., levee and tide gate)
b)Adapt existing infrastructure (e.g., water proofing and raising structures)
c)Prepare for Possible Retreat after 2050 (e.g., consider options for
assets outboard of levee)
Adaptation Strategies
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When we need to
start planning based
on sea level and year.
Adaptation actions
sequenced into
adaptation pathways
NO AC T ION / EX1!ST;IHG, CO :
1 AdrlNss inland Hooding
Nu.ar
Term
Conduc t l ocal drain aga study ancl a lternativ,es anal ysi s
Coordin a e w i t h Ca l trans t o address ovenflows
Dinrt offslt@ runoff by constructing peri meter flood
barriers
staU pop-up flood barn e rs across drlvew ays and
aJ cess poi nts
R se and regrade the par~l in key low points
F odproof bu ildings and access points. Elevate storage
11as off grnun d.
Improve/increase rl!!'gularity of storm dratn malntenar1ce
lood proof buildmgs and elevate equipment
i:c I tau stormwabn drainage system, treatm11nt, and new
d. h.arge paint
to pumped outfall
2 Protect Assets
Near
Tenn
Coordinate w ith drain age study
Carislder raising nearby stnH!ts, deployi ng tempora,y banrlilrs,
or constructing perimeter flood:wall to dMlrt storm runoff
Pernm,e rubb an debr"s along e shor Li
Ralse shoreline edg11 wi a new sea.wall
Co ordinatlli w ith t he projec replli.oemi;m t
2080
36 " 4 8 "' 52"'
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Sea Level Ri se flro ·ecti on s
-- - --- - - -- - ---Li kelytn 1-"n-20 0 Ch ance
LEGEND
co stat Defens Actions
PlaMl ng Act ions
ature-Based Actions
Stormwat r Actions
■ Thr shold
Tr igger
Trigger + Lead Ti me
• Act ion Implemented
f::,. Decis ion Po int
D,. Strategic Dec ision Point
't Alternative Action
-Action Eff ctive
➔ End of Act ion Lifespan
+ Action cont inues
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Palo Alto
Sea Level Rise
Vulnerabihty
Assessment
Prepared for:
City of Palo Alto
June2022
~1 PALO ALTO I -· ~ -OF I
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1
1.1
1.2
.3
VE SUMMARY............... . .......................................................................................... IX
INlRODUCTION ................................................................................................................ 1
Pr,o· ct 011all'lliew and PuliJ)Ose ........•......................... , .................•........ , ....................... , ...... 1
Conoeplua.l Frama-wo,t!c ............................................................................................ ·1
Organizalion o f lhe Vulnerability Assessment .......... , ........ ,,., .......... , ............. , .......... 2
_ _.SEJ:7Jl~I.JJIQ..CON,J1iJEi~XT .................................. , ............................................................... 5,
SEA LJEVEL
3 . HISloncal Sea Level Rise Trern ds ................................................ m ............. , ............ 9
3,2 Sea Leve l Rjse :Projections , ............ , .......... ,,., ........ ,., ........ , .. , .......... ,., ........ ,,., ......... ·10
3 .. 3 Subsidr.moo ..................................................................................................................... 12
3,4 Sha llow G-rouoow.al.er Rise·,,., ........ ,.,, ................................. ,,., ..................... ,,., ........ 13
3 .5 Liquefaction ......... ,,.,, ........ ,,,., ........ ,,,, ....... ,,,,., ....... ,,,, ........................ , ........ , .. , ........ 14
4 BUILD ING ON EXISTING POLICIES A ND STUDIES ....... , ....... ., ............ , .. , .................... 17
4 .1 Regu lali0r1s and Gu .dance ,, .......... , ...................... ,,. ....................... ,, .............. , ........ 17
4 .. 2 State ............................. -......................................................................................... -... 17
4.-3 Regiona l ................................................................................................................. ·1a.
4.4 City ................................................................................................................................ 18,
4 .5 Se-a Level Rise .Stud i es ............................................................................................ '1!3.
4 6 ~~.:,:..:,., ,.,-,vu11UW<ll.<j r,,i:,itt ;;>IIJO S ........... , .. ,.................................... • .... 21
SEA LEVEL IRl SE , SHALLO W GROUNDWATER, A ND CO NT AM INAN T MAPP ,IN G .. 23
5,.1
5 .1.1
5.1.2
5.2
5 .2.1
:5 .2.2
5.2 .3
5 .2.4
5,3
Sea Level se Inundation Mappmg ........................................................................ 23.
Assumplions and Caveats ............. ,,, ...................................................................... 24
Sea Leve l Rise 1Map nterpretation .. , .......... ,, ......... ,,., ........ , .. , ........ ,,,., ......... ,,., ........ 25,
Shallow Groo lldwaler Map.pin g ............................................................................... , .. 27
Existing Condi ~OJlS., .......... , ........... ,,, ........ , .. , .......... ,,, ........ , .. , .......... , ........... ,., ........ 28.
Fulure Condilions ,,,,, ........ ,, ........... ,,,, ....... ,,,,, ........ ,,,, ......... , .. , ......... ,, ..................... 29·
AswmpUons and Ca1,,1eats ., .. , ........ ,., ........... ,., .......... , ........... , ....... ..,, ............. , ........ 291
Sh-a llow G:rou lldwaler Map lnlerprel:alion .................................................. _ ............ 3 t
Sha11ow Grnul'ldwale r and Conlamination ................................................................. 31
6 ASSET INVENTORY ....................................................................................................... 35
6 .1 Data Collection ....................................................................................................... 35
6 .2 Asset Inventory Table ............................................................................................. 35
7 ASSESSING VULNERABILITY AND RISK .................................................................... 39
9
7 .1 Methodology and Approach ................................................................................... 39
7 .1.1
7 .1.2
7 .1.3
Exposure ................................................................................................................ 40
Sensiti vity ............................................................................................................... 40
Adaptive Capacity .................................................................................................. 4 1
__1_)_U..,_';::' __ .. :::: __ ::-:_,:::-:-::_:-:-: .. -:::: __ ~ ... ,.,., .. .,.,. .. ~ ... cc-.. -. --·~·· ............................................................................... 42
8 .1 Key Sea Level Rise Vu lnerabiliti es ......................................................................... 43
8.1 .1 Sea Level Rise Vu lne rabiliti es Under No Acti on Scenario ..................................... 43
8 .1.2
8 .2
8 .2 .1
8 .2 .2
8 .2 .3
8 .2 .4
Sea Level Rise Vu lne rabiliti es if a Bayfront Levee is Constructed ......................... 48
Sea Level Rise a nd Shallow G roundwater Vulnerab ility Sum mary Profi les ........... 49
City a nd Community Facilities and Residential Pa rcels ......................................... 50
Eme rgency Res ponse ............................................................................................ 59
Natural Resources an d Open Space ...................................................................... 63
Transport ati on ........................................................................................................ 7 1
8 .2 .5 Utilities and Flood Management... .......................................................................... 80
REFERENCES ... ~ •................................................................................................ 100
ATTACHMENTS .......................................................................................................... 106
Shallow Groundwater Assessment and Maps ........................................................... 106
Sea Level Rise Figures .................................. . .......................................................... 159
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Excerpt of City/Community/Residential Property Exposure to
Daily High Tide and Storm Tides
Table 10. City and Community Facilities and Residential Pa r cels : Sea Level Rise Exposure Summa ry from Daily Hig h-Tide In undation or 100-
Year Storm-Tide Flooding
Asset
Lucy Evans
Bay lands Nature
Cen ter
An ima l Shelter
Municipal Serv ices
Cen ter
Uti lity Con trol
Cen ter
Bay lands Rang er
Station
Forni.e r ITT
Property
Lib rari es
Boat Launch
Wate r
Level
HT
ST
HT
ST
HT
ST
HT
ST
HT
ST
HT
ST
HT
ST
HT
+0-inch
SLR
+12-inch
SLR
+24-inch
SLR
CITY FAC ILI T IES
+36 -inch
SLR
+ 48-inc h
SLR
+66-inch
SLR
+84-inch
SLR
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Excerpt of City/Community/Residential Property Exposure to
Shallow and Emergent Groundwater
Table 11. City and Community Facilities and !Residential Parcels : Sea Level Rise Exposure Summary from Emergent Groundwater Flooding or a
High Shallow Groundwater Table
Wat e r +0-inc h +1:2 -i nch +24-!in c h ' +36-i nch + 4 8-i nc h +66-i n c h +84-i nc h Asset t Level S LR SLR SLR I S LR SLR SLR SLR
CITY F AC ILITI .ES
Lucy Evans E G -----✓ ✓
Bayl ands Natu re
HG C ente r --
E G -------
Animal Shelter
HG ----
I\ tmicipal E G -------
Services Cen er HG ----,/ .✓
utility Control E G -------
Center HG ;; ----
Baytands R anger E G ------
Stati.on HG +/' ;. --
f ormer ITT E G ---✓ ✓ ✓
Pmpe rty HG -., ✓ --·--
E G Mitchell Mitchell Mitchell ----Park Park Park
Lib ra r ie s -
HG Chell
Park~rv(
r Mltchell1~ -A Libraiy Park Library; ---
,. '
Cubberley E G '--_/
Community
HG Center --
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www.cityofpaloalto.org/sealevelrise 15www.cityofpaloalto.org/sealevelrise 15Current conditions (2022)
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Daily high tide with 36 inches sea level rise (c. 2070-2100)
Image shows the approximate area for which planning is needed based on current elevations. The image is
not intended to indicate that the entirety of the low-lying shoreline areas would simultaneously flood nor
does not account for the duration of overtopping or site-specific conditions that could reduce exposure.
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Daily high tide with 36 inches sea level rise (c. 2070-2100)
Image shows the approximate area for which planning is needed based on current elevations. The image is
not intended to indicate that the entirety of the low-lying shoreline areas would simultaneously flood nor does not
account for the duration of overtopping or site-specific conditions that could reduce exposure.
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City/Community Residential
Facilities located inland of US 101,
•2,630 residential parcels
•Two schools (Palo Verde Elementary and Ohlone
•Two senior/disability centers (Palo Alto Housing
Corporation and Alta Torre)
Natural Resources
•Marshes permanently inundated Transition some
tidal marsh areas to a different habitat
•4,700 trees
•90% of golf course
•Five parks: Baylands Athletic Fields, Greer, Seale,
Ramos, Baylands Preserve, and Byxbee Park
Utilities and Flood Control
•Regional Water Quality Control Plant
•Four stormwater pump stations
•Two electrical substations
•Natural gas receiving station
•14 miles of Fiber Optic network
•35 miles drinking water
•37 miles sewer
•2 pump stations (SFC and Matadero)
•2.5 miles of levee
•14 miles of Fiber Optic network
Daily high tide with 36 inches sea level rise (c. 2070-2100)
Image shows the approximate area for which planning is needed based on current elevations. The image is
not intended to indicate that the entirety of the low-lying shoreline areas would simultaneously flood nor does
not account for the duration of overtopping or site-specific conditions that could reduce exposure.
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City/Community Residential
•4,400 residential parcels
•Two senior/disability centers
•Two schools (Palo Verde and
Ohlone)
•Seven city facilities
Emergency Services and
Transportation
•US 101
•Roads east of Middlefield Road,
•36 miles of multi-use trails.
•Palo Alto Airport
•14 miles of evacuation routes
Natural Resources/Parks/Trees
•Seven City parks
•6,900 trees
Utilities and Flood Control:
•Regional Water Quality Control Plant
•Four stormwater pump stations
•Two electrical substations
•Natural gas receiving station
A 100-year storm tide with 36” of sea level rise (c. 2070-2100)
Image shows the approximate area for which planning is needed based on current elevations. The image is not
intended to indicate that the entirety of the low-lying shoreline areas would simultaneously flood nor does not
account for the duration of overtopping or site-specific conditions that could reduce exposure.
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2021 Depth to
Groundwater
0~
Menlo, Park
fl/
De1pth to Waiter
-<Oft
,o
0-2 ft
2 ~.4 ft
4 -6 fl
6 •. ,s ft
8 10ft
10-t-fl
IM1tc
1
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Sho Hne Golf
nk!:
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Depth to
Groundwater
with 36”
Sea Level Rise
.
Note: the future depth to groundwater surface shown is based on uniformly increasing the existing groundwater surface with
sea level rise. The depth to groundwater represents the highest annual groundwater surface during temporary wet-season
groundwater conditions that may occur over hours or days in the near term, with longer durations occurring as sea level
increases or if future extreme precipitation events increase in intensity and/or frequency. The future condition maps do not
account for groundwater flows to nearby natural streams which may help reduce the groundwater surface in some areas. See
additional caveats discussed in the Palo Alto Sea Level Rise Vulnerability Assessment which will be released in Fall 2022.
Menlo Park
...
N
D-epth to Water
-<Of't
0-2 ·ft
2-4ft
4 -6ft
6 -Sfl
B· 10ft
J.Ot-ft
\
/ I,;
S,hQreline P-,.-
,ho rel lne Golf , .. ~
... ..
0
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Why look at
Shallow Groundwater?
~CITY OF
~PALO ALTO
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Potential Impacts From Rising Groundwater
Increased infiltration into sewer pipelines and below-
ground utilities
Flooding of basements and below-grade structures
Foundation and structural damage
Uplift of residential structures and smaller buildings
Roadway damage (cracking, buckling, sink holes)
Increased emergent (above ground) groundwater
~CITY OF
~PALO ALTO
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www.cityofpaloalto.org/sealevelrise 24
High shallow groundwater within six
feet of the surface could expose
underground Utilities such as:
•17 miles of fiber optic cable
•64 miles of water pipelines
•Access to more than 300 manholes and
1,000 access vaults
•2 miles of sanitary sewer pipeline
•2 electrical substations
•3 miles recycled water pipeline
•SCADA
•Natural gas receiving station
•RWQCP
Additional hazards to City and
Community assets could include:
•7 parks
•Urban forest
•Shallow groundwater within six feet of
the surface in some residential
communities and City facilities
•Roads and evacuation routes
•Contaminant mobilization if
contaminated groundwater sites are not
completely remediated
•Increased liquefaction susceptibility near
the Bay
Anticipated Shallow Groundwater Conditions With 36” Sea Level Rise (c. 2070-2100)
Note: the future depth to groundwater surface shown is based on uniformly increasing the existing groundwater surface with sea level rise. The depth to groundwater represents the highest
annual groundwater surface during temporary wet-season groundwater conditions that may occur over hours or days in the near term, with longer durations occurring as sea level increases
or if future extreme precipitation events increase in intensity and/or frequency. The future condition maps do not account for groundwater flows to nearby natural streams which may help
reduce the groundwater surface in some areas. See additional caveats discussed in the Palo Alto Sea Level Rise Vulnerability Assessment which will be released in Fall 2022.
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Emergent groundwater could occur during wet
weather conditions:
•Along two miles of water and sanitary
sewer pipelines
•RWQCP
•Airport
•One mile of evacuation routes
•770 residential parcels
•Byxbee Park
•360 City-maintained trees
•40% of the Baylands Golf Course
•One acre of green stormwater infrastructure.
Anticipated Emergent Groundwater Conditions With 36” Sea Level Rise (c. 2070-2100)
Note: the future depth to groundwater surface shown is based on uniformly increasing the existing groundwater surface with sea level rise. The depth to groundwater represents the highest
annual groundwater surface during temporary wet-season groundwater conditions that may occur over hours or days in the near term, with longer durations occurring as sea level
increases or if future extreme precipitation events increase in intensity and/or frequency. The future condition maps do not account for groundwater flows to nearby natural streams which
may help reduce the groundwater surface in some areas. See additional caveats discussed in the Palo Alto Sea Level Rise Vulnerability Assessment which will be released in Fall 2022.
