HomeMy WebLinkAbout2022-12-07 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)
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.
UTILITIES ADVISORY COMMISSION – REGULAR MEETING
DECEMBER 7, 2022 – 6:00 PM
City Council 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 – 6:35 pm
Approval of the Minutes of the Utilities Advisory Commission Meeting Held on October 12,
2022
Approval of the Minutes of the Utilities Advisory Commission Meeting Held on November 2,
2022
V. UNFINISHED BUSINESS
None
Chairman: Lauren Segal Vice Chair: AC 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.
VI. UTILITIES DIRECTOR REPORT 6:35 pm – 6:50 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 6:50 pm – 6:55 pm)
2.Discussion of Costs and Reliability of Different Back-up Electricity Technologies
(DISCUSSION 6:55 PM – 7:40 PM) Staff: Lena Perkins, PhD
3.Presentation and Update on the City's Electric Grid Modernization Analysis (DISCUSSION
7:40 PM – 8:25 PM) Staff: Tomm Marshall
4.Discussion of City of Palo Alto Utilities' Long-Term Electric Load Forecast Through 2045
(DISCUSSION 8:25 PM – 8:55 PM) Staff: Lena Perkins, PhD
VIII. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
INFORMATIONAL REPORTS
Informational Update on Electric Supply Portfolio Optimization and Rebalancing
Initiatives Staff: James Stack, PhD
IX. FUTURE TOPICS FOR UPCOMING MEETING: January 4, 2023
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.
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Meeting ID: 966-9129-7246
City of Palo Alto (ID # 14982)
Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 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 October 12, 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 October 12, 2022 meeting as
submitted/Amended.
Commissioner ______ seconded the motion.
Attachments:
•Attachment: Draft Minutes
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Utilities Advisory Commission Minutes Approved on: Page 1 of 7
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF OCTOBER 12, 2022 SPECIAL MEETING
CALL TO ORDER
Chair Segal called the meeting of the Utilities Advisory Commission (UAC) to order at 6:02p.m.
Present: Chair Segal, Vice Chair Johnston, Commissioners Bowie, Forssell, Metz, and
Scharff (arrived at 6:10 pm)
Absent: Commissioner Smith
AGENDA REVIEW AND REVISIONS
None.
ORAL COMMUNICATIONS
Hamilton Hitchings commented regarding residential municipal fiber. Mr. Hitchings would like
the City to partner with an outside vendor to offer competing service to AT&T and have them
build out and own the residential infrastructure such as Atherton Fiber. Palo Alto could use the
$30 million in its fiber fund to offer subsidies to another service provider instead of borrowing
money.
APPROVAL OF THE MINUTES
Chair Segal invited comments on the September 14, 2022 UAC draft meeting minutes.
Vice Chair Johnston noted on Pages 1 and 9 the speaker Hamilton Hutchings should be
Hamilton Hitchings.
Commissioner Johnston moved to approve the draft minutes of the September 14, 2022
meeting as amended.
Commissioner Metz seconded the motion.
The motion carried 5-0 with Chair Segal, Vice Chair Johnston and Commissioners Bowie,
Forssell, Metz voting yes.
Commissioner Scharff and Smith absent.
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Utilities Advisory Commission Minutes Approved on: Page 2 of 7
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Director's Report.
WaterSmart Program: The City recently launched WaterSmart, an online water management
tool to help residents and businesses understand their water usage, enabling them to conserve
water and save money by providing access to water use charts, personal recommendations for
water efficiency and information on available rebates. The WaterSmart system integrates with
MyCPAU portal. The City will promote the new program with a bill insert in November and a
welcome letter to customers in early 2023. The City will begin sending out courtesy leak alerts
and home water reports to single-family residential customers, including information on a
customer’s water usage, comparisons to similar-sized Palo Alto households and water saving
tips.
Advanced Heat Pump Water Heater (HPWH) Program Approval: On October 3, Council
approved a contract with Synergy Company, a Multifamily Plus Residential Energy Assistance
Program for heat pump water heaters. CPAU will offer electric heat pump water heaters at
three different affordability options: An all-inclusive $2,700 turnkey, a turnkey option of $1,500
with a $20 monthly payment financed for 5 years, or a self-directed HPWH installation with a
rebate of $2,300 upon completion.
S/CAP and Reach Code Update: On October 3, Council approved the Sustainability and Climate
Action Plan (S/CAP) Goals and Key Actions and adopted a resolution to achieve carbon
neutrality by 2035. Staff presented a proposal for the 2022 Building Reach Codes for Council's
consideration at their October 17 meeting.
Water Supply and Drought Update: The San Francisco Public Utilities Commission (SFPUC) is
calling for voluntary Regional Water Systemwide water use reductions. Palo Alto’s voluntary
cutback level is 8%. The City has taken recent measures to aid in community water savings,
including increasing education and outreach as well as implementing more stringent water use
restrictions such as limiting irrigation to two days per week, except for the health of trees and
non-turf plantings. The City hired a water waste coordinator to help with education efforts. For
January through April 2022, after the driest January through March in recorded history, Palo
Alto’s usage was 17% above the water budget from SFPUC. For the months of July through
September 2022, Palo Alto reduced water usage about 10% compared to the 2020 baseline.
Palo Alto has now reduced water usage to 7% above the water budget.
Mayors Climate Protection Award: The City was recognized with an honorable mention for the
2020 Mayors Climate Protection Awards. The award highlighted our Multifamily Gas Furnace to
Heat Pump Retrofit Pilot Program, which will reduce the City’s greenhouse gas emissions and
serves as a case study for future electrification projects in multifamily buildings. The Conference
of Mayors made the announcement at their Annual Meeting in Reno, Nevada on June 3. Mayor
Pat Burt and City staff received the award plaque in a special order of the day ceremony at the
September 27 Council meeting.
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Utilities Advisory Commission Minutes Approved on: Page 3 of 7
Upcoming Events: Details and registration are available at cityofpaloalto.org/workshops
October 12 (tonight, from 6:30-7:30 p.m.): SunShares Informational Workshop
October 15, 10 a.m.: Making Better Choices in Your Home Workshop
October 18, 7 p.m.: Landscape Design 101 – How to Get Started
November 1, 7 p.m.: Lawn Conversion 101
The quarterly report the Commission received tonight did not include our reliability numbers. In
future quarterly reports, staff will include our reliability numbers for electric, gas and water.
In response to Chair Segal’s suggestion regarding the calendar of programs offered to the
public, Mr. Batchelor stated that staff could look into having a monthly event page on the
Utilities website updated before the 1st of each month.
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: ACTION: Adoption of a Resolution Authorizing Use of Teleconferencing for Utilities
Advisory Commission Meetings 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: DISCUSSION: Discussion and Update of Sanitary Sewer Main Replacement Acceleration
Alternatives
Matt Zucca, Assistant Director of Utilities WGW, made a presentation regarding alternatives for
increasing the rate of sewer main replacement within the city. There are 138 miles of sewer
mains to replace. The current rate of replacement is 1 mile per year but it needs to transition to
2.5 miles per year.