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1) Protect City and habitat (keep water out from above and below)
2) Adapt City and habitat (increase resilience to water)
3) Consider retreat needs after 2050
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1) Protect City and habitat (keep water out from above and below)
2) Adapt City and habitat (increase resilience to water)
3) Consider retreat needs after 2050
•Continue with levee and tide gate improvement plans
•Increase groundwater monitoring and expand groundwater waterproofing
•Continue habitat restoration in Bay, creeks and upland areas to absorb and slow water
•Develop a SLR Plan in 2022 for redundant protection and to address additional specific
asset concerns
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1) Protect City from SLR inundation and changing groundwater conditions:
2) Adapt natural and built assets to increase resilience:
3) Consider retreat needs after 2050:
•Update design criteria/building codes to assume three feet higher groundwater and SLR
•Assume higher-risk SLR scenarios for critical infrastructure design
•Install backflow prevention and convert stormwater outfalls to pumped outfalls
•Design for adaptability
•Enhance City’s flood and emergency response capabilities
•Incentivize green infrastructure to reduce peak stormwater flows
•Convert portions of Baylands trails to raised boardwalks
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1) Protect City from SLR inundation and changing groundwater conditions:
2) Adapt natural and built assets to increase resilience:
3) Consider retreat needs after 2050:
•Possible relocation of assets outside of levees
•Transition Baylands upland areas to transitional wetland/upland habitat
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Next Steps
Milestone Completed
1.Complete groundwater peer review and
release Sea Level Rise and Groundwater
Vulnerability Assessment
Q2, 2022
2. Public/staff/Commission meetings for SLR
Adaptation Plan Development
Throughout 2022 and 2023
3. Council approval of SLR Adaptation Plan Q4, 2023
4. Implement Plan and develop related tools
and public education
Ongoing after Council
approval
5. Update SLR Adaptation Plan with
SCAP and revised Ocean Protection Council
guidelines.
Every five years, but with
annual workplans.
Sign up for report release and meeting information at cityofpaloalto.org/sealevelrise.
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Thank you
www.cityofpaloalto.org/sealevelrise
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City of Palo Alto (ID # 14582)
Utilities Advisory Commission Staff Report
Meeting Date: 8/3/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Discussion of Preliminary Internet Survey Results and Financial
Business Models for Palo Alto Fiber
From: Director of Utilities
Lead Department: Utilities
This item is for discussion and no action is requested. Staff will present preliminary results and
findings of the internet survey and financial forecasts of three business models (insource,
hybrid, outsource) and financial plan. Staff seeks input from the Utilities Advisory Commission
(UAC) in preparation of the joint Council/UAC study session scheduled on September 19, 2022.
On June 23, 2022, the City launched the internet services market research survey and Palo Alto
Fiber deposit program. The internet survey seeks responses from Palo Alto residents and
businesses to learn more about their internet preferences and service needs. The data received
through the survey will give guidance to the City Council when they determine next steps for
the Palo Alto Fiber project and determining service details like pricing and speeds. The new
deposit program is a means to demonstrate the community’s strong support for seeing the Palo
Alto Fiber internet services project through to fruition. As with any City project, community
input is essential to ensuring the City Council knows where the community stands. By
submitting a $50 deposit for the Palo Alto Fiber project, residents and businesses are
demonstrating strong support for their neighborhood and district obtaining locally controlled
fiber internet services. As of July 13, 2022, the City has received 2,350 survey responses and
498 deposits. The survey will be available through the end of July to gain as much community
responses as possible. The City Council and Utilities Advisory Commission will host a joint study
session on September 19, 2022 to review the survey results and FTTP financial models.
The Business Case evaluates three City-operated ISP models. The City can provide ISP with (1)
100% in-house staffing; (2) hybrid of insource (i.e. 70%) and outsource (i.e. 30%) (3) outsource
all functions to multiple strategic vendors. Some broadband functions are core competencies
and can be easily managed by the City, while other functions are new and can be outsourced
where the City doesn’t have the expertise in-house. Subsequently, outsourced functions have
the potential to slowly be brought in -house through hiring and as City staff becomes more
comfortable with the day-to-day operations of the fiber network. Magellan has identified
specific advantages and disadvantages for each model which will be discussed at the meeting.
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City of Palo Alto Page 2
• Insource
Pros: Total control; quality of service; institutional knowledge
Cons: Highest labor costs; higher learning curve
• Hybrid of Insource and Outsource
Pros: Flexible start-up and scalability
Cons: High labor costs; higher contract costs; contract risks
• Outsource
Pros: Lower labor costs; experienced vendors
Cons: Risk of lower service levels; no institutional knowledge; contract risks
Attachments:
• Attachment A: Presentation
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Utilities Advisory Commission
Palo Alto Fiber Update –Preliminary Internet
Survey Results and Financial Business Models
August 3, 2022
Staff: Dave Yuan
Consultant: John Honker
PALO
ALTO
llill
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- 2
AGENDA
•Project Update
•Preliminary Survey Update
•Business Models
•Insource
•Hybrid
•Outsource
•Preliminary Pro Forma Financials
•UAC Feedback for Joint Council Study Session
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- 3
Project Update
Planning Area Focus
(Checkmark means complete)
Business Operations
Management
Customer Service
Billing & Finance
Sales & Marketing
Market Analysis & Competitive Assessment
Technology Change & Obsolescence
Network Operations
Tech Support
Engineering
Regulatory Review •State Agencies: CPUC
•Federal Agencies: FCC, USAC
•Compliance & Reporting Requirements
Governance/Operational Models Models Organizational Structure
Policies, Procurement, Rate Setting and Management Decision
Guidelines
Preliminary Pro Forma Financials
Capital Plan
Staffing Plan
Rate Sheets and Packages
Income Statement
Borrowing Schedules
Final Pro Forma Financials •Update Capital Plan Based on Final Engineering Design
•Update Take Rates and Income Statement Based on Survey Results
•Provide Final Set of Financials with Sensitivity Analysis
Fiber Engineering Design 90% Design Complete
•100% Final Construction Prints in Aug-Sept
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- 4
PRELIMINARY SURVEY UPDATE
Total Surveys Emails 21,925
Surveys Complete 7/13 2,350
10.7% Response Rate
Surveys Complete 7/20 3,177
14.5% Response Rate
$50 Deposits Received 7/20 672
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PRELIMINARY SURVEY UPDATE
Value Percent Count
$20 -$40 Per Month 7.9%222
$41 -$60 Per Month 28.0%790
$61 -$80 Per Month 28.3%797
$81 -$100 Per Month 19.3%544
$101 -$120 Per Month 8.7%246
More Than $120 7.8%221
Totals 2,820
How much do you pay each month for your internet services, not
including other services such as television or telephone?
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PRELIMINARY SURVEY UPDATE
What company provides your internet service at home?
Value Percent Count
Comcast/Xfinity 67.2%1,916
AT&T 24.0%685
Sonic 5.3%152
Etheric 0.2%5
Unsure 0.4%10
Other -Write In 3.0%85
Totals 2,853
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PRELIMINARY SURVEY UPDATE
Do you purchase other services with your home internet services?
Value Percent Count
Cable Television 28.8%795
Home telephone service 25.8%712
Other -Write In 7.8%214
None of the above, I only 54.7%1,510
subscribe to internet through
my provider
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- 8
PRELIMINARY SURVEY UPDATE
If you use cable television at home, would you consider switching to an
internet streaming service like Netflix or Hulu over the next year?
Value Percent Count
Yes, I would cancel cable television and
use just internet streaming
17.2%446
I already subscribe to internet streaming
and don't have cable television
53.9%1,394
No, I would keep cable television and
add internet streaming
11.8%305
No, I would keep cable television, I'm
not interested in internet streaming
2.7%70
I'm not sure, I need more information
about internet streaming
14.4%372
Totals 2,587
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PRELIMINARY SURVEY UPDATE
Please rate your overall satisfaction level with your home internet service.
Value Percent Count
Very dissatisfied 7.3%181
Somewhat dissatisfied 22.3%552
Neither satisfied nor dissatisfied 12.8%316
Somewhat satisfied 38.2%945
Very satisfied 19.4%480
Totals 2,474
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-10
PRELIMINARY SURVEY UPDATE
If the City of Palo Alto were to offer high-speed internet services to your home, please select the top 3 reasons why you would switch from your current provider.
Item Overall Rank Rank Distribution Score Number of
Rankings
Lower price 1 4,255 1,827
Faster speed 2 3,957 1,798
Higher
reliability
3 3,450 1,779
I
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-11
COMPETITIVE ANALYSIS
Final survey results will provide inputs to competitive analysis
and threats, to be completed end of July; survey and deposits
will remain open for ongoing engagement.
•What speeds should be provided?
•What features are most important?
•What do competitors charge today/future?
•What should Palo Alto charge?
•How elastic is the market?
•What impact do pricing changes have on take rates?
•What is the expected take rate at the optimal price?
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STAFFING/VENDOR RESOURCES
Determine best mix of
existing resources, new
hires and strategic vendors
for Palo Alto Fiber
Existing
Resources
New
Hires
Strategic
Vendors
Finance &
Accounting
Sales &
Marketing
Tech
Support
General
Management
Operations
Management
Overnight
Customer Service
Billing Field
Services
Network
Design
Customer
Service
Customer
Service Construction
Legal Service Quality
Control
Construction
Management &
Inspections
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-13
STAFFING ESTIMATES FOR BUSINESS MODELS
Comparison of FTEs required for Outsource, Hybrid, Insource Models
One approach is to outsource functions during the first several years, then bring inhouse.
Ramp down vendor contracts as insourcing occurs.
Year 6 In-House Staffing Estimates
Total FTE Outsource Hybrid Insource
Assistant Director 1.00 1.00 1.00
Engineering & Operations Manager 1.00 1.00 1.00
Sales & Marketing Manager 1.00 1.00 1.00
Account Manager 1.00 1.00 1.00
Revenue & Accounting Manager 1.00 1.00 1.00
NOC Technicians - 2.00 4.00
Customer Service Rep - 2.00 3.00
Installation & Service Tech - 2.00 3.00
Network Engineer - 1.00 3.00
Customer Service Supervisor - 1.00 2.00
Maintenance & Repair Tech - 1.00 2.00
Billing Tech - 1.00 1.00
Network Designer - 1.00 1.00
Field Services Manager - 1.00 1.00
Total FTE 5.00 17.00 25.00
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-14
SUMMARY OF STAFFING MODELS
Palo Alto Staffing Costs 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Total
Insourced $1.93M $3.96M $4.92M $5.22M $5.35M $5.86M $6.01M $6.16M $6.31M $6.47M $52.18M
Hybrid $1.93M $3.34M $3.73M $3.82M $3.92M $4.02M $4.12M $4.22M $4.33M $4.43M $37.86M
Fully Outsourced $0.77M $1.26M $1.29M $1.32M $1.35M $1.39M $1.42M $1.46M $1.49M $1.53M $13.26M
Palo Alto FTEs
Insourced 7 19 23 24 25 25 25 25 25 25 25
Hybrid 7 15 17 17 17 17 17 17 17 17 17
Fully Outsourced 3 5 5 5 5 5 5 5 5 5 5
Vendor Costs
Insourced $0.00M $0.02M $0.09M $0.23M $0.32M $0.37M $0.37M $0.37M $0.38M $0.38M $2.51M
Hybrid $0.00M $0.09M $0.43M $1.13M $1.60M $1.83M $1.85M $1.86M $1.88M $1.89M $12.55M
Fully Outsourced $0.00M $0.18M $0.87M $2.26M $3.19M $3.66M $3.69M $3.72M $3.75M $3.78M $25.11M
Total Costs
Insourced $1.93M $3.97M $5.01M $5.44M $5.67M $6.23M $6.38M $6.53M $6.69M $6.85M $54.70M
Hybrid $1.93M $3.43M $4.16M $4.95M $5.52M $5.85M $5.96M $6.08M $6.20M $6.32M $50.41M
Fully Outsourced $0.77M $1.44M $2.15M $3.58M $4.54M $5.05M $5.11M $5.18M $5.24M $5.31M $38.37M
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-15
KEY TAKEAWAYS
•Consider the balance of quality/value versus
risk/control
•Selection and retention of staff/vendor
•Risk mitigation may require multiple options
•Vendor management is critical
•Flexibility to adapt to changing market conditions
•Speed to market and scalability vital for success
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-16
FINANCIAL PLAN
Will change
based on take
rates, final
design and rates
Costs Original Estimates 2021 Late 2021 Current Estimates
Fiber Backbone $22.28M $25.62M
Fiber To The Home $85.97M $98.87M
Cost Savings if Built Together -$4.48M -$8.73M
Working Capital Set Aside $12.50M $12.50M
Total Costs $116.27M $128.26M
Funding Original Estimates 2021 Current Estimates
Existing Fiber Fund $32.50M $32.50M
Contribution from Electric to Fiber
Backbone $10.00M $10.00M
Total Available Funding $42.50M $42.50M
Total New Funding Required $73.77M $85.76M
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-17
SAMPLE PRICING BANDS
Service Package Estimated Monthly Rate
Internet Platinum - 10 Gbps TBD
Internet Platinum - 2 Gbps $95 - $150
Internet Gold - 1 Gbps $80 - $95
Internet Standard - 600 Mbps $60 - $80
Internet Basic - 200 Mbps $40 - $60
Premier Internet - 1 Gbps
(Includes Dedicated Packages)
Premium Internet - 500 Mbps $300 - $500
Select Internet - 250 Mbps $200 - 250
Standard Internet - 100 Mbps $100 - $150
Basic Internet - 50 Mbps $60 - $80
*Estimates based on market pricing as of 6/1/2022
Residential
Commercial
$500 - $1000
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-18
FINANCIAL PLAN - INSOURCE
Will change
based on take
rates, final
design and rates
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Homes & Businesses With
Access 7,499 15,036 22,611 30,223 30,374 30,526 30,679 30,832 30,986 31,141
Customers
- 481 2,410 6,278 8,870 10,172 10,254 10,336 10,419 10,502
Take Rate 0% 3% 11% 21% 29% 33% 33% 34% 34% 34%
Revenues $1.70M $2.01M $3.49M $7.11M $11.32M $14.10M $15.35M $15.83M $16.33M $16.85M
Cost of Providing Services $0.43M $2.90M $3.90M $4.30M $4.49M $5.04M $5.15M $5.27M $5.39M $5.52M
Gross Profit $1.27M -$0.87M -$0.33M $3.03M $7.16M $9.46M $10.62M $11.00M $11.39M $11.79M
Gross Margin 75%-43% -10%43% 63% 67% 69% 69% 70% 70%
Sales, General &
Administrative Expenses $1.05M $2.47M $2.61M $2.77M $2.94M $3.01M $3.09M $3.17M $3.25M $3.33M
Depreciation & Amortization $1.27M $2.24M $3.25M $4.44M $4.69M $4.81M $4.99M $5.26M $5.27M $5.27M
Net Income -$1.05M -$6.70M -$8.24M -$7.15M -$4.45M -$2.45M -$1.55M -$1.45M -$1.06M -$0.66M
Cash Balance in Fund $32.72M $27.92M $22.30M $18.64M $17.55M $18.48M $18.60M $17.67M $20.07M $22.80M
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-19
FINANCIAL PLAN -OUTSOURCE
Will change
based on take
rates, final
design and rates
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Homes & Businesses With
Access 7,500 15,036 22,611 30,223 30,374 30,526 30,679 30,832 30,986 31,141
Customers
- 481 2,410 6,278 8,870 10,172 10,254 10,336 10,419 10,502
Take Rate 0% 3% 11% 21% 29% 33% 33% 34% 34% 34%
Revenues $1.70M $2.03M $3.57M $7.33M $11.66M $14.50M $15.77M $16.27M $16.78M $17.31M
Cost of Providing Services $0.00M $0.77M $1.81M $3.91M $5.31M $6.04M $6.10M $6.15M $6.21M $6.26M
Gross Profit $1.70M $1.26M $1.76M $3.42M $6.34M $8.46M $9.67M $10.12M $10.58M $11.05M
Gross Margin 0% 62% 49% 47% 54% 58% 61% 62% 63% 64%
Sales, General &
Administrative Expenses $0.90M $2.15M $2.28M $2.43M $2.59M $2.66M $2.73M $2.80M $2.87M $2.95M
Depreciation & Amortization $1.27M $2.24M $3.25M $4.44M $4.69M $4.81M $4.99M $5.26M $5.27M $5.27M
Net Income -$0.47M -$3.98M -$5.30M -$5.67M -$3.92M -$1.93M -$0.89M -$0.72M -$0.28M $0.19M
Cash Balance in Fund $18.30M $31.15M $28.32M $25.93M $21.78M $21.36M $21.96M $21.57M $24.60M $28.02M
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-20
FINANCIAL PLAN -COMPARISON
Will change
based on take
rates, final
design and rates
Comparison of Outsource vs Insource
Net Income 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Outsource -$0.47M -$3.98M -$5.30M -$5.67M -$3.92M -$1.93M -$0.89M -$0.72M -$0.28M $0.19M
Insource -$1.05M -$6.70M -$8.24M -$7.15M -$4.45M -$2.45M -$1.55M -$1.45M -$1.06M -$0.66M
Cash Balance in Fund 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Outsource $18.30M $31.15M $28.32M $25.93M $21.78M $21.36M $21.96M $21.57M $24.60M $28.02M
Insource $32.72M $27.92M $22.30M $18.64M $17.55M $18.48M $18.60M $17.67M $20.07M $22.80M
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-21
SENSITIVITY ANALYSIS –TAKE RATES
Will change
based on take
rates, final
design and rates
$17,500,000
Contribution
from Fiber Fund
in 2023
$15,000,000
Contribution
from Fiber Fund
in 2024
Cash declines in
the first years of
operations, as
expenses are
higher than
revenues
Cash grows with
revenues as take
rate increases,
more customers
connected
Impact of take
rate on cash felt
in later years of
the project.