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Utilities Advisory Commission Minutes Approved on: Page 4 of 7
In response to Commissioner Forssell’s question, Mr. Zucca explained that a State Revolving
Fund (SRF) loan is a program managed by the State of California with an approximate 1.6% loan
rate. There is a fixed amount of money loaned every cycle and a ranking priority depending
upon the type of project.
In reply to Vice Chair Johnston’s question regarding how an SRF loan affects the City’s credit
rating, Mr. Zucca believed it is the same as any other loan. The payback period is typically 20
years as opposed to 30 years for bond financing. Staff will continue to look for funding
opportunities to offset costs, such as the Infrastructure Investment and Jobs Act. Staff will make
a presentation to the Finance Committee in November. UAC and Finance will receive a
preliminary financial forecast. Staff will present the final financial plans to the UAC and Finance
before Council adopts final rates in June 2023.
Mr. Zucca addressed Vice Chair Johnston’s queries about the frequency and causes of sanitary
sewer overflows (SSOs). Staff could provide information on the frequency. A blockage might
slow the water flow. When we have a rain event, leaky pipes allow water to come in and then it
backs up. One way to prevent SSOs is with our aggressive cleaning program. By keeping it clean,
it flows smoothly and avoids substantial replacement. CCTV is used for pipes and laterals but
not yearly. Pipes are replaced with at least the same internal diameter and vitrified clay pipes
are replaced with HDPE. Vice Chair Johnston wants to avoid a 15% rate increase or borrowing
money, therefore he would not propose Alternative 1A or 1B but would accept Alternative 3 if
vulnerable pipes can be accurately identified.
Commissioner Bowie had questions regarding future potential infiltration events with climate
change and sea level rise as well as the costs for the plant in comparison to the proposed rate
increases. Mr. Zucca explained that we do not know the direct implication on groundwater
levels, so it is very difficult to model. We qualitatively know the mechanics and dynamics.
Hydraulics at the plant are expensive because of mechanical infrastructure (pipes, pumps,
concrete, etc.). A master plan in the next couple years will include obtaining data on the rate of
inflow and infiltration in the collection system now as opposed to 2006 when the last master
plan was done.
Commissioner Forssell stated Options 1A and 2 are reasonable as well as 1B if we get the 1.6
rate. Commissioner Scharff supports Option 2, however does not think we should be bonding at
current interest rates.
ACTION: None
ITEM 3: DISCUSSION: Discussion and Presentation of 2018 Strategic Plan Implementation
Anna Vuong, Sr. Business Analyst, made a presentation on Priority 1: Workforce. Initiatives in
progress include applying the training and career path template to other divisions, conducting
an employee satisfaction survey, promotion readiness evaluations to develop succession plans,
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Utilities Advisory Commission Minutes Approved on: Page 5 of 7
digital recruitment ads (one is posted along Highway 101 at the Ikea board), working on ways to
share team-building ideas and exploring how to collaborate with local daycare centers.
Ms. Vuong addressed Commissioner Metz’s request for further details on recruitment efforts.
Staff has attended college career fairs at Sacramento State, Cal Poly and San Jose State. One
initiative is to work with some of the college counselors to determine which of their programs
are suitable for entry-level positions in our engineering groups and operations.
Dean Batchelor, Director of Utilities stated that staff works with NCPA (Northern California
Power Agency) and SCPPA (Southern California Public Power Agency). One option may be
working with high schools to recruit for the classification of operational helpers to learn the
trade and become an apprentice. Staff is thinking about going to the high schools and if a
student were interested in becoming a lineman, we would send them to 15 weeks of training.
Staff has used two outside recruitment firms but we have not found an engineer or a lineman.
Staff has been to Foothill and Cañada community colleges. Staff has targeted Sacramento State
and San Luis Obispo because of their power engineering degree. Staff had some conversations
with the union representing our line workers, SEIU (Service Employee International Union). The
other 15 cities in the NCPA have IBEW, which has trainings and facilities but SEIU does not.
IBEW will not let us into their apprenticeship trainings. Recruitment is an industrywide problem.
Roseville and Alameda are having difficulties as well as two other agencies up north.
Mr. Batchelor stated there are some linemen contracts for responding to emergencies along
with our crews but the cost is about 2½ times more than we pay our linemen. Included in the
contract is helping some of our apprentices, which has been a good partnership. The SEIU and
the City are currently negotiating salary compensation. Staff made a comparison between the
rates we pay contractors and our employees and have given those salary ranges to HR. About
five agencies are part of our salary benchmark, including Santa Clara, Alameda and Roseville.
UAC took a break at 7:32 p.m. and returned at 7:45 p.m.
Catherine Elvert, Utilities Communications Manager, presented Priority 2: Collaboration.
Commissioner Metz would like to have a customer satisfaction metric added as one of the first
focus areas to address quality.
Council Liaison Cormack would like to have the net promotor score included in the next
iteration as well as a presentation from the residence in as opposed to from the utilities out.
Ms. Elvert noted there was a new customer welcome letter this week, which was a project that
the City Manager’s Office and a few other departments collaborated on with the Utilities
Department.
Council Liaison Cormack noted there are many phone numbers for Utilities, which is confusing
but an opportunity to make it straightforward who the customer calls for what.
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Utilities Advisory Commission Minutes Approved on: Page 6 of 7
Ms. Elvert stated the Utilities Department has historically conducted customer satisfaction
surveys. The National Citizen Survey has a few questions about utilities. She mentioned we
should add an initiative to collaborate with other departments and recognize what surveys are
going out to the community so we are not duplicating our efforts or inducing survey fatigue.
Dave Yuan, Strategic Business Manager, presented Priority 3: Technology.
Chair Segal asked if the AMI data was integrated into the new SAP system. Mr. Yuan explained
that flat files are exchanged. In the second half of next year, staff will decide if we stay with flat-
file exchanges or real-time API for Phase 2 but there is a cost. We have a consultant if we
decide to do so. Currently, the system collects all data on an SFTP server. At the end of the day,
the system generates a file and schedules it to be sent to the SAP system.
Mr. Yuan addressed the commission’s questions regarding maps. A VPN connection is required,
so that is an extra layer of security. The desire for paperless tools is coming from the
engineering and operations crew. Service and maintenance orders are written in the field and
entered into SAP upon return to the office. With a mobile solution, the orders can be uploaded
to the system.
Jonathan Abendschein, Assistant Director of Utilities of Resource Management, presented
Priority 4: Finance and Resource Optimization.
In response to Commissioner Metz’ question regarding how resilience is a financial objective,
Mr. Abendschein explained it is not just about achieving financial savings but also clearly
defining our objectives for utility services and resiliency is central to that. Achieving
improvements in resiliency and providing those services requires significant investment, so this
priority is about balancing the needs for investment against the objectives we want to achieve.
Mr. Abendschein addressed Chair Segal’s questions about capital replacement. Each investment
and maintenance plan has a list of things to do yearly or areas of investment or pace of
investment. Sometimes we did not have enough definition for the needed investment or
maintenance for our assets, so it is a strategic effort to fully define and track. Success is defined
as us meeting our plan objectives.
Commissioner Forssell asked for an update on the second transmission line. Staff submitted an
application to CAISO, which was not selected but we were provided feedback. We are in the
process of working with a consultant on submitting a follow-up application.
ACTION: None.
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
Vice Chair Johnston thanked Dean Batchelor and Tabatha Boatwright for the recognition event.
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Utilities Advisory Commission Minutes Approved on: Page 7 of 7
FUTURE TOPICS FOR UPCOMING MEETINGS:
Commission requested on update on the second transmission line.
Vice Chair Johnston asked if fiber to the premises was scheduled for the November meeting.
Commissioner Metz had questions regarding grid modernization. Dean Batchelor, Director of
Utilities, responded that an upgrade update would be provided at the December meeting as
well as a report on what the consultant found, an estimation of costs and the next steps.
Commissioner Metz suggested having a strategic discussion on grid modernization, to include
the impacts of the Inflation Reduction Act (IRA), heat pumps and EVs. Mr. Batchelor replied that
first the plant needs to be taken care of, then the strategic pieces and new programs.
Dean Batchelor, Utilities Director, addressed Commissioner Metz’ questions related to
resilience. An intern’s report will be shared, which includes the resiliency of what the system
could do and how it could be improved.
Commissioner Metz asked about the scheduling for Distributed Energy Resources (DER).
Tabatha Boatwright, Utilities Administrative Assistant, responded that staff gives a quarterly
report that includes updates on multiple items. Resiliency and DER are listed as reminders for
staff to report on any items that include those topics.
Commissioner Forssell suggested having a conversation about capacity planning at the state
level. The community is very concerned given the flex alerts and it would be great to
understand how capacity is being planned by the state as well as local capacity planning for the
increased loads with e-pumps, EVs and new housing.
NEXT SCHEDULED MEETING: November 2, 2022
Commissioner Forssell moved to adjourn. Vice Chair Johnston 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.
Meeting adjourned at 8:53 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
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Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 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 November 2, 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 November 2, 2022 meeting
as submitted/Amended.
Commissioner ______ seconded the motion.
Attachments:
• Attachment: DRAFT UAC Minutes
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UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF NOVEMBER 2, 2022 SPECIAL MEETING
CALL TO ORDER
Chair Segal called the meeting of the Utilities Advisory Commission (UAC) to order at 6:02p.m.
Present: Chair Segal, Vice Chair Johnston, Commissioners Forssell, Metz, Scharff, and Smith
(arrived at 6:03 pm)
Absent: Commissioner Bowie
AGENDA REVIEW AND REVISIONS
None
ORAL COMMUNICATIONS
None
APPROVAL OF THE MINUTES
Chair Segal noted the October 12, 2022, draft minutes were not ready for review and would be
available at the December 7, 2022, UAC meeting.
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Director's Report.
Gas Safety Outreach: Throughout the year, the City of Palo Alto Utilities (CPAU) delivers a variety
of outreach materials to the community about utility safety. An important element of our public
awareness program is the annual distribution of our gas safety awareness brochure. Per Federal
Department of Transportation regulations, we directly mail this information to all customers,
non-customers living near a gas pipeline, public officials, emergency responders, excavators,
contractors, and locators working in Palo Alto. Gas safety brochures will be delivered in
November. If interested in additional details about gas safety or this outreach, please visit
cityofpaloalto.org/safeutility.
Gas Safety Awareness Surveys: It is important to assess the effectiveness of our outreach for gas
safety to guide our actions, and it is also required for public awareness per the Federal
Department of Transportation. A primary way most utilities, including CPAU, do this is by
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contacting stakeholders through a randomized phone or email survey to ask questions about gas
safety. Questions address items such calling USA 811 before digging, who to call and what to do
in case of a gas leak, among others. Within the next month or so, we will engage with a contractor
to conduct these stakeholder awareness surveys. If you get a call, we thank you in advance for
helping us out by answering the questions!
Water Efficiency Workshops: Tuesday, November 1 marked the last of a series of fall landscape
workshops hosted by CPAU and the Bay Area Water Supply & Conservation Agency (BAWSCA).
The workshops covered topics of rainwater harvesting, lawn conversion, and available rebates.
Attendance was strong, with 91 residents participating over the course of the three workshops.
These workshops are a great way for residents to learn from landscape experts about how to use
water efficiently outdoors.
One Water Plan: The One Water Plan is evaluating alternative water supplies to make the City’s
water supply more resilient. Palo Alto is assessing key regional uncertainties and water supply
risks such as projected shortages under multi-year droughts. The City will hold its second
community workshop on December 6 at 5:30 p.m. to continue the conversation about water
supply and conservation options and review draft evaluation criteria for the plan. The workshop
will be at the Mitchell Park Community Center. Those unable to attend in person may join via
Zoom. A link is available on our website at cityofpaloalto.org/workshops.
Water Supply Update: The San Francisco Public Utilities Commission (SFPUC) continues to call
for voluntary water use reductions for the Regional Water System. Palo Alto’s voluntary cutback
level is 8%. The City has taken measures to aid in community water saving efforts, including
increasing education and outreach, implementing water use restrictions such as limiting
irrigation to two days per week, except to ensure the health of trees and other perennial non-
turf plantings, and hiring a water waste coordinator. These actions seem to be making an impact.
For January through April 2022, after the driest January through March in recorded history, Palo
Alto’s cumulative usage was 17% above the cumulative water budget from SFPUC. Palo Alto has
now reduced its cumulative water usage to 7% above the water budget for January through
October 2022. For the billing months of July through October 2022, Palo Alto has reduced its
water use 10% compared to the baseline of Fiscal Year 2020.
Making Better Choices in Your Home Event: On Saturday, October 15, the City hosted a
workshop titled “Making Better Choices in Your Home.” More than 100 community members
attended and spoke with experts and staff about beneficial electrification, including heat pump
water and space heating, induction cooking, upgrading electrical panels, electric vehicles and
bikes. Twenty-two residents signed up at the event to learn more about the City’s new pilot
program offering financing options for installing a heat pump water heater. Participants entered
a free raffle to win sustainability-related prizes, and six community members won the top prize
of a free Home Efficiency Genie Assessment.
Electric Vehicle Events: On Sunday, October 30, 2022 hosted 2 events.