CURRENT
BUSINESS CASE
$0
-22% Break-Even
-30%
-32%
-40%
-50%
Sensitivity Analysis -Balance of Fund at Different Take Rates Over 10 Years
-22% Break-Even -30% -32% -40% -50%
Ta ke Rate 2023 2024 2025 2026 2027 2028 2029 2030 2031
22% $18.30 $30 .94 $27 .60 $24 .06 $18 .20 $15.48 $12 .41 $8.22 $7 .31
30% $18.30 $30 .95 $27 .73 $24.58 $19.48 $17.83 $16 .53 $14 .19 $15.22
32% $18.30 $30.95 $27 .75 $24.82 $19 .94 $18.79 $18 .65 $17 .54 $19 .83
40% $18.30 $30 .96 $28.00 $26.18 $21.72 $22.38 $22 .85 $22 .36 $25.32
50% $18.30 $30 .96 $28 .04 $26.03 $21 .13 $21 .75 $24 .79 $26 .98 $32 .72
2032 2033
$6 .67 $6 .30
$16 .59 $18 .32
$22 .52 $25 .63
$28 .70 $32 .53
$39 .02 $45 .88
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-22
FINANCIAL TAKE AWAYS
Will change
based on take
rates, final
design and rates
•City’s existing fiber fund provides significant value
•Insource, outsource and hybrid models all viable
•Cushion of cash in case issues occur
•Lowers long-term debt service in perpetuity
•More flexibility in pricing and costs
•Without it, feasibility would be more challenging
•Other considerations
•Cash balance/reserves
•Price increases, inflation
•Debt repayment schedule
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-23
UAC Feedback
Q&A
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City of Palo Alto (ID # 14386)
Utilities Advisory Commission Staff Report
Meeting Date: 8/3/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Staff Recommends the Utilities Advisory Commission Consider and
Adopt an Attendance Policy
From: Director of Utilities
Lead Department: Utilities
Recommended Action
Consider and adopt a remote attendance policy for the Utilities Advisory Commission (UAC).
Background and Discussion
During the City Council meeting on April 4, 2022, it was suggested the UAC, as a City Commission, should
establish a remote attendance policy.
The Council’s Final Motion was:
Council Member Tanaka motioned, seconded by Mayor Burt, to direct staff to continue to
present the findings for AB 361 for the Council, Commissions and Boards and
a) Council Members can participate remotely in Council Committee meetings up to 3
times per year;
b) Board Members and Commissioners can participate remotely, but are encouraged to
meet in person, and the Boards and Commissions should establish a remote attendance policy.
MOTION PASSED: 7-0
Section 8.4 of the UAC Bylaws provides that the UAC may, by a majority vote of its members, adopt or
amend any rules and procedures to be followed at UAC meetings and study sessions, to the extent such
rules and procedures are not in conflict with the UAC’s Bylaws or other applicable law. Staff has thus
brought forward a recommended attendance policy for the UAC’s consideration and adoption.
If the UAC adopts the proposed Attendance Policy, staff will, in accordance with Section 10.1 of the UAC
Bylaws, transmit a copy to each member of the Commission, to the Council, and to the City Clerk. Copies
of the Bylaws and any other rules and procedures shall be made available to the public, upon request,
and at each meeting of the Commission.
Recommended Policy for Adoption
UAC Attendance Policy
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1. Regular and Special UAC Meetings and Study Sessions – Attendance Required
a. Commission Members, and the Staff Liaison, along with any other City staff that have been
requested to be present, shall take their regular stations in the Council chamber at 7:00 p.m.
on the first Wednesday of each month, except during the established Commission vacation.
The Chair or other presiding officer will ensure that during each regular or special meeting
there will be one 10-minute break.
b. The Commission expects its members to attend regularly and notify the Commission Clerk of
any planned absences.
2. Telephonic/Remote Attendance of Commissioners at UAC Meetings – General Guidelines and
Requirements
a. The telephonic/remote attendance provisions in this UAC Attendance Policy shall apply to
Commission Members unless there exists a proclaimed state of emergency in accordance
with Government Code Section 54953(e), in which case only the provisions of that Section
shall govern telephonic/remote attendance.
b. Requests by Commission Members to attend a Commission meeting via telephonic/remote
appearance are actively discouraged.
c. Telephonic/remote attendance shall be permitted not more than 4 times a year.
d. At least a quorum of the Commission must participate from a location within the City
(Government Code Section 54953(b)(3)).
e. If the two threshold requirements in section 2(c) and (d) of this Policy are met, the
Commission Member who will be appearing telephonically or remotely must ensure that:
i. The UAC meeting agenda identifies the teleconference/remote location and is posted at
that location in an area that is accessible and visible 24 hours a day for at least 72 hours
prior to the meeting.
ii. The teleconference/remote location is open and fully accessible to the public, and fully
accessible under the Americans with Disabilities Act, throughout the entire meeting.
iii. The teleconference/remote technology used must be open and fully accessible to all
members of the public, including those with disabilities.
iv. The accessibility requirements in subsections (i) – (iii), above, apply to private
residences, hotel rooms, and similar facilities, all of which must remain fully open and
accessible throughout the meeting, without requiring identification or registration.
v. Members of the public who attend the meeting at the teleconference/remote location
must have the same opportunity to address the Commission from the remote location
that they would if they were present in Council Chambers.
vi. The teleconference/remote location must not require an admission fee or any payment
for attendance.
vii. If the meeting will include a closed session, the Commission Member must also ensure
that there is a private location available for that portion of the meeting.
4
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f. If the Commission Member determines that any or all of the requirements in section 2(e) of
this Policy cannot be met, he or she shall not participate in the meeting
telephonically/remotely.
3. Responsibilities of Commission Members Attending a Meeting Telephonically/Remotely:
a. Five days’ written notice of telephonic/remote attendance in advance of the publication of
the agenda must be given by the Commission Member to the Commission Clerk. The notice
must include the address at which the teleconferenced/remote meeting will occur, the
address the Commission packet should be mailed to, and the phone number of the
teleconference/remote location.
b. Commission Members need to ensure all technology necessary for them to attend
telephonically/remotely is functioning.
c. The Commission Member is responsible for posting the Commission agenda in the remote
location, or having the agenda posted by someone else at the location and confirming that
posting has occurred. The Commission Clerk will assist, if necessary, by emailing, faxing or
mailing the agenda to whatever address or fax number the Commission Member requests;
however, it is the Commission Member’s responsibility to ensure that the agenda arrives
and is posted. If the Commission Member will need the assistance of the Commission Clerk
in delivery of the agenda, the fax number or address must be included in the five -day
advance written notice above.
d. The Commission Member must ensure that the location will be publicly accessible while
the UAC meeting is in progress.
e. The Commission Member must state at the beginning of the Commission meeting that the
agenda posting requirement was met at the location and that the location is publicly
accessible, and must describe the location.
Environmental Review
The adoption of this policy does not meet the definition of a project under Public Resources Code
Section 21065, thus no environmental assessment under the California Environmental Quality Act is
required.
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City of Palo Alto (ID # 14461)
Utilities Advisory Commission Staff Report
Meeting Date: 8/3/2022 Report Type: INFORMATIONAL REPORTS
City of Palo Alto Page 1
Title: Utilities' Quarterly Report Update for Q3 of FY2022
From: Director of Utilities
Lead Department: Utilities
Executive Summary
Linked below for the Utilities Advisory Commission ’s information 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. This updated report (Linked Document) has been prepared to
keep the Council and Utilities Advisory Commission apprised of the major issues that are facing
the water, gas, electric, wastewater collection and fiber utilities. A separate quarterly report on
the financial position is prepared consistent with when the City closes its books.
Items of special interest in this report are summarized below:
COVID-19 Impacts: Behavior changes resulting from COVID-19 continue to impact loads in FY
2022:
• FY 2022 actual electric sales through March 2022 were about 2.8% lower than projections,
and revenues were about 4.8 % below projections. Decreased loads are mostly attributed to
the commercial sector. (Section 1.5.1)
• Gas utility demand for through March 2022 was 0.8% lower than forecasted in the FY 2022
Financial Plan. But actual sales revenue was 16.5% higher than forecasted. The higher
revenue was due to increases in the market price of gas commodity which is passed through
to customers. (Section 2.5.1)
• Water demand and revenue through the end of March 2022 was 3.7% lower than
forecasted in the FY 2022 financial plan, mostly due to customer wat er conservation from
responding to the drought. Increased water conservation may further impact revenue and
reserve levels. (Section 3.5.1)
• Wastewater revenues have not been significantly affected by the pandemic.
Vacancies and Staffing – Appendix B
• The Utilities Department has 45 vacant positions out of 248 authorized positions or a 18%
vacancy rate at the end of March 2022
Packet Pg. 80
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• CPAU will continue to seek third party contracts for some of the difficult -to-fill positions
until the positions are filled and staff is trained.
Electric Utility:
• Output from the City’s hydroelectric resources is low. Total forecasted hydropower for FY
2022 is 244 GWh, which is 234 GWh (51%) below the long-term average. (Section 1.1.2)
• REC sales for CY 2022 are expected to result in $0.8M in net revenue. (Section 1.1.3)
• A number of construction projects are in the design phase with construction due to begin in
2022. (Section 1.2)
• Electric sales for the first two quarters of FY22 were about 3% lower than projected, and
revenue was about 5% lower. (Section 1.5)
Gas Utility:
• Gas prices remain high, but customer bills will be less impacted over the warmer months.
(Section 2.5.2)
• A gas main replacement project is currently in progress (GS -13001) and the City is in the
midst of a two year inspection project to find “cross bores.” (Section 2.2)
Water Utility:
• January through March 2022 was the driest on record for the Hetch Hetchy gauge. System
storage is below normal but in better shape than most reservoirs in the state. (Section 3.1)
• In August 2021, the state curtailed diversions on the Tuolumne River. In response, the
SFPUC filed a lawsuit and is applying for a health and safety exemption because per capita
use on the system is extremely low. From October 2021 through May 2022, the State Board
suspended the curtailments and reinstated them on June 8, 2022.
• .
• On May 24, 2022, Palo Alto’s water supplier, the San Francisco Public Utilities Commission
adopted a systemwide voluntary water use reduction of 11% compared to baseline water
use during FY 2019-2020. Staff expects this to increase Palo Alto’s voluntary water purchase
cutback level from about 8% to 10% beginning in July. (Section 4.1)
• In June, staff will recommend to City Council restricting potable irrigation of ornamental
landscapes and lawns to 2 days per week, except to ensure the health of trees and other
perennial non-turf plantings. (Section 3.1)
• Water sales are 3.7% lower due to drought-related conservation. Staff projects that with
expected revenues and expenses together with transfers from the CIP Reserve, the
Operations Reserve will remain at the maximum guideline level at the beginning of FY 2022
and will reach approximately target levels by the end of FY 2023. (Section 3.5)
• A rebuild of the City’s Corte Madera Reservoir is complete. Construction started on a water
main replacement project in April. (Section 3.2)
Wastewater Utility:
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City of Palo Alto Page 3
• An overview of the status of the Regional Water Quality Control Plant (RWQCP)
rehabilitation projects is provided, including an overview of the financing plan for the
projects. The first project to begin construction will be the primary sedimentation tank
rehabilitation. (Section 4.1)
• A sewer system rehabilitation project (SSR 30) was approved by Council on December 31,
2021. Construction started in March 2022 and is expected to be complete in November
2022. (Section 4.2)
• Wastewater Utility revenue for Q3 FY22 was 2.4% lower than budget. (Section 4.4)
Fiber Utility:
• Magellan Advisors has completed 80% of the engineering design for the fiber backbone and
fiber-to-the-home (FTTH) which includes designs for running overhead and underground
lines and route optimization. Staff is identifying potential sites for three fiber huts which
will be strategically located (i.e., north, south, west). The City launched the Palo Alto Fiber
Community Engagement Hub. The goal of the online platform is to inform the community
about the Palo Alto Fiber initiative and increase awareness of the benefits of City-provided
internet service. (Section 5.1)
• Fiber revenues for FY 2022 are projected to be $3.8 million, which is $0.5 million or 12%
below the revenue forecast of $4.3 million. Compared to pre-pandemic revenues, FY 2022
fiber sales are anticipated to be $0.7 million or 15% below FY 2020 fiber sales of $4.5
million. Staff projects annual fiber revenues will return to pre-pandemic level of $4.5 million
by FY 2024. (Section 5.4)
• Projected ending FY 2022 Fiber Optic Reserve is $34.0 million. (Section 5.4.2)
Customer Programs (Section 6):
• The City launched its Business Advantage Program in March 2021 to help local businesses
tune their HVAC units for efficiency. Businesses also got an HVAC inspection, a new MERV
13 filter, and advice on tuning the HVAC to increase indoor air flow in line with ASHRAE
recommendations for reducing airborne infectious aerosol exposure . As of May 24, 2022, 68
systems have been installed. (Section 6.1.1)
• The City continues to promote its multi-family and workplace EV charger programs. See
Section 6.1.2 for more detail.
Communications: A digest of major outreach efforts is provided in Section 7, including outreach
related to drought, the public safety power shutoff program in the Foothills, and utility scams.
Legislative and Regulatory: Major legislative and regulatory items are summarized in Section 8.