Morning event from 9 a.m.-Noon:
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Frunk or Treat @ Cal Ave*: Over 250 people came and checked out ten awesome EVs – Rivian
R1T, Fiat 500e, Rivian R1S, Hyundai Ioniq 5, Mustang Mach-E, VW ID.4, Nissan Leaf, Tesla Model
Y, Kia EV 6 and Ford F-150 Lightning – on display. The adults were very engaged with some even
asking the EV owners/ambassadors if the cars were on display for sale and the kids enjoyed trick
or treating in the frunks and trunks filled with goodies. We "sold out" of over 1.5k pieces of trick-
or-treat candy and hundreds of City swag items like cute reminder tags related to water
conservation (a project started by some students and provided to use for free), jar grippers,
nightlights, cellphone fans, efficiency tips playing cards, hose nozzles, and reusable backpack-
tote bags. This was an amazing pre-Halloween event for both adults and kids decked out in cute
and cool costumes.
*I staffed at this event.
Afternoon event from 1:30 p.m. – 4:00 p.m.:
EV Meet & Greet @ Congregation Kol Emeth*: Smaller event with about 50 attendees and fewer
EVs on display, but there was a Polestar. This was an event geared more towards Congregation
members.
*We did not have City staff at this event.
UNFINISHED BUSINESS
None
NEW BUSINESS
ITEM 1: ACTION: Adoption of a Resolution Authorizing Use of Teleconferencing for Utilities
Advisory Commission Meetings 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 Forssell, Metz,
Smith, and Scharff voting yes.
Commissioner Bowie absent.
ITEM 2: ACTION: Staff Recommends the Utilities Advisory Commissioner Consider and Adopt an
Attendance Policy
Vice Chair Johnston suggested indicating Section 3 requirements do not apply for people
attending remotely pursuant to Section 4.
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Commissioner Scharff questioned whether the new Brown Act requirements have a limitation on
3 meetings a year.
Jennifer Fine, Deputy City Attorney, explained that the just cause provisions have a 2-meeting
limit and an overall limitation of not more than 20% of the body's meetings solely remotely.
Because this body meets 12 times a year, one cannot attend a third meeting remotely using these
new provisions.
Commissioner Scharff reviewed the approved reasons for meeting remotely and suggested
removing the phrase "actively discouraged." He felt if requirements were met, someone should
not be discouraged from attending remotely.
Chair Segal proposed rewording it more positively that members are encouraged to meet in
person. She stated a decision needed to be made on how many total meetings per year
commissioners may attend remotely. She questioned if it was possible to go beyond 3 total.
Ms. Fine stated that using the standard remote attendance rules, it is possible to go beyond 3
but once beyond 2, using the just cause or emergency provisions is not allowed.
Commissioner Scharff questioned the reason for a third remote attendance. There was further
discussion on this.
Commissioner Forssell questioned if the UAC has discretion on a policy of how many meetings
per year a commissioner can do standard remote attendance.
Ms. Fine stated the Commission has the discretion to decide how many meetings and agreed that
it was hypothetically possible to let commissioners attend every meeting remotely following the
posting requirements.
Commissioner Forssell stated the meaning of 2C was hard to understand.
Ms. Fine suggested to edit that to read, "A commission member who has already attended 2
meetings remotely in one calendar year for any reason may not attend another remotely under
Section 4."
Commissioner Scharff clarified that the real discretion is how many commission meetings in total
people would be allowed to attend remotely. He asked if there were any other discretionary
questions besides that.
Ms. Fine stated that the general policy statement on whether remote attendance is discouraged
or encouraged is also discretionary and listed other minor discretionary items that are Brown Act
minimums or streamlining options that could be edited. The included scripts are discretionary.
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Chair Segal stated there was also the timing of notice of a commissioner attending remotely
because of just cause or for emergency purposes. She felt the earliest possible opportunity was
reasonable.
Ms. Fine stated that requiring a particular minimum can ensure a quorum at the singular physical
location because if there is not a quorum at the singular physical location, none of the remote
attendees can attend under just cause or emergency circumstances.
Chair Segal suggested going through the discretionary items. For 2B, one proposal was to delete
the statement that attending remotely is actively discouraged and another was to state that
commission members are encouraged to attend commission meetings in person.
Vice Chair Johnston suggested stating that commission members are strongly encouraged to
appear in person.
Chair Segal asked if anyone objected to that phrasing. No one objected, and she requested to
propose that. Regarding 2C, she asked if the commissioners were comfortable with limit of 3
combined remote attendances.
Commissioner Forssell reiterated the clarification "for any reason."
Chair Segal read the revision, "A commission member who has already attended 2 meetings
remotely in 1 calendar year for any reason may not attend another remotely under Section 4."
There was discussion on this.
Commissioner Scharff suggested 4 since no one had a strong preference.
Council Liaison Cormack suggested using positive wording for Section 2C as well.
Chair Segal read the proposal, "Each commission member may attend up to 4 commission
meetings remotely per calendar year. A commission member who has already attended 2
meetings remotely in 1 calendar year for any reason may not attend another remotely under
Section 4." There was a proposal to leave Section 2D as a singular policy, that at least a quorum
must participate from a physical location within the City. She asked if anyone felt strongly about
splitting that policy.
Commissioner Forssell stated it would be confusing to change the longstanding tradition of
gathering in City Hall.
Ms. Fine stated that the script was open for modification and that the Commission could require
additional notice.
Chair Segal felt the members could be trusted to notify the Commission as soon as reasonably
possible. She asked if anyone desired changes to the prescription in Section 4C IV, reflecting the
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statute in a way that makes it easy to follow and notify commissioners. Commissioners felt it
was helpful.
Vice Chair Johnston was concerned that it was not clear that it is not necessary to meet the
requirements of Section 3 under Section 4.
Chair Segal proposed the sentence, "The 3 different ways to attend remotely are as follows,"
listing each of them so it is clear they are separate. She restated the following modifications:
Under 2B, commissioners are strongly encouraged to attend commission meetings in person.
Under 2C, each commissioner may attend up to 4 commission meetings remotely in any calendar
year. A commission member who has already attended 2 remotely in one calendar year for any
reason may not attend another remotely under Section 4. The remote attendance policy does
not apply to emergency situations.
There was discussion on whether an action would be taken at this meeting.
ACTION: Commissioner Metz moved Staff recommendation that the Utilities Advisory
Commission (UAC) Adopt an Attendance Policy, as amended.
Seconded by Vice Chair Johnston.
Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Forssell, Metz,
Smith, and Scharff voting yes.
Commissioner Bowie absent
Dean Batchelor, Director of Utilities, added that once the changes are made, it will be an
informational for next month so the Commission will be able to see it. If there is discussion, it
can be brought back up then.
ITEM 3: ACTION: Staff Recommendation That the Utilities Advisory Commissioner Review and
Recommend the City Council Affirm the Continuation of the REC Exchange Program
Chair Segal asked for public comments. There were none.