Attachments:
• Attachment A: Utilities Quarterly Report FY22-Q3
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Utilities Quarterly Update
Third Quarter of Fiscal Year 2022
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1Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
Ta ble of Contents
1 ELECTRIC UTILITY 4
1.1 ELECTRICITY SUPPLY AND TRANSMISSION 4
1.1.1 Forecasted Supply Costs 4
1.1.2 Hydroelectric Conditions 5
1.1.3 REC Exchange Program 6
1.2 CAPITAL IMPROVEMENT PLAN STATUS 6
1.3 RATE AND BILL COMPARISONS 7
1.4 RELIABILITY 8
1.5 FINANCIAL HEALTH 8
1.5.1 Sales Forecasts vs. Actuals 8
1.5.2 Financial Position 9
2 GAS UTILITY 10
2.1 GAS SUPPLY AND TRANSMISSION 10
2.1.1 Actual and Forecasted Supply Costs 11
2.1.2 Carbon Neutral Gas Program 11
2.1.3 Cap and Trade Program 12
2.1.4 Gas Transmission Line Capacity Valuation 13
2.1.5 Gas Prepay Valuation 14
2.2 CAPITAL IMPROVEMENT PLAN STATUS 14
2.3 RATE AND BILL COMPARISONS 14
2.4 RELIABILITY 15
2.5 FINANCIAL HEALTH 15
2.5.1 Sales Forecasts vs. Actuals 15
2.5.2 Financial Position 16
3 WATER UTILITY 17
3.1 WATER SUPPLY AND TRANSMISSION 17
3.2 CAPITAL IMPROVEMENT PLAN STATUS 19
3.3 RATE AND BILL COMPARISONS 20
3.4 RELIABILITY 20
3.5 FINANCIAL HEALTH 20
3.5.1 Sales Forecasts vs. Actuals 20
3.5.2 Financial Position 21
4 WASTEWATER UTILITY 23
4.1 WASTEWATER TREATMENT UPDATES AND CAPITAL PLANNING STATUS 23
4.1.1 Treatment Cost Trends 23
4.1.2 Regional Water Quality Control Plant Capital Planning Status 24
4.2 COLLECTION SYSTEM CAPITAL IMPROVEMENT PLAN STATUS 25
4.3 RATE AND BILL COMPARISONS 25
4.4 FINANCIAL HEALTH 26
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2Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
4.4.1 Sales Forecasts vs. Actuals 26
4.4.2 Financial Position 26
5 FIBER UTILITY 27
5.1 FIBER UTILITY STRATEGIC PLANNING 27
5.2 CAPITAL IMPROVEMENT PLAN STATUS 27
5.3 RELIABILITY 28
5.4 FINANCIAL HEALTH 28
5.4.1 Fiber Sales 28
5.4.2 Financial Position 28
6 CUSTOMER PROGRAMS (EFFICIENCY AND SUSTAINABILITY)29
6.1 CUSTOMER PROGRAMS UPDATES 29
6.1.1 Energy and Water Efficiency 29
6.1.2 Electric Vehicles 31
6.1.3 Building Electrification 35
6.2 FUNDING SOURCES FOR EMISSIONS REDUCTIONS 36
6.2.1 Low Carbon Fuel Standard (LCFS) Program 36
6.2.2 Cap and Trade Program, Revenue from Allocated Allowances 37
6.2.3 Electric Public Benefit Funds 37
6.3 INNOVATION AND PILOT PROGRAMS 37
6.3.1 Academic Collaborations 38
6.3.2 Completed Projects 38
7 COMMUNICATIONS 39
8 LEGISLATIVE AND REGULATORY ACTIVITY 40
8.1 STATE LEGISLATION 40
8.2 STATE REGULATORY PROCEEDINGS 42
8.2.1 Energy Commission 42
8.2.2 State Water Resources Control Board 42
8.2.3 Air Resources Board 42
8.2.4 Natural Resources Agency 42
9 APPENDIX A: ENERGY RISK MANAGEMENT PROGRAM 44
9.1 OVERVIEW OF HEDGING PROGRAMS 44
9.2 OVERVIEW OF ENERGY RISK MANAGEMENT PROGRAM 44
9.3 FORWARD CONTRACT PURCHASES 44
9.4 MARKET EXPOSURE 45
9.5 TRANSACTION COMPLIANCE 45
10 APPENDIX B: STAFFING AND VACANCIES 46
11 APPENDIX C: ELECTRIC UTILITY ANNUAL INFRASTRUCTURE MAINTENANCE AND REPLACEMENT REPORT 47
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3Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
Figures
FIGURE 1:FY 2022 FINANCIAL PLAN SUPPLY COST FORECAST VS.ACTUALS ................................................................................................5
FIGURE 2:FY 2021 AND FY 2022 HYDROPOWER FORECAST....................................................................................................................6
FIGURE 3:RESIDENTIAL MONTHLY ELECTRIC BILL COMPARISON (EFFECTIVE 6/1/2022,$/MO.).....................................................................7
FIGURE 4:ELECTRIC OUTAGE RELIABILITY,FY 2022 ................................................................................................................................8
FIGURE 5:ELECTRIC SALES VOLUME (KWH),FY 2022-Q3.......................................................................................................................8
FIGURE 6:ELECTRIC SALES REVENUE ($),FY 2022-Q3 ...........................................................................................................................9
FIGURE 7:GAS SUPPLY COMMODITY RATES ($/THERM),ACTUAL VS FORECAST,FY 2018-22......................................................................10
FIGURE 8:GAS SUPPLY COSTS ($),ACTUAL VS BUDGET,FY 2022-Q3 .....................................................................................................11
FIGURE 9:OFFSET PORTFOLIO COMPOSITION ......................................................................................................................................11
FIGURE 10:OFFSET PROJECT DESCRIPTIONS ........................................................................................................................................12
FIGURE 11:ESTIMATED CAP AND TRADE COSTS ...................................................................................................................................13
FIGURE 12:RESIDENTIAL NATURAL GAS BILL COMPARISON ($/MONTH)...................................................................................................14
FIGURE 13:GAS SERVICE INTERRUPTIONS,FY 2022 .............................................................................................................................15
FIGURE 14:GAS SALES VOLUME (THERMS),FY 2022-Q3 .....................................................................................................................15
FIGURE 15:GAS SALES REVENUE ($),FY 2022-Q3 .............................................................................................................................16
FIGURE 16:UPCOUNTRY TEMPERATURE AND PRECIPITATION TRENDS ......................................................................................................17
FIGURE 17:REGIONAL WATER SYSTEM STORAGE .................................................................................................................................18
FIGURE 18:SFPUC WATER DELIVERIES..............................................................................................................................................19
FIGURE 19:RESIDENTIAL WATER BILL COMPARISON ($/MONTH)............................................................................................................20
FIGURE 20:WATER SERVICE INTERRUPTIONS,FY 2022 .........................................................................................................................20
FIGURE 21:WATER SALES VOLUME (CCF),FY 2022-Q3......................................................................................................................21
FIGURE 22:WATER SALES REVENUE ($),FY 2022-Q3 .........................................................................................................................21
FIGURE 23:PALO ALTO’S SHARE OF ESTIMATED WASTEWATER TREATMENT EXPENSES (PROJECTION AND PLANNED CIP)..................................24
FIGURE 24:CURRENT RWQCP CAPITAL WORK IN-PROGRESS (INFORMATION FROM RWQCP JUNE 2022 PARTNERS MEETING).......................25
FIGURE 25:RESIDENTIAL WASTEWATER BILL COMPARISON ($/MONTH)...................................................................................................25
FIGURE 26:WASTEWATER SALES REVENUE ($),FY 2022-Q3 ................................................................................................................26
FIGURE 27:EV TECHNICAL ASSISTANCE PROGRAM (EVTAP),CUMULATIVE PROGRESS REPORT (JAN-MAY 2022)...........................................33
FIGURE 28:SCHEDULE OF CPAUWORKSHOPS AND EVENTS,JAN –MAY 2022 .........................................................................................35
FIGURE 29:STATUS TO DATE OF ALL APPLICATIONS TO THE PROGRAM FOR EMERGING TECHNOLOGIES............................................................38
FIGURE 30:ELECTRIC LOAD RESOURCE BALANCE,APRIL 2022 -MARCH 2025..........................................................................................45
FIGURE 32:UTILITIES VACANCIES AND POSITION MOVEMENTS BY DIVISION,UP TO Q3 FY 2022 ..................................................................46
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4Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
1 Electric Utility
The City’s electric utility serves all residential and non-residential gas demands in Palo Alto at a lower cost than
PG&E in surrounding communities. Its electric supply portfolio is 100% carbon neutral. The City maintains and
operates an electric distribution system and one small natural gas generator but does not operate any
transmission lines or any significant generating capacity on its own. Instead, the City belongs to Northern
California Power Agency (NCPA) which operates its Calaveras hydroelectric generating plant and provides power
scheduling services for its other generating resources. This carbon free power is supplied through power purchase
agreements with various generation operators.
1.1 Electricity Supply and Transmission
Below is an update on electricity supply and transmission services.
1.1.1 Forecasted Supply Costs
The current forecast supply budget for FY 2022 is $89.3 M. This represents a $6.0 M (7.2%) increase over FY 2021
actuals (and $7.6 M over the FY 2022 Budget estimate provided a year ago during FY 2021 Budget process), which
is primarily driven by higher than historical forward energy prices, increasing resource adequacy costs, and lower
than historical average hydro forecasts.
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5Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
Figure 1: FY 2022 Financial Plan Supply Cost Forecast vs. Actuals
1.1.2 Hydroelectric Conditions
The City takes power from two hydroelectric projects, the Calaveras project and the Western Base Resource
contract for Federal hydropower from the Central Valley Project.1 The watershed for Western hydropower is
primarily in the northern end of California, while the watershed for the Calaveras project is in the Central Sierras.
For water year 2020 to 2021 (October 2020 to September 2021), total precipitation was just below 50% of average
in both watersheds. For water year 2021 to 2022, total precipitation is currently about 63% of average for the year
to-date in the two watersheds. Total actual hydropower for FY 2021 was 295 GWh, which is 183 GWh (38%) below
the long-term average.Total forecasted hydropower for FY 2022 is 244 GWh, which is 234 GWh (51%) below the
long-term average.2
1 The Calaveras project is a hydropower project located in Calaveras County that is maintained and operated by the Northern
California Power Agency on behalf of the City and other project participants. The City is also one of several public entities
with contracts with the Western Area Power Administration for “Base Resource” electricity, which is the hydroelectric power
available from the Federal Government’s Central Valley Project (operated by the Bureau of Reclamation) after accounting for
power used for Central Valley Project operations and power delivered to certain “preference” customers.
2The long-term average forecast levels for both Western and Calaveras have been revised downward (about 10% each) in
recent years to reflect the impact of climate change. These values may need to be revisited again in the coming years.
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6Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
Figure 2:FY 2021 and FY 2022 Hydropower Forecast
FY 2021 FY 2022
Calaveras Actuals/Forecast (GWh)49 47
Western Actuals/Forecast (GWh)246 197
Total Hydro Actuals/Forecast (GWh)295 244
% of Long-term Average Total 62%49%
1.1.3 REC Exchange Program
Under the REC Exchange Program, which was approved by Council in August 2020 (Staff Report #11556), staff has
so far sold a total of 120 GWh worth of in-state renewable energy (for $1.5M), and purchased 180 GWh worth of
out-of-state renewable energy credits (RECs) (costing $1.0M) for CY 2022. Of the resulting $0.5M in net revenue,
at least one-third will be directed towards the funding of local decarbonization efforts, with the remainder to be
used to lower the City’s supply costs (and therefore electric rates).
For the remainder of CY 2022, staff expects to sell a total of approximately 72 GWh worth of in-state renewable
energy (for $0.9M) and purchase 95 GWh worth of out-of-state RECs (costing $0.6M),resulting in $0.3M in net
revenue.Net revenue for the REC Exchange program is projected to be significantly lower in 2022 than in prior
years due to a number of factors: (a) the poor hydro outlook, which will lead to large out-of-state REC purchase
volumes, (b) the continued narrowing of the in-state versus out-of-state REC price spread, and (c) lower in-state
REC volumes in 2022 due to the recent expiration of the Shiloh wind contract.
1.2 Capital Improvement Plan Status
The following capital projects are currently in progress or have been recently completed:
EL-17001 (East Meadow Circles 4/12kV Conversion):This project is scheduled to be completed in several
phases. Phase 1 design is complete and released for construction. Phase 2 (of 6) engineering design is
currently in progress.
EL-11003 (Rebuild Underground 15):This project is in the preliminary stages of engineering design.Project .
is delayed due to staffing shortage.
EL-10006 (Rebuild Underground 24):This project is in construction phase and scheduled to be completed in
2022.
EL-16000 (Rebuild Underground 26):This project is in the design phase and to be completed in multiple
phases. First phase is scheduled to be completed in 2022.
EL-19004 (Wood Pole Replacement):This project is in the design phase with expected completion in
September 2022 and construction starting 2023. The project is delayed this year because of staffing
shortages.CPAU is in the final phase of establishing contract with working to bring on a consultant to work on
the design phase of this project.
EL-16003 (Substation Physical Security): This project is scheduled to be completed in several phases.
Substation Security lighting is going out to bid Spring 2022
EL-17002 (Substation 60kV Breaker Replacement):Currently working on solicitation to procure a contractor
for the next phases.
EL-21001 (Foothills Rebuild):This project will rebuild the approximately 11 miles of overhead line in Foothills
Park, as necessary to mitigate the possibility of wildfire due to overhead electric lines. Staff has completed
7000 feet of substructure work and design to eliminate the corresponding 26 poles and install new
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7Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
underground equipment will be completed by June 2022.Staff has started the design for next phase of the
substructure work. Construction is expected to start in July 2022 for the next phase.
EL-14005 (Reconfigure Quarry Feeders):Staff completed the design phase this year. Construction has been
delayed due to shortage of staff.
EL-02011 (Electric Utility Geographic Information System (GIS)):The project scope includes
maintenance/technical support of the existing GIS system and implementation of the new GIS platform (ESRI).
Staff has completed the ESRI ArcGIS Portal, which is a web service for staff to view data and are currently
working on final phase of the electric data migration to ESRI’s Utility Network model.
EL-16002 (Capacitor Bank Installation):This project is a multi-year effort for the procurement, design and
installation of capacitor banks at several substation. Hanson Way and Park Blvd substation work is complete;
Hanover and Maybell substations will be completed in 2022.
1.3 Rate and Bill Comparisons
For the median consumption level,the annual residential electric bill for FY 2022 was $744, about 45% lower than
the annual bill for a PG&E customer with the same consumption and approximately 16% higher than the annual
bill for a City of Santa Clara customer. The bill calculations for PG&E customers are based on PG&E Climate Zone
X, which includes most surrounding comparison communities.
The figure below presents sample median residential bills for Palo Alto, PG&E, and the City of Santa Clara (Silicon
Valley Power) for several usage levels. Rates used to calculate the monthly bills shown below were in effect as of
June 1, 2022.
Over the next several years low usage customers in PG&E territory are expected to continue to see higher
percentage rate increases than high usage customers as PG&E compresses its tiers from the highly exaggerated
levels that have been in place since the energy crisis. This is likely to make the bill for the median Palo Alto
consumer look even more favorable compared to most PG&E customers. Even with the compressed tiers, bills for
high usage Palo Alto consumers are projected to remain substantially lower than the bills for high usage PG&E
customers.
Figure 3: Residential Monthly Electric Bill Comparison (Effective 6/1/2022, $/mo.)
Season Usage (kwh)Palo Alto PG&E Santa Clara
Winter
300 45.17 94.55 39.22
(Median)453 75.11 143.96 59.95
650 115.82 221.71 86.65
1200 229.49 438.79 161.17
Summer
300 45.17 98.13 39.22
(Median) 365 56.92 123.78 48.03
650 115.82 236.26 86.65
1200 229.49 453.34 161.17
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8Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
1.4 Reliability
CPAU tracks electric outages. A summary chart of these outages can be found below.
Figure 4: Electric Outage Reliability, FY 2022
Outage Reliability Q1 Q2 Q3
System Average Interruption Duration
Index (SAIDI)1.71 7.32 6.72
System Average Interruption
Frequency Index (SAIFI).01 .02 .16
Customer Average Interruption
Duration Index (CAIDI)180.18 323.65 41.48
1.5 Financial Health
Below is a summary of the financial position for the electric utility.
1.5.1 Sales Forecasts vs. Actuals
Electric actual sales volumes through Q3 of FY 2022 were about 2.8% lower and sales revenues were about 4.8%
lower than budgeted. The commercial sector continues to have lower sales in Q3 of FY 2022 due to the impacts
from COVID-19,and it is uncertain when sales will recover .
Figure 5: Electric Sales Volume (kWh), FY 2022-Q3
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Figure 6: Electric Sales Revenue ($), FY 2022-Q3
1.5.2 Financial Position
The Electric Supply and Distribution Reserves were within guideline ranges at the end of FY 2021 and are projected
to be within guideline ranges through FY 2022. Council approved, via its approval of the FY 2022 Electric Utility
Financial plan,the temporary suspension of a $1 million repayment towards an outstanding $5 million loan from
the Electric Special Projects (ESP) reserve done in FY 2018 (originally $10 million). If needed, funds are available in
the Hydroelectric Stabilization Reserve to mitigate the impact of dry-year conditions.
Through the third quarter of FY 2022, sales and revenues were about 3% and 5% lower, respectively, compared
to budget. Drier hydro conditions as well as overall higher market prices for electricity have resulted in increased
cost, estimated at about $10 to 12 million more for FY 2022. In response,the Hydro Rate Adjuster was activated
at the maximum level starting in April.In addition to a 5% increase for FY 2023 and 6% beyond, staff will utilize
Hydro Stabilization Reserve funds as well as possible additional withdrawals from the ESP Reserve to help stabilize
rates.
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2 Gas Utility
The City’s gas utility serves all residential and non-residential gas demand in Palo Alto. The City maintains and
operates a system of low-pressure gas lines for delivering gas but does not operate any transmission lines. Costs
for the gas utility are split approximately two thirds for the operation, maintenance and one third for the cost of
the gas commodity,PG&E gas transmission, compliance with the State’s Cap and Trade Program and the City’s
Carbon Neutral Gas Program.
2.1 Gas Supply and Transmission
Gas Commodity prices were relatively high throughout the winter and spring of FY 2022. A combination of flat
U.S. natural gas production, below-average U.S. natural gas storage levels, high levels of US liquefied natural gas
exports, inflation, supply chain issues, and global geopolitical events have put upward pressure on prices for U.S.
natural gas. The communications team published an article and posted in social media during the winter to warn
customers regarding high gas prices and potential ways to conserve gas usage.Staff anticipated natural gas prices
to drop in the Spring of FY 2022, but gas prices rebounded and will likely stay at a relatively high level for the
foreseeable future.
Figure 7: Gas Supply Commodity Rates ($/Therm), Actual vs Forecast, FY 2018-22
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11Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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2.1.1 Actual and Forecasted Supply Costs
Due to the anticipated supply cost increases, a mid-year budget adjustment was made to increase the gas supply
budget by about $7 million in FY 2022. The actual supply cost is $1.8M, or 10.3% below budget after the mid-year
adjustment, through Q3 of FY 2022. Gas demand was similar to the forecast used in the budget, through Q3 of
FY 2022.