Jim Stack, PhD, Senior Resource Planner, stated this presentation would be similar to those he
had shared previously with some discussion on the program's impacts to date and projections
for the future. He shared the results of the program so far. The program was adopted in the
summer of 2020 and involves selling excess in-state renewable energy (bucket 1 RECs) and
purchasing out-of-state renewable energy (bucket 3 RECs). These 2 products are equivalent in
terms of environmental and climate impacts, but due to the State's RPS regulations favoring use
of in-state RECs, there is a price premium for bucket 1 RECs compared to bucket 3. That
presented the City with an arbitrage opportunity. In 2020, the Council directed that two-thirds
of the net revenue the program generates for the first 2 years would be devoted toward supply
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cost reductions in order to keep residential rates lower, with the remainder allocated toward
local decarbonization programs. For 2022 and beyond, all revenue would be allocated toward
local decarbonization efforts. The program has generated nearly $7M in net revenue to date. If
the program is continued into the future, that amount would gradually shrink as RPS level
requirements gradually increase every year, reducing the amount of excess bucket 1 renewable
energy available to sell. Projected cumulative net revenue for the next 5 years is $9M to $10M,
all of which would be devoted toward local decarbonization efforts, such as building
electrification programs. Functionally, there is no impact on the environmental quality of the
electric supply. With the REC Exchange Program in place, the emissions intensity is roughly the
same as the statewide average. Staff recommended the UAC recommend that the Council affirm
the continuation of the REC Exchange Program and that Council direct staff to return to the UAC
and City Council by 2027 to provide another review of the program's impacts.
Vice Chair Johnston felt the program had turned out very well and was pleased there has not
been a lot of pushback from the community. He commented that pushing the next report out to
2027 is too long and would prefer sometime around 2025.
Commissioner Forssell asked if before the REC Exchange Program, the City would buy RECs to get
to carbon neutral. She clarified that the baseline without REC exchanges is not in opposition to
the claim of carbon neutrality because in either case, the City is purchasing enough bucket 3 RECs
to get to carbon neutral.
Dr. Stack stated that was correct.
Commissioner Forssell asked for clarification of the statement on packet page 19 that some of
the City's older and smaller renewable energy contracts are set to expire, further reducing the
supply of bucket 1 RECs. She expected that expiring contracts would be replaced with other
renewable energy sources and questioned why the RECs from those energy sources would not
be available to do the REC exchange.
Dr. Stack stated that because there has been much surplus renewable energy, staff had not
assumed in the models that they would replace those small contracts. If the load grows to the
point where it needs to be replaced, it would be replaced with renewable energy. Staff will be
coming to the Commission next month with a discussion on long-term load forecasts with exciting
impacts from building and transportation electrification and some possible new commercial load
growths.
Commissioner Metz stated selling one financial instrument and buying another does nothing to
advance environmental sustainability. He felt buying bucket 3 RECs provided no renewable
additionality, which is the reason California sharply limits bucket 3 RECs and the reason bucket 3
RECs are so much cheaper than bucket 1 RECs. He felt this probably reduces renewable energy
and recommended, if this plan goes forward, using the money to generate renewable energy
locally plus increasing conservation rather than decarbonization.
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Dr. Stack believed there was a reasonable debate to be had about the additionality question. He
felt Palo Alto stepped up pretty early in renewable energy and had a big impact on that market.
Bucket 3 RECs have increased substantially over the past few years. This makes a meaningful
impact on the finances of the renewable energy developers.
Commissioner Forssell remembered the Commission raising the same concern about
additionality in 2019 or 2020. She remembered reading academic papers that indicated that
bucket 3 RECs had the necessary qualities in terms of carbon reduction, also noting the fact that
the California requirements may have been motivated by state legislators' desire to keep the
economic benefits of these projects in state.
Commissioner Metz stated electricity is about delivering energy at a certain place and time and
the definition of bucket 3 RECs is they do not have that time or place connection. He felt there
was an increasing problem with increasingly renewable resources being built and paid for and
not contributing renewable energy.
Chair Segal highlighted that multiple commission meetings were spent on this issue over time.
She stated this policy has already been approved by the City Council, and the question is whether
to continue it. On the question of whether the next review should be in 2027 or sooner, she
proposed 2025. She hoped that some documentation or review of old meetings would make
Commissioner Metz comfortable as it had been discussed previously.
ACTION: Vice Chair Johnston moved Staff recommendation that the Utilities Advisory
Commission (UAC) recommend that the City Council:
1) affirm the continuation of the “REC Exchange Program,” whereby the City exchanges
bundled RECs from its long-term renewable resources (Bucket 1 RECs) for Renewable Portfolio
Standard (RPS) eligible, unbundled RECs (Bucket 3 RECs),1 to the maximum extent possible, while
maintaining compliance with the state’s RPS regulations, in order to provide additional revenue
for local decarbonization efforts; and
2) direct staff to return to the UAC and City Council in 2025 to provide another review of
the program’s impacts.
Seconded by Commissioner Forssell.
Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Forssell, Metz,
Smith, and Scharff voting yes.
Commissioner Bowie absent
ITEM 4: ACTION: Staff Recommends the Utilities Advisory Commission Recommend the Finance
Committee Recommend That the City Council Adopt a Resolution Amending the E-HRA (Electric
Hydro Rate Adjuster) Rate Schedule, Increasing the Current E-HRA Rate to $0.026/kWh Effective
January 1, 2023.
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Chair Segal requested any comments from the public, and there were none.
Eric Keniston, Sr. Resource Planner, stated this is a proposal to increase the Electric Hydro Rate
Adjustor, which was implemented several years ago to fund additional power purchases when
hydro supplies are low. This is a very low hydro year that requires going out for more market
power, which can be quite expensive, about twice what had originally been projected. Power
costs in FY22 were about $16M higher than what was budgeted. All of the hydro stabilization
reserve was used to help mitigate against that, and the existing Hydro Rate Adjustor was
implemented in April 2022 to help offset the effects. Right now the supply operations reserve is
only about 22M, with a minimum reserve guideline of around 18M. Because of regional and
worldwide problems, a lot of the resources are incredibly expensive. The estimate is upwards of
$9M higher than what is in the current budget. Without adding to the current Hydro Rate
Adjustor, the reserve will drop below the minimum guideline level by the end of this fiscal year.
Doubling the existing Hydro Rate Adjustor from 1.3 cents to 2.6 cents would bring in an additional
$5M for the rest of this fiscal year and should keep it above minimum guideline level. With the
upcoming electric rate increase in June, staff will likely bring in potential amendments to the
existing Hydro Rate Adjustor method, something more flexible that takes the budget into account
and a more fluid Hydro Rate Adjustor on customer bills.
Vice Chair Johnston questioned if the new increased Hydro Rate Adjustor would be implemented
as soon as it is approved by the City Council.
Mr. Keniston stated ideally the proposal would be in front of the Finance Committee in November
and to Council by December for a January 1 implementation. Within 6 months, if sales stay close
to projections, there should be about $5M additional in revenue to help offset costs.
Commissioner Metz asked if buying more gas-generated electricity with the fuel surcharge
compensates for the extra expense.
Mr. Keniston stated there is not a gas surcharge on the electric rates, just the Hydro Rate Adjustor
tacked on to cover additional market costs beyond hydro generation. Moving forward, the
existing Hydro Rate Adjustor may be turned to a Power Cost Adjustor to encompass the higher
market-related costs of procuring supplies greater than budget.