Figure 8: Gas Supply Costs ($), Actual vs Budget, FY 2022-Q3
2.1.2 Carbon Neutral Gas Program
In December 2020, Council adopted Resolution #9930 maintaining the Carbon Neutral Natural Gas Plan to achieve
carbon neutrality for the gas supply portfolio using high-quality carbon offsets with a cost cap of $19 per ton CO2e.
Offsets are purchased to neutralize emissions equal to those caused by natural gas usage in Palo Alto. Staff
purchased 60,000 carbon offsets for FY 2022 in January 2022 from a mixture of forestry and livestock projects at
an average purchase price of $12.26 per metric ton, nearly double the price of historical average transaction
prices. Staff will execute additional purchases for FY 2022 in June 2022 and expects prices to remain above
historical averages.The average purchase price of offsets purchased for the program is $7.60 per ton CO2e. The
figure below shows the composition of offset purchases.
Figure 9: Offset Portfolio Composition
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12Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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The following table provides a description of the projects.
Figure 10: Offset Project Descriptions
2.1.3 Cap and Trade Program
The gas utility has been regulated under California’s greenhouse house (GHG) regulations since January 2015 with
a GHG emissions cap that declines over time. The gas utility receives carbon allowances equal to the emissions
allowed under the cap and is required to auction off a portion of the allowances (55% in 2022, increasing by 5%
annually) through the state Cap and Trade Program. To meet its annual GHG compliance obligation, the City must
purchase allowances based on actual gas use.
The auction floor price to either purchase or sell allowances increases annually by 5% plus inflation. Historically,
allowances have traded at or near the floor price, but the clearing prices for allowances in the auction have
Project Name Project Type De scription
Grotegut Dairy Li vestock Grotegut Dairy is a 3,900 milk-cow operation in Newton, Wisconsin with a methane capture system.
Green Trees U.S. Forest
GreenTre es Advanced Carbon Restored Ecosystem is reforestation of agricultural lands into native
hardwood forest in Mississippi, Louisiana, Arkansas, and Illinois
San Juan Lachao Me xican Forest
Protecti on of forests located in High Biological Value Zones which contain flora and fauna listed in the
Me xican Endangered Speci es Li st and the International Union for Conservation of Nature’s Red List of
Thre ate ned Species. Project in San juan Lachao near Palo Alto's Sister City of Oaxaca.
Blandin Forest U.S. Forest Blandin Native American Hardwoods Conservation and Carbon Sequestration project i n Minnesota.
Pocosin+U.S. Forest
These projects are all forested land that will not be disturbed by human development. Without this
protecti on, the forests would be converted to grow wheat or corn. Forest conservation plays a vital
role in protecting freshwater systems like lakes. The forests around the lakes act as natural water
filters and purify the water for all who use it. The projects also support heal thy populations of red
wolf, bald eagle,black bear,and various bird species.
Refex ODS Ozone Depleting Substance
The RemTec facility in Bowling Green, Ohio uses an argon arc plasma destruction device to achieve
99.99 perce nt removal. The majority of refrigerants originated in California, and all were sourced
within the United States.
The RemTec facility uses an argon arc plasma destruction device to achieve the required destruction
and removal efficiency of 99.99 perce nt. The majority of ODS refrigerants originated in California, and
al l were sourced within the United States.
Me thane Capture Mi ne Methane Capture
This project is the first of its kind. Peabody Natural Gas, LLC removed methane from the North
Antelope Rochelle Coal Mine before mining. The methane was compressed and transported to a
natural gas pipeline and distributed to a national gas grid for use as fuel. Before implementation of
the project,al l the methane was vented to the atmosphere.
Virgi nia
Conservation
Forestry Program U.S. Forest
The Virginia Conservation Forestry Program - Clifton Farm and Rich Mountain is a 9000+ acre
improved forest management project in which the timber and carbon ownership and
management rights have been transferred to The Nature Conservancy's Conservation Forestry
Program. The program manages for multiple goals to incl ude: Water quality protection,
habitat diversity, high value forest products, and carbon sequestration.
Co-benefits: Biodiversity, Watershed Protection, Climate Resilience, and Connectivity
Riverview Farm
Anaerobic Digester Li vestock
Riverview is a carbon offset project generating emission reductions thought the capture and
destruction of methane at a dairy farm in Minnesota. Under the baseline, manure managed in open
lagoons led to the fugitive emission of methane to the atmosphere. In the project scenario, this
methane is captured by an anaerobic di gester and destroyed on site in the production of electri ci ty.
Co-benefits include job creati on and the improvement of local air and water quality.
Big River / Salmon
Creek Forests IFM U.S. Forest
The Big River and Salmon Creek Forests are locate d in Mendocino County, CA and cover 16,000 acre s
of redwood and Douglas-fir forest. This project is a conservation-based forest management project.
Co-benefits include the creati on of 140 j obs, protection of 37 miles of streams, and improved water
quality for local fish and bird speci es.
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increased significantly. The cost of compliance is anticipated to increase from $1.5 million in FY 2022 to $5.6
million in FY 2030, about an 18% increase per year on average, as shown in the following table:
Figure 11: Estimated Cap and Trade Costs
Revenues from the auction sale of gas utility allowances (currently about $1.2 million per year) must be used
exclusively for the benefit of the ratepayers in that utility in accordance with California Code of Regulations (CCR
Title 17, section 95893). Approved uses are 1) the funding of certain energy efficiency rebates, retrofits, and
demand reduction programs, 2) funding for programs with demonstrated GHG reductions, 3) non-volumetric
return to ratepayers, either on or off bill, and 4) certain administrative, outreach and educational costs related to
items 1-3 above. Council adopted a policy on the use of allowance proceeds (Resolution #9487), generally
mirroring the regulations and requiring additional Council approval for rebates. Per the current regulations, the
utility must either spend or rebate the funds received in any given year within 10 years (for example, funds
received in 2020 must be spent by 2030, etc.).
As of the end of FY 2021, unspent funds related to Cap and Trade revenues were placed in a Cap and Trade reserve,
until such time as they can be utilized per the dictates of applicable regulations.There was $5.936 million in this
reserve available for use at the end of FY 2021.Amounts for FY 2022 will be calculated based on annual sales less
any program related expense which may occur during the year, to be accounted for at the end of the Fiscal Year.
2.1.4 Gas Transmission Line Capacity Valuation
Palo Alto contracts for capacity on the Redwood pipeline, the path from the California-Oregon border to PG&E’s
mid-pressure transmission system, at a cost lower than the market value. During the summer months, Palo Alto
does not need all of the capacity to serve demand. The excess capacity is monetized by purchasing gas at the
California-Oregon border and selling an equal amount of gas at the terminus of the pipeline. The variable cost of
transporting the gas is much less than the gas price difference between the two points. The net benefit to the Gas
Utility in FY 2022 through FY 2022 Q3 was $208K.
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2.1.5 Gas Prepay Valuation
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 cumulatively reduced
gas commodity costs by about $629K through FY 2022 Q3.
2.2 Capital Improvement Plan Status
The following capital projects are currently in progress or have been recently completed:
GS-13001 -GMR 23 (Gas Main Replacement 23): This project is currently under construction to replace
approximately 22,300 linear feet of gas main and 142 gas services. The anticipated completion date is July
2022.
Phase 3 Cross Bore Inspection: This is a two-year project to verify approximately 1,480 sewer laterals by
video inspection, to ensure that natural gas pipelines or other utilities were not unintentionally installed
within the sewer lateral at the time of installation (known as a cross bore). Cross bore inspection under this
project started in March 2021 and the anticipated completion date is March 2023. To date, the contractor
found one gas service cross-bore.This gas service drilled through a private branched-off sewer lateral.The
damage was repaired by WGW Ops on the same day it was found.
2.3 Rate and Bill Comparisons
The figure below presents residential bills for Palo Alto and PG&E customers at several usage levels for commodity
rates in effect as of a March 2022 (a recent winter period) and May 2022 (a recent summer period). The bill
calculations for PG&E customers are based on PG&E Climate Zone X, an area which includes the surrounding
communities of Menlo Park, Redwood City, Mountain View, Los Altos and Santa Clara. The annual gas bill for the
median residential customer for FY 2022 was $689, about 11% lower than the annual bill for a PG&E customer
with the same consumption. PG&E’s distribution rates for gas have increased substantially to collect for system
improvements for pipeline safety and maintenance.
Figure 12: Residential Natural Gas Bill Comparison ($/month)
Season
Usage
(therms)Palo Alto PG&E Zone X
% Difference
Winter
(March 2022)
30 $ 50.03 $ 61.71 -18.9%
(Median) 54 81.34 113.82 -28.5%
80 130.08 179.25 -27.4%
150 279.06 355.41 -21.5%
Summer
(May 2022)
10 26.45 20.70 27.8%
(Median) 18 38.89 38.54 0.9%
30 65.25 68.87 -5.3%
45 100.93 106.77 -5.5%
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2.4 Reliability
The City of Palo Alto tracks all gas service interruptions.A summary chart of these interruptions can be found
below. Gas service interruptions are usually due to repairs of broken or damaged gas services and mains. This kind
of damage is often caused by excavation by outside parties digging in the City.
Figure 13: Gas Service Interruptions, FY 2022
Gas Q1 Q2 Q3
Number of Breaks 3 1 2
Total Minutes 360 60 300
Customers Affected 38 1 22
2.5 Financial Health
Below is a summary of the financial position for the gas utility.
2.5.1 Sales Forecasts vs. Actuals
Actual sales volume for Q3 of FY 2022 were 0.8% lower than forecasted in the FY 2022 Financial Plan. But actual
sales revenue was 16.5% higher than forecasted because gas commodity prices were higher. Much of the revenue
is pass-through in nature and offsets commensurately higher gas commodity purchase costs.
Figure 14: Gas Sales Volume (Therms), FY 2022-Q3
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Figure 15: Gas Sales Revenue ($), FY 2022-Q3
2.5.2 Financial Position
Through FY 2022Q3, while therm sales have been slightly lower than budget by about 1%, sales revenues were
almost 17% higher than budget. Because the gas commodity charge is a pass-through of market costs, increased
revenue offsets the increased cost. Now that the winter heating season is over CPAU gas customer bills will not
be will not be impacted as much by the higher gas prices.
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3 Water Utility
The Water Utility serves water to virtually all Palo Alto residential and non-residential customers.Nearly all of the
water delivered All potable water in the City is from the San Francisco Public Utilities Commission (SFPUC) Hetch
Hetchy Water System. This system delivers high quality water from the Sierra Nevada and uses no pumping to
deliver water to Palo Alto. Palo Alto uses a small amount of recycled water for irrigation of the Municipal Golf
Course and a few other sites near the Regional Water Quality Control Plant. The City also maintains a system of
reservoirs and wells that enable Palo Alto to serve water during an interruption of the Hetch Hetchy system. Costs
for the Water Utility are split approximately half for the operation, maintenance and periodic replacement of Palo
Alto’s water system and half for the costs of the water purchased.
3.1 Water Supply and Transmission
January through March 2022 was the driest on record for the Hetch Hetchy gauge. Despite the dry January,
atmospheric rivers in October and December generated significant snowpack. Hetch Hetchy System precipitation
was 64% of median annual total. The figure below shows the trend toward dryer and hotter conditions at an
upcountry weather station.
Figure 16: Upcountry Temperature and Precipitation Trends
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Storage in the San Francisco Regional Water System is below normal while in better shape than many reservoirs
across California. As of May 31, 2022, the Regional Water System total storage operated by the San Francisco
Public Utilities Commission (SFPUC) was 73.7% full (normal system storage for this time of year is 84.7%). In the
figure below, the solid black line shows storage in the Regional Water System for the past 12 months (color bands
show contributions to total system storage)and the dashed black line shows total system storage for the previous
12 months.
Figure 17: Regional Water System Storage
On August 20, 2021 the SFPUC received curtailment orders for Tuolumne River diversions. The
curtailments eliminate access to the Water Bank which, as shown in the figure above, provides much of
the system storage. From October 2021 through May 2022, the State Board suspended the curtailments
and reinstated them on June 8, 2022.
The SFPUC declared a local water shortage emergency by Resolution No. 21-0177 on November 23, 2021 calling
for voluntary systemwide 10% water use reductions from FY 2019-2020 levels. Each Wholesale Customer has its
own requested cutback level and for January through June 2022, Palo Alto’s voluntary water purchase cutback
level was 7.96%.For January –May 2022,Palo Alto’s cumulative monthly water budgets were 1,537,884 CCF while
actual total purchases were 1,611,651 CCF or 5% above the budget.This is in part because of the exceptionally
dry conditions in January through March 2022. However, for the period July 1, 2021 through May 31, 2022,
compared with the same period from July 1, 2019 to May 31, 2020, the Palo Alto community reduced water usage
by 2%.On May 24, 2022, SFPUC adopted Resolution No. 22-0098 adopting a systemwide voluntary water use
reduction of 11% compared to baseline water use during FY 2019-2020. Staff expects this to increase Palo Alto’s
voluntary water purchase cutback level by approximately 2% beginning in July.SFPUC’s cutbacks are currently
voluntary, however they could become mandatory in the fall if insufficient water conservation is observed
systemwide.
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The figure below shows water usage for the South Bay/East Bay (including Palo Alto)compared to several
benchmarks including 2019.
Figure 18: SFPUC Water Deliveries
Valley Water, the groundwater manager in Santa Clara county, declared a water shortage emergency and
adopted a 15% mandatory water use reduction for water retailers its agency serves. Valley Water called for the
County, water retailers and cities to restrict ornamental landscape and lawn irrigation with potable water within
their service or jurisdictional areas to no more than two days per week. In June, staff will recommend to City
Council restricting potable irrigation of ornamental landscapes and lawns to 2 days per week, except to ensure
the health of trees and other perennial non-turf plantings.Palo Alto is working with Valley Water on messaging
to customers in the county to avoid confusion as much as possible. As such, the wise use of water rather than
specific targets will continue to be emphasized.
3.2 Capital Improvement Plan Status
The following capital projects are currently in progress or have been recently completed:
WS-09000 (Corte Madera Reservoir Seismic Upgrade): This is a design-build project. A new concreate tank
replaced the old steel tank. The construction of the new reservoir was completed in April 2022.
WS-14001 -WMR 28 (Water Main Replacement 28): The project is to replace approximately 18,763 linear
feet of water main and 256 water services. Construction of this project started on 4/18/22 and the anticipated
completion date is in November 2023.
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3.3 Rate and Bill Comparisons
The figure below shows the water bills for single-family residential customers compared to what they would be
under surrounding communities’ rate schedules as of October 2021. CPAU is among the highest monthly bills of
the group. Palo Alto’s water bills at 9 CCF per month are 16% higher than the comparison group average.
Figure 19: Residential Water Bill Comparison ($/month)
As of April 2022
Usage CCF/month Palo Alto Menlo Park
Redwood
City
Mountain
View Santa Clara Hayward
4 $46.89 $54.03 $54.04 $38.80 $26.76 $39.80
(Winter median) 7 70.28 77.71 76.09 60.07 46.83 61.34
(Annual median) 9 90.42 93.50 90.79 74.25 60.21 75.70
(Summer median) 14 140.77 136.35 138.94 109.70 93.66 119.80
25 251.54 241.76 267.39 230.19 167.25 216.82
3.4 Reliability
The City of Palo Alto tracks all water service interruptions. A summary chart of these interruptions can be found
below. Water service interruptions are usually due to repairs of broken or damaged water services and mains.
Figure 20: Water Service Interruptions, FY 2022
Water Q1 Q2 Q3
Number of Breaks 7 15 3
Combined Minutes 345 1395 1705
Customers Affected 76 335 39
3.5 Financial Health
Below is a summary of the financial position for the water utility.
3.5.1 Sales Forecasts vs. Actuals
Actual water sales volumes through Q3 of FY 2022 were 3.7% lower than forecasted in the FY 2022 financial plan.
Actual water sales revenues were 2.7% lower than forecasted during the same period. Water usages during Spring
increased due to dry weather conditions, offsetting water conservations made during the Winter season.
However, staff expects lower water usages through the summer due to increased water use restrictions.
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21Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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Figure 21: Water Sales Volume (CCF), FY 2022-Q3
Figure 22: Water Sales Revenue ($), FY 2022-Q3
3.5.2 Financial Position
The Water Operations Reserve was filled to the maximum guideline level at the end of FY 2021 as higher bid costs
and delays in project schedules resulted in deferred main replacement projects over the past few years. There are
additional funds in the Operations Reserve above the maximum guideline level that will be used to cover water
utility operational and capital costs in FY 2022 and FY 2023. At year end FY 2021 there was approximately $10.4
million in Water CIP Reappropriations and Commitments reserves.The adopted water capital budget for FY 2022
included an additional $14.4 million. The FY 2022 Water Utility CIP includes a main replacement (WMR 28) as well
as one-time seismic reservoir upgrades (one upgrade is complete and a second and third are planned in FY 2023
and FY 2026). At year end FY 2021, there was also $10.7 million in the CIP Reserve and $9.07 million in the Rate
Stabilization Reserve. Staff projects that with expected revenues and expenses together with transfers from the
CIP Reserve, the Operations Reserve will remain at the maximum guideline level at year end FY 2022 and will reach
approximately target levels by the end of FY 2023. Staff will continue to monitor drought conditions and respond
to calls for voluntary or mandatory conservation. Staff will evaluate and propose reserve transfers between the
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Rate Stabilization Reserve, CIP Reserve, and Operations Reserve in the annual Financial Plans, and the need for
those reserve transfers will be re-evaluated at the end of FY 2022 when the reserve balances are known.
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4 Wastewater Utility
The Wastewater Utility includes the system of sewer pipes that collect and transport wastewater to the Regional
Water Quality Control Plant (RWQCP) operated by the City of Palo Alto under a partnership agreement with
several surrounding communities, as well as Palo Alto’s share of the cost of operating the RWQCP. The RWQCP
provides treatment and disposal of wastewater for Palo Alto. Costs for the Wastewater Utility are split
approximately half for the operation,maintenance and periodic replacement of Palo Alto’s sewer collection
system and half for the costs of wastewater treatment at the RWQCP.
4.1 Wastewater Treatment Updates and Capital Planning Status
The Regional Water Quality Control Plant is operated by Palo Alto’s Public Works Department and provides
wastewater treatment to Palo Alto, Mountain View, Stanford, Los Altos, East Palo Alto and Los Altos Hills. The Palo
Alto Wastewater Collection Utility pays its share (approximately 35% projected in FY 2023) of the costs for
wastewater treatment and disposal. Capital costs for wastewater treatment are a major driver for cost increases
for the Wastewater Treatment Utility and by extension for the Wastewater Collection Utility. These costs are
projected to increase at approximately 13% per year on average through FY 2032. The RWQCP is facing the need
for major upgrades in coming years, due to aging equipment and changing environmental regulations.
Rehabilitation and replacement of plant equipment that has been in use for over 40 years is necessary to ensure
the city can continue to provide wastewater treatment operations safely and in compliance with regulatory
requirements for the discharge of treated wastewater 24 hours a day.
4.1.1 Treatment Cost Trends
RWQCP staff project treatment costs paid for by Palo Alto’s Wastewater utility to increase by approximately 5%
annually on average from FY 2023 through FY 2032. A key driver of the increases are capital projects, parts,
materials and debt. The treatment debt service costs are increasing at an average of about 13% per year from FY
2023 through FY 2032 to keep up with ongoing replacement of aging equipment. Larger increases to capital
expenses are expected to begin in FY 2024 in the form of new debt service for major projects to implement the
Plant’s capital program. The figure below shows Palo Alto’s share of each component of estimated treatment
costs. Major upcoming capital projects and estimated years for debt service to begin are reflected in the “Planned
Debt Service” bar in the figure below and include:
Joint Interceptor Sewer Rehabilitation and 1900 Embarcadero Road Purchase (FY 2024)
Primary Sedimentation Tank Rehabilitation (FY 2025)
Outfall Line Construction (FY 2027)
Operation Center and Laboratory (FY 2028)
Secondary Treatment Upgrades (FY 2028)
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Headworks (FY 2029)
Figure 23: Palo Alto’s Share of Estimated Wastewater Treatment Expenses (Projection and Planned CIP)
The figure shows the ongoing annual CIP reinvestment (“Recurring/Minor CIP” and “Existing Debt Service”) as
well as treatment operations costs, which make up the majority of the treatment costs but are not growing as
quickly as the planned debt service. Factors that are contributing to cost increases for treatment operations are
rising salary and benefits costs, allocated charges for centralized city services needed to support wastewater
treatment fund operations, increased water and air permitting fees from the Regional Water Quality Control
Board and Bay Area Air Quality Management District, commodity rates to operate the facility, and chemical
expenses.
4.1.2 Regional Water Quality Control Plant Capital Planning Status
The Long-Range Facilities Plan, completed in 2012, guides the capital plans for the RWQCP. The RWQCP’s current
capital work in-progress includes an estimated $359 million in projects. The following table summarizes these
ongoing projects and provides their status and costs.
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Figure 24: Current RWQCP Capital Work In-Progress (information from RWQCP June 2022 Partners Meeting)
Project Status Expense (million $)
Primary Sedimentation Tanks Rehabilitation and
Equipment Room Electrical Upgrade
Construction $19.4
New Outfall Pipeline 90% Redesign $17.4
Secondary Treatment Upgrades 100% Design $150.1
Advanced Water Purification System 60% Design $52.5
Technical Services Building/Lab Building, Ops
Building Remodel
Advanced Planning $41.4
Buy 1900 Embarcadero Road Planning $7.1
Headworks Facility Replacement Budgeted $48.6
Joint Interceptor Sewer Rehabilitation Design $14.2
Projects in Progress Various $8.3
Subtotal $359
The largest projects listed above include the Headworks Facility Replacement which involves replacement or
rehabilitation of the parts of the facility that pump raw sewage to the main treatment works (the headworks), and
rehabilitation of primary sedimentation tanks that separate out primary sludge. Additionally, the RWQCP
anticipates regulations to limit nutrient discharges (on total nitrogen) into the San Francisco Bay. The current
secondary treatment design cannot remove nitrogen and the Secondary Treatment Upgrades will address this
regulatory change as well as address aging mechanical and electrical equipment that must be replaced.
The RWQCP plans to fund these capital projects through a combination of mechanisms including State Revolving
Fund loans, and revenue bonds. In addition,Valley Water will be providing $16 million of funding for the Advanced
Water Purification System.
4.2 Collection System Capital Improvement Plan Status
The following capital projects are currently in progress or have been recently completed:
WC-17001 -SSR 30 (Sanitary Sewer Replacement 30): This project is to replace approximately 10,120 linear
feet of wastewater main and 156 sewer laterals. The construction started on 3/28/22 and the project is
anticipated to be completed in November 2022.
4.3 Rate and Bill Comparisons
The figure below shows the wastewater monthly bill for residential customers in Palo Alto compared to what they
would be under surrounding communities’ rate schedules as of April 2022. Palo Alto’s monthly sewer bill is lower
than four of the six neighboring communities. Menlo Park in this table refers to the West Bay Sanitary District.
Staff will report on future rate increases once they are adopted by the wastewater utilities.
Figure 25: Residential Wastewater Bill Comparison ($/month)
As of April 2022
Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward
$43.32 $104.58 $89.28 $46.40 $40.83 $44.53 $37.17
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26Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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4.4 Financial Health
Below is a summary of the financial position for the wastewater utility.
4.4.1 Sales Forecasts vs. Actuals
Actual wastewater sales revenues for Q3 of FY 2022 were 2.4% below forecasted levels from the FY 2022 Financial
Plan. This lower revenue was in part due to lower non-residential customer class water usage during the months
impacted by the COVID-19 pandemic restrictions. Non-residential revenue is expected to recover over the next
few years.
Figure 26: Wastewater Sales Revenue ($), FY 2022-Q3
4.4.2 Financial Position
The Wastewater Collection Operations Reserve was within the guideline range at year end FY 2021 and staff
projects it will remain within the guideline range at year end FY 2022; the CIP Reserve had a balance of
approximately $3.2 million at year end FY 2021 and staff will seek Council approval in the FY 2023 Wastewater
Collection Financial Plan to access funds in the CIP Reserve if they are needed for CIP projects. The Wastewater
Collection Utility CIP Reappropriation and Commitment Reserves totaled $0.83 million at the end of FY 2021. In
addition to these funds, the adopted FY 2022 budget included over $6 million in the CIP program primarily for the
Sanitary Sewer Replacement Project 30.
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27Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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5 Fiber Utility
The City offers a "Dark" fiber service providing a fiber connection from Palo Alto businesses to the downtown
Internet Exchange. At the exchange businesses select an internet service provider (ISP) for bandwidth and
connection speed.
5.1 Fiber Utility Strategic Planning
Magellan Advisors has completed 80% of the engineering design for the fiber backbone and fiber-to-the-home
(FTTH) which includes designs for running overhead and underground lines and route optimization. Staff is
identifying potential sites for three fiber huts which will be strategically located (i.e. north, south, west) to serve
the entire city. The huts are either prefabricated or customized building designed for broadband. It centralizes all
fiber for connections to neighbors and provides electronic and interconnection. It can serve between 10,000 to
15,000 customers. In addition, the City will need about 130 fiber cabinets throughout the City. A cabinet is a
manufactured steel structure that houses fiber connections. A cabinet connects each neighbor back to the fiber
hut. Each cabinet can serve between 250 to 500 customers and can be mounted below or above ground. The City
will reuse existing cabinet locations where feasible to reduce the number of new cabinets.
The City launched the Palo Alto Fiber Engagement Portal.The goal of the online platform is to inform the
community about the Palo Alto Fiber initiative and encourage engagement around the community. The website
explains what fiber is, the benefits of fiber, how to get involved, resources that may be useful to the community,
and how to contact the City for more information. The platform contains a map where residents can list their
neighborhood and share their ideas and uses of Palo Alto Fiber. Residents and businesses can also register to
receive updates of Palo Alto Fiber. The City will also be embarking on a social media campaign, drafting a video
series about fiber, and recruiting public ambassadors to host small group meetings to discuss fiber.
After the awareness and community engagement campaign, the City and Magellan will be launching residential
and commercial surveys in June 2022.The surveys will assess community interest and build support for the Palo
Alto Fiber project. The purpose of the surveys is to measure demand for broadband services and to better
understand what value residents and businesses place on different aspects of their broadband services.
5.2 Capital Improvement Plan Status
The Fiber Network Rebuild CIP project is temporarily on hold pending the results of the fiber backbone expansion
and FTTH project. As part of the City’s wildfire mitigation plan, CPAU will underground approximately 11 miles of
electric line in the Foothills area by 2025. CPAU have already completed 1.5 miles of substructure work and have
started working on the next 1.5 miles. By the end of 2023, CPAU anticipate the actual undergrounding of lines will
begin.
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5.3 Reliability
There were no unplanned fiber outages or events to report in Q3 of FY 2022.
5.4 Financial Health
Below is a summary of the financial position for the fiber utility.
5.4.1 Fiber Sales
As of March 2022, fiber revenues for FY 2022 are projected to be $3.8 million, which is $0.5 million or 12% below
FY 2022 revenue forecast of $4.3 million. Based on the number of new dark fiber applications, staff projects
annual fiber revenues will return to pre-pandemic level of $4.5 million by FY 2024. To expand the dark fiber
business, CPAU is recruiting for a dedicated Fiber Engineer and Fiber Market Analyst to reduce fulfillment time for
new applications.
Since March of 2022 the Dark Fiber Utility has seen an upturn of interest in obtaining Dark Fiber connections.
Interested customers include large corporations in the Stanford Research Park, the Downtown area and the
Embarcadero corridor.The Dark Fiber utility does not publicly disclose individual customer company names. By
industry sector the two largest Dark Fiber Projects have been for the medical and transportation sectors. Note
that these companies have requested fully redundant, high fiber count connections suggesting that these
companies are trusting City Dark Fiber for their primary connections for all of their communications needs, as
opposed to using City Dark Fiber as a backup or supplemental service. In addition, two national fiber long haul
carriers with railway easements are working with our Project management and Fiber Operations teams to bring
their high-volume fiber to the internet exchange. This again illustrates the fiber industry’s trust in, and reliance on
Palo Alto’s Fiber Utility.
Fiber expenses are projected to be $3.7 million which includes the $2.4 million contract amendment with Magellan
for engineering design of the fiber backbone and FTTH networks, community engagement, FTTH business plan,
and grant funding analysis. Funding is shared between Fiber ($2.0M) and Electric ($0.4M). As of Q3 2022, $1.2
million is still remaining under the Magellan contract.
5.4.2 Financial Position
The projected ending FY 2022 Fiber Optic Utility Rate Stabilization Reserve is $34.0 million.
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6 Customer Programs (Efficiency and Sustainability)
The City’s Utilities Department maintains a number of programs to help customers save money, use energy and
water efficiently, and reduce carbon emissions. These programs are funded through a variety of funding sources,
some of which are summarized below.
6.1 Customer Programs Updates
Below is a summary of the City’s energy and water efficiency programs, as well as programs to encourage building
electrification and adoption of electric vehicles.
6.1.1 Energy and Water Efficiency
Energy & Water Efficiency Workshops
While many public events and workshops were canceled in response to the COVID-19 pandemic, the City’s
partners at the Bay Area Water Supply and Conservation Agency (BAWSCA) have been offering virtual landscape
workshops since Spring 2020 for residents to learn how to save water and improve the sustainability of their
landscape from the comfort of home.
Upcoming Events and Workshops from Partner Agencies
Tree Care During Times of Drought Tuesday, June 14, 5:30 PM -7:00 PM (Webinar)
Lawn Conversion Wednesday June 22, 6:00 PM -7:30 PM (Webinar)Please visit the BAWSCA website for
a complete list of available classes and events at: https://bawsca.org/conserve/programs/classes. All past
Landscape Class Videos are available online at: https://bawsca.org/conserve/landscaping/videos/. Please
visit the South Bay Green Gardens website to learn more about conserving water, preventing pollution,
promoting healthy soils, and events in the Bay Area at: https://www.southbaygreengardens.org/. Palo
Alto residents and businesses can take advantage of landscaping programs through the City’s cost-sharing
partnership with Valley Water at https://www.valleywater.org/saving-water/rebates-surveys .
For updates on future events and workshops, please visit http://cityofpaloalto.org/workshops
Residential Energy and Water Programs
As post-COVID utility programs begin to regain momentum after the extended period with no in-person visits, we
are gradually seeing increasing participation in our residential efficiency and electrification programs. The Home
Efficiency Genie program continues to provide residents with professional advice and information to improve their
home’s efficiency and comfort, lower their energy and water usage and get guidance on home electrification
options. Even with the Genie returning to in-home comprehensive and diagnostic assessments in the fall of 2021,
the virtual option developed during COVID continues to be a service that residents are interested in. The Home
Electrification Readiness Assessment (HERA) was also amended to include a virtual version during COVID. Both
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30Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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the in-home and virtual versions continue to help residents assess home electrification upgrades that their home
can accommodate and provide actionable next steps. Between January and May of 2022, the Genie performed 7
comprehensive in-home assessments, 7 HERAs and one virtual assessment.
CPAU’s Residential Energy Assistance Program (REAP) for income-qualified customers continues to reach our most
vulnerable population offering energy and water efficiency improvements at no cost to the customer. Residents
who are newly qualified for CPAU’s Rate Assistance Program (RAP) are notified each month of their eligibility for
these free upgrades installed by CPAU’s vendor,Synergy. Between January and May of 2022, 10 new REAP
customers have taken advantage of the free efficiency upgrades.
For our multifamily (MF) property owners, CPAU continues to offer the Multi Family Plus (MF+) program which
offers free energy efficiency upgrades installed by our vendor,Synergy. These upgrades include lighting upgrades
to LEDs and whole building envelope upgrades. Between January and May of 2022, there have been upgrades to
3 MF properties,and one significant LED lighting upgrade for a 50-unit apartment complex is scheduled but waiting
due to supply chain issues for the new lights.
Bay Area SunShares Program
The 2021 Bay Area SunShares solar and battery storage group-buy-discount program administered by Building
Council for Climate Change (BC3) was offered to Palo Alto residents from September 1, 2021 to January 14, 2022.
SunShares had a record-setting year with the most residents served and most solar capacity contracted in the
program’s six-year history. As of June 9, 2022, 10 of 32 contracts (31%) have been installed and one contract has
been cancelled. Staff continue to coordinate with Planning and Development Services to support project
permitting and installation. The 2022 SunShares program will launch in late Q4 2022.