Commissioner Metz asked if the real problem is the large fixed cost for hydro and the variable
supply. He stated it seemed like the reason for this problem was trying to match a fixed cost to
a variable revenue source.
Mr. Keniston stated the Hydro Rate Adjustor is meant to recover the costs of when there is no
hydro. There are certain fixed costs related to hydroelectric, but the increased cost is related to
the variable of the market-based power. In future rate actions, staff might suggest putting in a
fixed charge for customers to better represent those fixed costs, but that will be forthcoming
with the rate changes for July 1, 2024.
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Dean Batchelor, Director of Utilities, added the Hydro Adjustor is flexible. When hydro is in good
condition, these charges go away. He stated there is a question of looking for other renewable
energy, wind or solar, to offset these costs.
Commissioner Scharff cautioned not to assume current conditions will last forever. The only
variable is if drought will be the new normal and then hydro would be a bad bet. He believed
hydro has been a great positive for the city and that the savings have far offset the added costs
in the dry years. He believed that increasing the Hydro Rate Adjustor was a measured response
and that people would get the benefit in a non-drought year. He supported the plan.
Commissioner Forssell agreed that the Hydro Rate Adjustor was a better tool than a complete
rate increase. She looked forward to staff coming back next time with something even more
flexible and supported this plan.
Chair Segal also supported the plan and liked the flexibility.
Council Liaison Cormack stated that the difference in the operations reserve balance needs to be
highlighted in the staff report.
ACTION: Vice Chair Johnston moved Staff recommendation that the Utilities Advisory
Commission (UAC) recommend the Finance Committee recommend that Council adopt a
resolution amending the Electric Hydro Rate Adjuster (E-HRA), effective January 1, 2023, to
reflect current hydrological conditions and market purchase costs. This would double the existing
E-HRA surcharges and discounts across all levels, increasing the current E-HRA rate from
$0.013/kwh to $0.026/kwh.
Seconded by Commissioner Forssell.
Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Forssell, Metz,
Smith, and Scharff voting yes.
Commissioner Bowie absent
UAC took a break at 7:26 p.m. and returned at 7:41 p.m.
ITEM 5: ACTION: Changes to the Utilities Rules and Regulations and Rate Schedules for AMI
Implementation
Chair Segal asked if there were any public comments. There were none.
Dave Yuan, Strategic Business Manager, stated the items to discuss are deployment of Advanced
Metering Infrastructure and build-overs. There was an addition of the definition of Advanced
Metering Infrastructure to Rule 2. Regarding Rule 9, there was the new functionality of remotely
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connecting or disconnecting without having to send out a crew. These remote connect and
disconnect switches will be piloted. In Rule 10, customers may opt out of the AMI program,
either before the installation crew comes out or after the advanced meter has been installed.
The electronic transmission would be turned off, and the meter would need to be read manually
with no data transmitting. There would be a one-time $100 fee and a $25 monthly fee to recover
staff time for these opt-out customers, which will have to be manually reviewed and also
physically audited every year. Rules 15 and 20 were about adding peripheral equipment for
meters, the radial endpoints that will be part of the AMI infrastructure for gas and water meters.
Regarding overbuilds, Rule 8 required customers to make sure there is unobstructed access to
the meters and service lines. In Rule 20, the City has the right to relocate a service line or meter,
with charge borne by the customer, if the customer has done something to obstruct access.
Vice Chair Johnston stated it would be helpful to note in 9E that the same procedures as 9C would
be followed. He questioned that it is $25 a month for 1 meter reading a year.
Mr. Yuan stated the $25 is for manually entering and validating the customer's self-reported
reads and following up with customers who do not submit their reads. The figure was based on
staff time, estimating the amount of minutes per each staff member conducting each task. The
fees are for cost recovery only and not to make money or discourage residents from opting out.
Commissioner Forssell supported the fees but felt it would be worthwhile to revisit it after
implementing the program and base it on actual costs rather than estimates. She suggested the
definition of Advanced Metering Infrastructure be updated to include what distinguishes a
"smart" meter and also that a tighter definition of "near realtime consumption data" would be
helpful.
Mr. Yuan stated there will be a 1-day delay because it has to be integrated back with the SIP
system. It is not currently an instantaneous read.
Commissioner Forssell suggested calling out the range as somewhere between daily and
whatever aspiration this technology will ultimately support.
Mr. Yuan also noted there would be a rate assistance fee, $10 monthly and $50 one-time instead
of the $25 and $100.
Chair Segal stated there was a change to 9E II to clarify that it is the same notice provided as in
9C whether it is remote or not. The AMI definition will be revisited.
ACTION: Vice Chair Johnston moved Staff recommendation that the UAC recommend Council
adopt the attached Resolution (Attachment A) amending Utilities Rules and Regulations 2, 8, 9
(Change request was to ensure that the notices for physical disconnect/reconnect also apply to
remote disconnect/reconnect), 10, 15, 18, 20, and Utilities Rate Schedules C-1 and C-4, as
amended.
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Seconded by Commissioner Metz
Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Forssell, Metz,
Smith, and Scharff voting yes.
Commissioner Bowie absent
ITEM 6: ACTION: Staff Recommends That the Utilities Advisory Committee (UAC) Approve a
Recommendation That Council Recommend Building the Fiber Backbone and Options for Fiber-
to-the-Premises (FTTP)
Chair Segal requested public comments.
Daniel Dulitz believed all the technical questions had been answered and there was no significant
technical risk in this proposal. Areas served by AT&T fiber would likely receive better service if
there were a true fiber competitor. He supported the FTTP recommendation, specifically Option
2, a phased build-out that would mitigate the primary risks of take rates and marketing. He
believed wise application of phasing could support the vast majority of the City's needs in a
relatively short time frame.
Hamilton Hitchings stated staff has claimed a 25% take rate is necessary to break even. He asked
the Commission and staff to provide a more realistic estimate of take rate to City Council, such
as 20%. The cost estimates for the City have already increased 20% from 2021 to 2022, much
faster than inflation. Estimating further cost increases, the necessary take rate will be much
higher. He stated no other city in California has concluded that citywide, city-owned offering
makes sense and successfully deployed it. He believed it may not be commercially viable for a
third high-speed Internet provider to start in Palo Alto; however, he felt subsidies should be
offered to entice companies like Atherton Fiber and gave examples of ways to do this. He
requested staff add a subsidy for high-speed Internet for low-income households. He asked the
Commission to recommend Option 3 to the Council to improve the city's fiber offering without
the risk of borrowing money, and not Option 1, which could result in the City owing a large
amount of money, requiring cutting of funding elsewhere.
Jeff Hoel recommended Option 1. He stated the incremental Option 2 costs more and takes
longer to implement, giving competitors more time to be competitive first. He described
Chattanooga's network idea and how the FTTP alone made enough money to pay for it, and he
felt that was an inspiration Palo Alto could take advantage of.