Business Advantage Program
As of May 24,2022, the Business Advantage Program (BAP) has enrolled 68 customers into the GridPoint Energy
Management program (GEM). Of the 68 customers, only two decided to withdraw and return equipment. One
customer preferred their old thermostat (NEST)and the other was frustrated using the system and had multiple
overrides. The two returned units will be redeployed. The majority of program sign ups have come from direct
customer contact through face-to-face engagement/sales. GridPoint currently acquires six customers per month
(i.e.,installed units). In May 2022, GridPoint held its first 30-minute customer training session to educate current
users on how to properly program and operate the GEM system. The training session had nine customers
participate. The goal of this outreach is to offer end users practical hands-on training on how to efficiently and
effectively operate their GridPoint system. This will be a monthly training opportunity with dedicated outreach
via email. Additionally, GridPoint and City of Palo Alto would like to re-engage the Palo Alto Chamber of Commerce
to discuss the benefits of the GEM system free energy management system.
Large Commercial Energy Efficiency Program
As of May 25,2022,Enovity has completed two projects with about 100,000 kWh savings. They have an additional
4 projects in the pipeline and anticipate finishing these projects before the end of the fiscal year with an additional
1,500,000 kWh or a total of 1,600,000 kWh for FY 2022. Key Account Managers have been actively reaching out
to engage customers with direct email contacts as well as through the Questline Key Account Newsletter. Lighting
continues to be the most popular energy conservation measure. Some companies, however,are reluctant to
allocate resources to efficiency upgrades until staffing levels at their sites return to pre-pandemic levels.
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31Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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Business Customer Rebates, formerly Commercial Advantage Program
On May 11, 2022 the City of Palo Alto Utilities “soft” launched the Business Customer Rebate (BCR) program as
an updated version of the previous rebate program for business customers, which was called the Commercial
Advantage Program. The rebrand was designed to emphasize new rebates that are being introduced for building
electrification measures, including rebates for space and water heating equipment as well as cooking equipment.
These electrification rebates support the City’s Sustainability and Climate Action Plan (S/CAP)goal of emissions
reduction by incentivizing the reduction of natural gas use in the non-residential sector. In addition to the
introduction of new rebates for electrification, rebates for gas equipment were discontinued, and electric
efficiency rebates increased for most measures. The program is still designed for E2, E4 , E7 electric customers, as
well as G3 gas customers.
Business Energy Advisor
On June 6, 2022, the CPAU launched a new Business Energy Advisor program to assist business customers with
the implementation of energy efficiency and water-savings measures. This program aims to help businesses lower
their energy and water bill while improving the health and comfort of the building occupants.Businesscustomers
(excluding Key Account customers) can get a free phone consultation with an Energy Advisor, plus an in-person
or virtual site walk-through to evaluate the onsite energy systems such lighting, HVAC, water heating, and
refrigeration to identify efficiency upgrade potential at no cost to the customer.The Business Energy Advisor will
provide support throughout the contractor selection, measure installation and rebate submission process.
6.1.2 Electric Vehicles
Palo Alto continues to facilitate the installation of EV charging infrastructure throughout the City to support mass
EV adoption, with equitable access for multifamily and lower income residents, as well as workplaces, public
parking lots and retail areas. Correspondingly, cross-departmental work is progressing on proposals for curbside
charging, fleet electrification and permit streamlining.
Financial Overview
FY2021 actual expenses were $1.15M, of which $0.89M was contribution to the CFR program and $0.15M in
rebate payments. Revenues for FY21 was $1.75M, resulting in the cash reserve increasing by $0.6M for a reserve
balance of $6.93M at the end of FY 2021.
FY2022 expenses to date is $0.54M, of which $0.465 is for the first installment of CALeVIP program. No direct
customer rebates have been paid to date. Revenues for the year is $1.59M,lower than anticipated a year ago due
to declining market prices for LCFS credits.Total LCFS revenues received to date is $10.1 million.
Overview of Programs Focused on Increasing EV Charging Accessibility at Multi-family Properties and
Workplaces
Mission:The EV team’s mission is to close the multi-family EV access gap. Only 13% of EVs in Palo Alto are
registered in multi-family buildings, while multi-family households make up 42% of households.
Why:This is an equity issue. Most middle-income and low-income residents in Palo Alto live in multi-family
housing. EVs provide significant household savings over their lifetime, and yet those who most need those
savings have the hardest time obtaining charger access due to the challenges of installing chargers in multi-
family housing. Private industry is not adequately serving this market, so the City is well positioned to help,
making this a meaningful use of available City funding sources for EV promotion.
Program Goal:Expand EV charging accessibility to 10% of multi-family households (about 1,100 households)
by 2025. This goal could be increased with additional funding if it could be accommodated by the distribution
system.
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32Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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Program Strategy:Facilitate development of some shared Level 2 chargers in multi-family buildings plus as
many Level 1 chargers as can be installed. Size electrical infrastructure to enable the building owner to add
more EVs.
Eligibility:Any multi-family or condo building, nonprofits, some workplace charging is available as well.
Program Results to-Date
Program Commencement:December 2017 (multi-family rebates), October 2019 (multi-family / nonprofit
technical assistance), December 2019 (workplace charging rebates)
Leads:Over 130 sites have enrolled in the programs, of which 86 are multi-family properties representing
over 3400 units
Project Status:Of the 133 enrolled sites, 101 have actively proceeding or completed projects:
o 50 in the site evaluation, business case development, and project design phase
o 20 obtaining bids
o 6 ready-to-submit permits
o 8 permits submitted/not issued
o 3 under construction
o 14 projects completed
Results:When the active projects listed above are completed, the City will have:
o Facilitated access to EV charging for over 1500 multi-family housing units. Without this charging these
residents are unlikely to consider an EV.
o Supported access to EV charging for employees of several non-profits and workplaces. These chargers
will serve both middle-income and low-income employees who may not have EV charging at home and
may now be able to consider an EV.
Marketing Strategy
Of 803 multi-family buildings in Palo Alto, focus on the top 5% (44 of the largest properties) which includes 32%
of the units (about 3800 households).Also,focus on low-income housing via affordable housing providers. 1600
low-income units exist at 35 sites of which 5 properties have 100 units or more.Outreach consists primarily of
direct outreach to property owners via call campaigns, with marketing done by the 3rd party program provider,
CLEAResult.
Customers:Landlord, condo association, or nonprofit building owner
Customer Needs
o Trusted, neutral advisory services (rather than vendor sales services) with a direct connection to internal
City staff to facilitate problems.
o Technical assistance (site evaluation, including electrical capacity, business case development, project
design, obtaining bids, preparing permit packages)
o Incentives (both for charging equipment and any distribution upgrades needed)
Updates by Program
EV Technical Assistance Program (EVTAP)
Goal: Facilitate the installation of 180-360 ports @ 60-90 sites (By 2024)
Offer technical assistance for the installation of EV chargers at Non-Profit and MF properties, involving a series
of site visits, technical evaluations and engineering reviews, that culminate in the landlord receiving contractor
bids and then assistance submitting a building permit, applying for incentives and project management of the
installation. Projects expected to take up to 2 years or more to reach completion.
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33Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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As of the end of May 2022:
o 0 installations complete
o 7 Permit Applications Submitted
o 56 sites enrolled and working through the program
o Potential for 319 Level 2 ports and 56 Level 1 ports
Figure 27: EV Technical Assistance Program (EVTAP), Cumulative Progress Report (Jan-May 2022)
EV Charger Rebate Program
Goal: Incentivize the installation of EV chargers at Non-Profits and Multifamily properties. CPAU currently
offers up to $8000 per port for up to 10 ports.
As of the end of May 2022:
o 32 ports installed
o Since the launch of this program in 2017, UTL has facilitated the installations of 94 new EV charging
ports/connectors at 14 sites. The breakdown of the installation sites: 6 MF and 8 non-profits (including
3 schools). Avg. cost of each port: $10k and projects have averaged 12 months to complete.
CALeVIP (California Electric Vehicle Infrastructure Project)
Goal: Facilitate and Incentivize the installation of EV chargers at commercial sites.
As of the end of May 2022, A total of $1.54M has been reserved by 8 site owners through CALeVIP, a
commercial EV charging,matching grant program sponsored by the California Energy Commission (CEC) with
a total of $2 million in funding over two years.The proposed installations could lead to the installation of 115
Level 2 ports and 14 DC Fast Chargers.
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34Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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o 0 installations complete
o 8 sites enrolled and working through the program (2 hotels, 5 office sites and 1 Midtown retailer)
o 8 Permit Applications Submitted
o 6 Permits Issued
o Potential for 115 Level 2 ports and 14 DC Fast Chargers
CCFR (California Clean Fuel Rewards)
Goal: Incentivize the purchase of new EVs
In the past 18 months. since the launch of the CCFR program in November 2020, Palo Alto residents have
earned 1,336 rebates valued at $1.6M.This translates to, 6% of Palo Alto households purchasing an EV,taking
advantage of this program, compared to approximately 1.4% of customers in PG&E territory and 2.5% of
Silicon Valley Power customers. To date, Palo Alto has contributed $1.3M towards this state program. The
most popular EV continues to be the Tesla Model Y and Model 3 and the most popular plug-in hybrid continues
to be the Toyota Prius Prime.
In November 2021, due to higher than expected participation levels statewide, CCFR rebates were reduced
from $1,500 to $750.However,it is likely that these rebate levels will be decreased again in the near future,
due to lower than expected Low Carbon Fuel Standard (LCFS) credits prices, which today are less than half of
what they were a year ago. California LCFS credit prices have hovered around $200 per metric ton of CO2e
for several years but today are at around $100. This is significant,as the funds generated from LCFS,not only
fund the CCFR program, but is CPAU’s main source of funding for all EV programs.
November 2020 -May 2022:
o 1,336 Rebates paid to Palo Alto residents for EV Purchases
Curbside Charger Pilot
Goal: Install 10 EV charging ports in front of 10 single family homes, to expand the types and locations of EV
charging infrastructure throughout Palo Alto, for residents who cannot or do not want to install charging
infrastructure and visitors in need of a charge while in Palo Alto. If the 10 charger, 5-year pilot proves
successful, staff may consider large scale deployment of curbside charging.Residential champions of this
program are ready to re-energize this pilot in the coming months.
As of the end of May 2022:
o 0 Installations
o 1 Permit Submitted
o 4 Interested Households
EV Awareness and Outreach
Goal: Raise awareness, answer questions and encourage residents to consider transitioning to electrified
modes of transportation, including electric cars, e-Bikes and other modes of clean transportation.After
contracting with multiple vendors, CPAU is offering a wide array of EV classes and events. Through the end of
May 2022,CPAU has been involved in 15 EV education and outreach events and expects to offer over 2 dozen
workshops and events during calendar year 2022. There is a high level on interest and many of the online
webinars regularly attract over 100 highly engaged participants. We have actively incorporated e-Bikes into
class content and hosted the City’s first ever e-Bike test ride event on Earth Day.
January -May 2022:
o 15 EV education and outreach events completed
o 800 attendees
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35Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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Figure 28: Schedule of CPAU Workshops and Events, Jan –May 2022
Event #Day Date Event
1 Thursday 1/27/2022
EV Workshop: New Models and Insider Tips for Purchasing an EV (New
Attractions and Insider Tips)
2 Thursday 2/17/2022 EV 101
3 Tuesday 3/1/2022 EV 101
4 Thursday 3/10/2022 EV Financial Incentives Clinic (with optional follow-up consultations)
5 Sunday 3/13/2022 Congregation Beth Am Sustainability Team -Webinar on Electrification
6 Saturday 3/26/2022 EV 101 – 1
7 Sunday 3/27/2022 Neighborhood EV Expo 1 of 9 -First Congregational Church
8 Sunday 4/10/2022 Earth Month EV 101 Workshops w/ EV Showcase
9 Wednesday 4/20/2022 EV 101 – 2
10 Friday 4/22/2022 Stanford Healthcare Earth Day Event
11 Friday 4/22/2022 Earth Day March and Rally for Earth
12 Saturday 4/23/2022 e-Bike Test Ride -Earth Day Event
13 Wednesday 5/4/2022 EV101 – 3
14 Saturday 5/7/2022 Neighborhood EV Expo 2 of 9 @ May Fete Parade
15 Thursday 5/12/2022 EV Charging Workshop
16 Tuesday 5/17/2022 EV 101 – 4
Visit http://www.cityofpaloalto.org/workshops for information on upcoming classes.
City-Owned EV Chargers
Goal: Install EV Charging Infrastructure for the public as well as City-fleet.
As of the End of May 2022:
o 124 -City-Owned Ports
o 120 - Publicly accessible EV Charging ports
o Newest chargers: 6 ports at renovated Junior Museum on 1451 Middlefield Rd.
Transformer Upgrade Rebate Program
Goal: Provide discounts to defray the cost of utility distribution system upgrades triggered by EV
applications, costs that would otherwise be borne by the customers. With this program we are offering up
to $100K for MF & non-profits and up to $10K for SFH
As the End of May 2022:
Through EVTAP we are learning that many older properties in Palo Alto, especially multifamily buildings, have
limited electric capacity to accommodate EV chargers and building electrification. The EV team is working
closely with Engineering, looking into methodologies for pre-screening of transformer loading when looking
at potential electrification.
6.1.3 Building Electrification
With sustainability continuing to be a Council priority, staff recognizes the need to promote the importance and
benefits of building electrification (BE) while removing barriers to voluntary electrification efforts in existing
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buildings. Current work covers three areas of activities: public outreach, customer program development and
implementation, and strategy and policy development.
For public outreach, staff continues to participate in meetings with Working Group teams developed through the
Council’s Ad Hoc Committee. These working groups hold periodic updates with the public, including one on June
14, 2022.
For nonresidential customer programs, staff is currently working with CLEAResult to launch a Business
Electrification Technical Assistance Program (BE TAP)by mid-2022.Program services under BE TAP will include
education and marketing to building owners and property managers, free technical assistance to support
customers’ building electrification journey, and post-installation quality control.Near-term priorities for BE TAP
include replacement of mixed-fuel rooftop HVAC units and gas water heaters with efficient heat pump. The
program will also address other gas equipment in commercial kitchens, pools and spas.All commercial customers
are eligible to participate in the BE TAP program and receive electrification rebates.
For residential customer programs, staff issued a comprehensive RFP in June 2021 for residential building
electrification, energy and water efficiency programs which includes single family and multifamily homes as well
as income and medically qualified residents. As part of the community engagement process, an Ad Hoc committee
of Council members was formed in April 2021, and staff was asked to pause activities related to contract
negotiations for the residential programs RFP until the Council Ad Hoc committee and related working groups had
the opportunity to provide input on program design and direction. Staff was also asked to wait to proceed with
contract negotiations while concerns raised by the Utility’s Engineering and Operations Division about potential
additional electric load resulting from building and transportation electrification were addressed. These
community and staff collaborative efforts resulted in suggested initial programming focused on a turnkey heat
pump water heater installation program.Other programs planned include building electrification phone advisory
and technical assistance services for both single family and multifamily property owners, and self-service online
tools to help residents assess the economics of electrifying their homes. Staff will begin contract negotiations with
the selected vendors in June 2022 and plans to bring the contracts to City Council for approval in the fall of 2022.
Utilities completed a pilot project with Mid-Pen Housing, a non-profit housing developer, to convert the gas
furnaces at Page Mill Court, a 24-unit apartment complex for low-income adults, to all-electric air source heat
pump equipment. The pilot was funded with a grant from the Bay Area Air Quality Management District and the
City’s Public Benefit funds. Due to COVID-19 restrictions, the pilot was put on hold in 2020. Construction
commenced in late September 2021 and was completed in December 2021. The final report of the pilot
documents the lessons learned to inform future retrofits of gas furnaces in multifamily properties.
For strategy and policy development, staff was collaborating with Planning & Development Services to propose
the adoption of all-electric reach code for accessory dwelling units (ADUs) in spring 2022. However, this work has
been put on hold due to capacity issues with the electric distribution grid.
6.2 Funding Sources for Emissions Reductions
Energy efficiency and water efficiency programs have traditionally been funded by electric, gas, and water rate
revenues. To fund emissions reduction programs, the City has developed multiple alternative funding sources
6.2.1 Low Carbon Fuel Standard (LCFS) Program
LCFS base credits are allocated by the California Air Resources Board (CARB)to CPAU, based on the number EVs
registered in Palo Alto, the estimated miles travelled and the difference in carbon intensity of transportation fuels
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37Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
and electricity. Credits are also allocated based on CNG dispensed and electricity dispensed at city owned EV
chargers. The sales proceeds of these credits are the source of funds for CPAU’s customer programs related to
EVs.
6.2.2 Cap and Trade Program, Revenue from Allocated Allowances
The Global Warming Solutions Act of 2006, also known as Assembly Bill (AB) 32, authorized CARB to develop
regulations to lower the state’s greenhouse gas (GHG) emissions to 1990 levels by 2020. CARB developed a cap-
and-trade program as one of the strategies to achieve the 2020 goal. Under the cap-and-trade program, an overall
limit on GHG emissions from capped sectors is established and facilities subject to the cap are able to trade permits
(allowances) to emit GHGs. Senate Bill 32 (2016) expanded upon AB 32 by requiring a 40% reduction in GHG
emissions below the 1990 levels by 2030.
In 2012, CARB’s cap-and-trade program commenced and certain covered entities, such as electricity generators
and other stationary sources of GHGs, had a compliance obligation under the new program. The City of Palo Alto
Utilities’ (CPAU’s) electric utility does not own or operate fossil fuel-based electricity generation covered by the
cap-and-trade regulations. CPAU also received free allowances from CARB to mitigate the costs of reducing its
GHG emissions. Since CPAU’s electric utility is carbon neutral and typically has no need to use the allowances for
compliance, it must sell them into the cap-and-trade auction.
Allowance revenues, estimated to be at around $3 million per year in 2022 and onward, can be used for several
approved purposes, including: a) purchases or investment in renewable resources (outside Palo Alto or locally) for
the electric portfolio; b) investment in energy efficiency programs for the electric portfolio and retail customers;
c) investment in other carbon reduction activities, including those required to achieve a carbon-neutral electric
portfolio; and d) rebates to electric retail ratepayers.
As of 2020, all allowances have been utilized to purchase renewable resources. Staff is investigating using some
of these funds for investments in emissions reduction programs.
6.2.3 Electric Public Benefit Funds
Locally owned municipal utilities like CPAU must collect Public Benefit funds from their electric utility customers
as required by section 385 of the Public Utilities Code, to be used on cost-effective energy efficiency and
conservation, low income programs, investments in renewable energy resources and technologies, and research
and development.CPAU currently has an Electric Public Benefit surcharge of 2.85% of the electric utility bill for all
customers. A portion of this fund can be used for building electrification pilot programs and projects.
6.3 Innovation and Pilot Programs
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 today, the program has received a total of 101 applications. The figure below summarizes the
status of all applications through to date in FY 2022.
So far this year, only a single academic collaboration has reached the threshold of value, quality, and relevance to
be considered good fits for a pilot project. CPAU is currently in discussions with some applicants about revising
their projects and is 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, staff is also
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revised the program’s guidelines to highlight what makes a compelling project pitch for CPAU. These updated
program priorities and guidelines were released this year and presented to the UAC. Pending other priorities and
sufficient resources, staff will work with local universities and accelerators to solicit high-quality applications
closely aligned with CPAU’s highest priorities in calendar year 2022.
6.3.1 Academic Collaborations
CPAU staff collaborated with Stanford University through a summer fellowship endowed by Karl Knapp’s family
to have Stanford Graduate student Shoja Jahangard to work on a project focused on resiliency and decarbonizing
single-family homes. The final report can be found in the November UAC records: Discussion and Presentation on
the Impact of Decarbonization on the Resiliency of Single-Family Homes in Palo Alto.CPAU has recently been
approached by researchers at the University of London, and are in preliminary discussions.
6.3.2 Completed Projects
In FY 2022 CPAU has received five applications, declined two and is reviewing three others. Staff is also in
discussions with a few start-ups and will consider asking them to apply for collaborations.
Figure 29: 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 4
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 0 3 0 5
FY 2021 2 0 1 0 1
FY 2022 5 3 2 0 0
TOTAL 101 3 69 0 29
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39Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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7 Communications
This section summarizes communications highlights, updates on major campaigns and noteworthy events. Copies
of ads and bill inserts are available online at http://cityofpaloalto.org/UTLbillinsert.
Water Supply and Drought: Staff have been proactive about communicating the current situation of water
supply conditions and ever-changing water shortage emergency declarations. As a result of the continued dry
conditions, CPAU continues a robust outreach campaign about water supply conditions, water use restrictions,
and resources for water use efficiency. Staff are working with the Bay Area Water Supply and Conservation Agency
(BAWSCA) and Valley Water to coordinate public education events. Updates are available at
cityofpaloalto.org/water
Hydroelectricity Resources: Drier hydro conditions and higher market prices for electricity have resulted in
increased cost. Council activated the Hydro Rate Adjuster at its March 14 meeting.Staff developed communication
tools to explain the need for this adder to the electric rate charges and value it adds in terms of protecting
customers from wide swings in rate changes for electricity. More information can be found at
http://www.cityofpaloalto.org/ratesoverview
Annual Walking and Mobile Gas Leak Survey: CPAU began its annual gas leak detection survey of the City in April.
This routine inspection of our gas distribution system is conducted every year to ensure the safety of all who live
and work in Palo Alto. Staff post information about the survey online and share updates with the community as
part of our gas safety awareness program. Find details and survey area map at cityofpaloalto.org/safeutility
Electric Vehicle Events: In this quarter, CPAU partnered with Acterra and Ride and Drive Clean to host quite a few
EV events, including topics of financial incentives, EVs 101, EV charging, and neighborhood EV expos. The goal of
these events is to raise awareness about electric vehicles, e-Bikes, and other electric modes of transportation. The
climate crisis and record high gas prices are compelling many to switch to electric to drive and ride clean, save
money, improve health, and take advantage of financial assistance and grants such as Clean Cars for All, Drive
Clean Assistance, and county-specific programs in the Bay Area. Event attendees can receive guidance on
identifying programs for which they qualify. Event information and registration is available at
cityofpaloalto.org/workshops
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40Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
August 3, 2022
8 Legislative and Regulatory Activity
8.1 State legislation
As of the time of this writing in early June, any bills that will move forward must have already passed from their
house of origin to the other house. As a result of this key deadline, some of the bills we are tracking have died for
the year. Additionally, much of the legislative activity is now focused on passing the state budget, then hearing
bills in policy committees before the summer recess.
Below is an overview of key State legislative and regulatory activity that may impact, or is of interest to, CPAU.
AB 847 (Quirk) Electrically conductive balloons. Requires the state to adopt regulations by September 1, 2024
governing the manufacture or sale of foil balloons filled with lighter-than-air gas. All foil balloons filled with lighter-
than-air gas must comply with these regulations on or after September 1, 2026.
AB 1864 (Gipson) Small businesses. Allows a tax credit to a "qualified small business employer" or local
government equal to $434 per qualified employee. Includes cities; but has not moved forward in over a month.
SB 260 (Wiener) Climate Corporate Accountability Act.Requires CARB, by January 1, 2024, to develop and adopt
regulations requiring business entities with total annual revenues in excess of $1,000,000,000 that do business in
California to publicly disclose to the State, and verify annually, their GHG emissions from the prior calendar year,
beginning in 2025. .
SB 379 (Wiener) Residential solar energy systems: permitting.Requires cities and counties to implement an online,
automated rooftop solar permitting platform such as SolarAPP+ that verifies code compliance and issues permits
in real time. For a city the size of Palo Alto, we'd have to implement by September 30, 2023, unless our system is
not configured for SolarAPP+.
SB 396 (Dahle) Forestry: electrical transmission or distribution lines: clearances: notice and opportunity to be
heard. Among other items: Requires a state agency to develop standardized content for use by utilities to notify
landowners when they need to gain access to land and prior access has not been granted, and to develop
standardized content for landowners to request removal of valuable lumber and to request an opportunity to be
heard. *As a result of effective industry advocacy, POUs were removed from this bill*.
SB 833 (Dodd ) Community Energy Resilience Act of 2022. Requires the CEC to develop and implement a grant
program for local governments to develop community energy resilience plans to address power outages. Does
not appear to relate to or impact local governments with electric POUs.
SB 852 (Dodd) Climate resilience districts: formation: funding mechanisms. Allows local governments, either alone
or in combination,to create climate resilience districts and provides these new districts various financing powers.
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41Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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SB 887 (Becker) Electricity: transmission facility planning.This bill adjusts the planning horizon for the annual
electricity transmission plan from 10-years to 15-years and requires CAISO to consider approval for specified
transmission projects as part of the 2022-23 transmission planning process. Currently, this bill is not aligned with
the state’s clean energy timelines. .
SB 892 (Hurtado) Cybersecurity preparedness: food and agriculture sector and water and wastewater systems
sector. Requires the California Office of Emergency Services to develop, propose, and adopt optional reporting
guidelines for companies and cooperatives in the food and agriculture industry and entities in the water and
wastewater systems industry if they identify a significant and verified cyber threat.
SB 936 (Glazer) California Conservation Corps: forestry training center: formerly incarcerated individuals:
reporting. This bill requires, upon an appropriation, the CA Conservation Corps director to establish a forestry
training center on or before December 31, 2024. In part, the center will provide enhanced training, education,
work experience, and job readiness for entry-level forestry and vegetation management jobs. Enrollment is
prioritized for certain formerly incarcerated individuals.
SB 1032 (Becker) . State Energy Resources Conservation and Development Commission: electrical transmission grid
development and expansion: study. In late May,this bill required the CPUC, by January 1, 2024, to submit a study
identifying proposals to accelerate the development of, and reduce the cost to ratepayers of expanding, the
electrical grid as necessary to reduce GHG emissions. CPAU submitted a letter of support.In early June, the bill
was amended to require the CEC to take on “various actions” to further the state’s clean energy goals, including
the study mentioned above.
SB 1112 (Becker) Energy suppliers: notice and recordation of a decarbonization charge. Establishes transparency
for renters and home buyers by requiring that a utility who engages in tariffed on-bill financing notify their county
recorder.
SB 1158 (Becker) Retail electricity suppliers: greenhouse gas emissions: integrated resource plans. Changes the
Power Source Disclosure rules to require electric utilities compare their energy purchases and demand on an
hourly basis and report their energy sources and GHG emissions based on the hourly basis. These new rules will
also give each utility an annual GHG emissions number that can be compared to the their GHG target under the
Integrated Resource Planning process;the governing board of each POU is then required to make an assessment
of progress against the GHG target.
SB 1174 (Hertzberg)Electricity: eligible renewable energy or energy storage resources: transmission and
interconnection. Seeks to enhance planning of the state’s energy transmission and distribution system by
requiring specified reporting related to electric transmission projects and mandating the CPUC identify
interconnection transmission projects and prioritize necessary approvals, as specified.
SB 1197 (Caballero) Water Innovation and Drought Resiliency Act of 2022. Creates an Initiative to Advance Water
Innovation and Drought Resiliency in the Governor’s Office of Planning and Research for the furtherance of new
technologies and other innovative approaches in the water sector. The bill would require the office to take
specified measures on or before December 31, 2024 to advance innovation in the water sector and ensure a
drought-resilient economy. This bill will not move forward.
SB 1376 (Stern) State Energy Resources Conservation and Development Commission: strategic plan: integrated
energy resources and policies. This bill would require the CEC to adopt a strategic plan on or before November 1,
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42Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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2023, to enable no less than 6 GW annually of zero-carbon resources to be interconnected to the state’s electrical
grid, beginning on January 1, 2025.This bill will not move forward.
8.2 State regulatory Proceedings
Below are issues currently before state regulatory bodies that CPAU is monitoring, primarily through our work
with CMUA and NCPA.
8.2.1 Energy Commission
The CEC and the Department of Transportation held a joint workshop on the California State Electric Vehicle
Infrastructure Deployment Plan. The CEC also launched the Gas Decarbonization Order Instituting Informational
Proceeding related to decarbonization of the gas system in California, held a EV charging infrastructure reliability
workshop.
8.2.2 State Water Resources Control Board
The Water Board adopted emergency drought regulations , held a water quality fee stakeholder meeting, and
continues work on the outdoor residential water use update.
8.2.3 Air Resources Board
CARB is working on Advanced Clean Cars regulations to establish emissions standards and released its Scoping
Plan Update draft.
8.2.4 Natural Resources Agency
The Wildfire Safety Advisory Board released guidelines to the POU Wildfire Mitigation Plans.
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43Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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Appendices
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44Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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9 Appendix A: Energy Risk Management Program
This appendix provides a quarterly update on the City’s Energy Risk Management Program.
9.1 Overview of Hedging Programs
The City’s Utilities Department maintains a hedging program for its Electric and Gas Utilities. In the Gas Utility the
program protects against short-term (intra-month) price spikes caused by weather or major incidents on the
Western gas system. However, the City does not hedge its gas supply more than one month in advance, choosing
instead to protect the Gas Utility’s financial position by passing gas supply costs through to customers via a charge
that varies monthly based on gas market prices. As a result, the Gas Utility’s only market exposure is the amount
by which gas demand deviates from forecasts within the month. This exposure is relatively small and can be
managed using Gas Utility Operating Reserves. A risk assessment is performed each year as part of the Gas Utility
financial planning process to ensure adequate reserves to cover all risks. The most recent Gas Utility Financial Plan
was adopted June 21, 2021 (Staff Report #12240).
The City has entered into long-term contracts for its Electric Utility to ensure that the City has carbon free
electricity supplies equal to 100% of Palo Alto’s annual electric demand. However, the output from these
generating sources does not match Palo Alto’s electric load. In the summer,the City has a surplus of carbon free
energy and it has a deficit in the winter. This exposes the City to market risk, and staff maintains a hedging program
to protect against this risk. In addition,hydroelectric generators make up approximately half the City’s energy
supply. During dry years these resources do not generate as much energy, creating an additional market exposure
that must be hedged. Unlike the gas hedging program, which is operated by City staff, the electric hedging program
is operated by the Northern California Power Agency (NCPA),a joint powers agency the City formed in partnership
with several other California publicly owned electric utilities, with oversight by City staff.
9.2 Overview of Energy Risk Management Program
The hedging programs described above are conducted in accordance with the City’s Energy Risk Management
Program,which includes a set of Program Policies adopted by the City Council, Guidelines adopted by the City’s
Utilities Risk Oversight Coordinating Committee (UROCC), and Procedures approved by the Utilities Director. In
addition, for the electric hedging program, NCPA maintains its own Risk Management Program. The City is able to
provide policy level oversight of this program through its seat on the NCPA Risk Oversight Committee, which is
held by the City’s Risk Manager.
Per the Energy Risk Management Policies, the City Council must receive quarterly reports on the City’s forward
contract purchases, market exposure, credit exposure, counterparty credit ratings, transaction compliance, and
other relevant data.
9.3 Forward Contract Purchases
There were no future forward purchases and sales made in Q3 of FY 2022.
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45Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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9.4 Market Exposure
The chart below shows the City’s market exposure and committed and planned purchases and sales to cover
exposed positions.
Figure 30: Electric Load Resource Balance, April 2022 -March 2025
9.5 Transaction Compliance
There are no transaction exceptions or violations to report.
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46Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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10 Appendix B: Staffing and Vacancies
As of Q3 FY 2022, the Utilities Department has 45 vacant positions out of 248 authorized positions or a 18%
vacancy rate. Below is a breakdown of the vacancies by division. The Electric and Fiber Engineering and Operations
(E&O) division continues to have the highest number and hardest positions to fill. Electric Engineering and
Operations has a total of 30 vacancies or 33% vacancy percentage. As part of the FY 2022 midyear budget
adjustments, four new positions (Electric Project Engineer (3 FTEs) and Utilities Program Services Manager (1 FTE))
were added to accelerate S/CAP initiatives. These positions are required to increase capacity in project
management, build in-house resources, and design and implement infrastructure upgrades such as increasing
capacity in the electric distribution grid for electrification of single-family residences. Some of the critical and
difficult-to-fill positions include lineperson/cable splicer, compliance technician, engineer, and engineer
estimators. CPAU will continue to seek third party contracts for some of the difficult-to-fill positions until the
positions are filled and staff is trained.
Figure 32: Utilities Vacancies and Position Movements by Division, up to Q3 FY 2022
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47Utilities Quarterly Update: Third Quarter of Fiscal Year 2022
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11 Appendix C: Electric Utility Annual Infrastructure Maintenance and Replacement
Report
In each Quarterly Update the Utilities Department will provide a detailed overview of a single utility’s investment
and maintenance activity. An update on the electric utility was scheduled for this report, however, staff resources
are insufficient, and other work is of greater importance. Given the larger context of the City’s S/CAP goals and
the related effort to upgrade the electric distribution system, information regarding the status of electric
infrastructure will be provided to the UAC on a separate timeline and via separate reports.
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