Herb Borock agreed with Mr. Hoel but questioned if the Council and Commission would approve
a 5-year project if their own neighborhoods were last. He was concerned about the cost
estimates and stated adding up the amount of money from the fiber fund and the bonds is almost
as much as the total FTTP cost, which did not make sense. He stated the depreciation rates do
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not match the City's rates and listed several revenue concerns. He questioned the location of
the fiber hut.
Dave Yuan, Strategic Business Manager, was looking for UACs recommendation on how the City
should move forward with FTTP and enhance broadband in the community. Staff returned with
follow-up information from the joint session on September 19. There are 3 options of
deployment: full deployment, incremental or phased build-out, and pausing and collaborating
with the private ISPs. There is no city in California providing citywide municipal FTTP. Regarding
whether microtrenching could help reduce construction costs and speed up deployment, he
listed the advantages and disadvantages and stated staff does not recommend microtrenching
in Palo Alto currently. In regard to the fiber reserves, the City has a very successful dark fiber
business and has accumulated about $34M since inception. The dark fiber reserves generated
so far can be used for any fiber-related projects, but it is uncertain how future revenues could be
used due to recent litigation under Prop 26 and 218. For all 3 options, the staff recommends
building out the fiber backbone and reinvesting back in the fiber network. He discussed this
further. He detailed the advantages of Option 1.
Chair Segal questioned the amount put in by the electric fund for this option.
Mr. Yuan stated that the electric portion would be bond financed because the City would get a
better rate because electric has a healthier financial record than fiber.
Commissioner Forssell stated the fiber backbone recommended under all 3 options enables more
connectivity for city departments but only Option 1 provides infrastructure for smart city
applications. She asked about examples of what is available for all three versus only Option 1.
Mr. Yuan stated Option 1 will fiber in the neighborhoods. More fiber would help with
connectivity in certain neighborhoods, especially in the Stanford area during games and in the
parking garages. It would be distributed throughout the city and not just along the corridors.
Right now some of those initiatives cannot be connected because there is not fiber nearby. Parks
also had requests for fiber to do Wi-Fi in certain areas. Transportation wanted to add some
electronic signs in some areas.
Commissioner Scharff questioned whether the general fund would be on the hook for this if fiber
could not pay the interest on the bonds.
Mr. Yuan stated that based on his understanding, the general fund would be on the hook if the
fiber fund was not able to pay off the debt service at the end. He believed the bond holders could
go after the electric fund as well if they were bond financed together. He moved on to discussing
disadvantages of Option 1, including risk of competition and risk of the take rate. If the take rate
is less than 25%, subsidies from the City would probably be required to cover the debt payments.
Commissioner Scharff was concerned about the effect of rising interest rates. He felt this made
a lot more sense when interest rates were cheap. Given the take rate is the thing that matters,
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he believed 3 to 6 months should be offered free to the entire community, which would probably
give a 100% take rate and people could then opt out later.
Mr. Yuan stated there is $34M in the bank right now and interest rates could potentially be down
in a year or two. He described Option 2, the phased deployment, including deployment options.
Dean Batchelor, Utilities Director, stated in the past this Commission did not like the idea of
building out in phases as it could take 10 to 14 years. One reason staff was asked to put this
option back in was the potential for interest rates to continue to climb with a payback that would
be even higher. The advantage of this is to have time to analyze if it makes sense moving forward.
It also gives time for electrification with opportunities to build jointly from an electric and fiber
perspective. This would not take 10 years because there will be some scale economies that to
work with the electric side. Poles are going to have to grow, and space can be added for the fiber
side. There will be cost savings with that.
Mr. Yuan then talked about the advantages of Option 2.
Chair Segal asked if there is a backup plan in case this is more expensive than initially planned
and the money runs out before the 25% take rate.
Mr. Yuan stated there is some contingency built in the financial model for construction costs. It
is possible to do more marketing campaigns, slow down construction costs, slow down
construction projects, or renegotiate with vendors.
Chair Segal stated it is not known how long phase 2 could take if it depends on initial take rate to
fund future projects and now combining it with electrification.
Mr. Batchelor did not believe that was true. Using the synergies around electrification, the
system needs to be rebuilt in a period of time, possibly 7 rather than 10 years.
Vice Chair Johnston questioned what would happen if the take rate on the initial build-out was
not sufficient.
Mr. Yuan stated it would depend on the gap, whether or not to bond finance the rest of the
project or do a slower build-out. The longest it would take is roughly 20 years.
Chair Segal questioned the cost of the staff and the support and whether the customer or the
utility would buy the boxes inside the homes.
Mr. Yuan stated the City will provide the equipment. Staffing would probably start with an
outsourcing model and pay based on phase or customer take rate.
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Mr. Batchelor stated another option is to look for a third party to partner with because the most
costly piece of the fiber system is the last mile and the operation portion. He did not believe the
asset would be shut down.
Mr. Yuan discussed the disadvantages of Option 2 and then Option 3's advantages and
disadvantages.
Vice Chair Johnston recalled talking to both AT&T and Google Fiber in 2016 and they were not
interested. He did not expect the ISPs to act more positively now than 6 years ago.
Mr. Yuan showed a cost comparison chart of the 3 Options. He stated the Option 2 model was
built assuming aerial and the numbers would have to be rerun for underground. He stated aerial
was the areas of lowest cost and highest density, but in underground areas with higher demand,
the construction cost would go up as well and offset the savings.
Commissioner Forssell questioned if the total cost of $20M would be split differently between
the fiber and electric funds depending on which of the 3 options.
Mr. Yuan stated for Option 2, $20M would be allocated but the number of customers may be less
for underground versus aerial. There was discussion about this.
John Honker, Magellan Principal, expanded on Option 2 as a way to start with fiber to the home
rather than all at once with Option 1. There will be about $20M for a first phase of FTTP. He
explained the options for phased deployment, showing a map of lowest-cost, highest-density
areas and where AT&T fiber is reported based on survey results. He detailed the various areas
on the maps and what the deployment options were in those areas. He felt the risk to the City is
lower with Option 2 because there is no debt service attached to the fiber fund, which creates a
more economical build that could potentially withstand lower take rates and also gives some
opportunity to get into the market in a big way.
Commissioner Smith believed there were at least 28 cities in the State of California with municipal
FTTP service and questioned that.
Mr. Honker stated a number of cities have started the process on a limited basis but none have
built out to 100% of the city.
Commissioner Smith stated there seemed to be fear about the City's ability to do this business.
The City knows the residential side from electrical. The fiber is just one aspect, and partnering
seems logical. He asked if the analysis showed the minimum possible take rate to be much higher
than 25%.
Mr. Honker stated the analysis came to around 40% after discounting for execution risk and
inflation contingencies.
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Commissioner Smith felt that was an important statistic and stated 25% represents the bare
minimum. The citizen population is keenly interested in getting this done. For Option 1 or 2, the
entire cost of the build, inflation, interest rate will be more. He liked that Option 1 forces building
and bringing customers on at a take rate that can support the payments. He liked that Option 2
spends the money available today first and gets to the playing field. He suggested, if both
inflation and interest rate costs are too great a burden to accept at this time, accepting Option 2
as a starting position and then in a year or two when there are better statistics and understanding
as to how to run the business, reintroducing Option 1 for some type of revenue bond.
Commissioner Forssell asked how many of the 740 deposits are being hit in the map under the
areas of highest demand scenario.
Mr. Honker stated the 740 deposits were distributed through the areas. Any areas that had less
than 5 deposits were not considered in the analysis. There are about 350 in the areas of highest
demand scenario, about half of the deposits.
Commissioner Scharff also asked about starting with Option 2 and continuing to roll on if it is
going well.
Mr. Honker stated that assuming things are going well with the first phase, additional financing
would happen and may create some opportunity, having a going concern business at that point.
Maybe the fiber facility could stand on its own at that point because it has assets, revenues, and
a track record. It would potentially open up more financing opportunities to mitigate some of
the interest rate risk that is out there today.
Commissioner Scharff wondered about the fear of AT&T, if it was a fear of being the third player.
Mr. Honker stated there are not a lot of scenarios with 2 fiber competitors in the same market.
The fear may be unsubstantiated, but it would be a substitute product in the market that could
lower take rates. The other features may still influence people to buy from Palo Alto Fiber rather
than AT&T, but the core product is very similar. There was further discussion about customers
with AT&T service. When asked how long it would take to have fiber in people's homes if the
City Council approved this immediately, Mr. Honker stated a conservative timeline would be 18
to 24 months.
Commissioner Scharff believed that in that time, AT&T would have started moving into more of
the green areas on the map. There was discussion about the best starting areas.
Council Liaison Cormack believed this conversation and the map would be very important when
the Council makes a decision. She encouraged staff to talk about the advantages and
disadvantages when bringing this forward to the Council.
Commissioner Forssell referenced the study showing very few people interested in faster upload
speeds. She felt an indication of whether people have good broadband available is important,
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instead of being solely focused on fiber. She felt the goal was not to win against other providers
but for everyone in Palo Alto to have access to good-quality broadband. She was not interested
in Option 1, which seems too risky. She wanted to see areas of need for Option 2. She also
wanted a better understanding of how Internet works in multifamily buildings as multifamily
housing is concentrated in certain areas of the city and that could affect the conversation.
Vice Chair Johnston did not feel Option 3 moved toward the goal of getting high-speed
broadband service to everyone in Palo Alto. He stated after listening to the discussion, he favored
Option 2 with some additional thinking about where to start the build-out.
Commissioner Metz wanted clarification that all the cities in California delivering residential high-
speed Internet were partnering with an ISP.
Mr. Yuan stated those partnerships are in targeted areas, not a full citywide deployment.
Commissioner Metz referred to previous research that there is strong community support and
the majority of residents have unbundled Internet from cable. He favored Option 2 and possibly
in parallel partnering with a service provider. There is nothing to prevent accelerating this later.
Chair Segal questioned when the electrification projects might start and also wondered why no
city in California is doing what Palo Alto is proposing.
Mr. Honker stated in almost every other state without restrictions, cities are providing service.
Labor costs being higher has been a recurring theme from other cities that have considered or
started to deploy FTTP.
Mr. Batchelor stated there was not yet an estimate on when electrification would begin.
Chair Segal stated switching over is not simple for everyone. If the goal is to get broadband to
everyone, the areas of AT&T fiber reported would be the last ones to look at. After the
discussion, she favored Option 2 and felt Commissioner Scharff's idea of free Internet to
incentivize was intriguing.
Commissioner Scharff stated he felt the Commission did not need to decide immediately about
where to go but about which option. His concern was to demonstrate a viable business. Once
there is a viable business, then Internet can be provided for those who do not have it. If it is not
a viable business to start with, the whole thing will fall apart and will never go through the whole
city. He made a motion to recommend Option 2.
Vice Chair Johnston seconded the motion.
Commissioner Forssell wanted to define Option 2 as having additional decisions to be made, with
a more limited initial build-out that does not require bond financing.
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Commissioner Scharff stated that going with Option 2 meant staff would come back several times
to discuss the details. It is not a business plan fleshed out; it is a decision not to go for bond
financing and to use the money already available.
Mr. Yuan stated Option 2 is to have a phased approach without any bond financing. The $20-M
is not fixed and more analysis is needed.
Commissioner Metz favored the motion of Option 2 but wanted to highlight the ISP ingredients
in Option 3 because that has not been discussed previously.
Mr. Yuan felt that contracting out the ISP service part would come with the outsourcing model
for Option 2.
Vice Chair Johnston did not want to see the ISP be a condition of moving the project forward.
Commissioner Smith stated voting Option 2 pushes the project forward, recommending to
Council to spend the available money first, but he did not want to restrict the City Council or the
individuals who run the business on how to run the business efficiently and economically.
Chair Segal stated Option 2 does not even decide between which phased approach is
recommended and she was struggling with whether to recommend fiber at all.
Commissioner Forssell agreed with the motion as presented.
Commissioner Smith did not agree. He questioned what happens in 2 years' time when interest
rates collapse and the $140M investment is now $80M from an economics perspective. He felt
the original Option 2 the way it was drafted in the packet seemed appropriate and did not think
it was in the Commission's purview to direct Council how to fund a recommendation. There was
more discussion about the language of Option 2.
Commissioner Scharff amended the motion to say, "Use $34M from the Fiber fund and $13M
from the electric fund to build the fiber backbone and build phase 1 of the FTTP distribution
network in a phased approach."
ACTION: Commissioner Scharff moved Staff recommendation that the Utilities Advisory
Commission (UAC) approve a recommendation that Council recommend building the fiber
backbone and the following option for Fiber-to-the- Premises (FTTP):
Option 2. Build fiber backbone and FTTP under a phased approach without new bond
financing. Use $34M from the Fiber fund and $13M from the Electric fund to build the fiber
backbone and build phase 1 of the FTTP distribution network in a phased approach.
Seconded by Vice Chair Johnston
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Motion carries 6-0 with Chair Segal, Vice Chair Johnston, and Commissioners Forssell, Metz,
Smith, and Scharff voting yes.
Commissioner Bowie absent
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
None
FUTURE TOPICS FOR UPCOMING MEETINGS:
Commissioner Metz asked what issues Grid Modernization and the Resiliency update would
address.
Dean Batchelor, Utilities Director, stated Grid Modernization was to give an update on what was
found by the consultant hired to do an overview of the system. It is mostly geared to the system
and would touch on some issues at a high level. He stated the Resiliency update was about
looking at resiliency around micro gridding and potential correlation with modernization and
resiliency.
NEXT SCHEDULED MEETING: December 7, 2022
Meeting adjourned at 10:07 p.m.
Respectfully Submitted
Jenelle Kamian, Program Assistant
City of Palo Alto Utilities
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City of Palo Alto (ID # 14941)
Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 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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City of Palo Alto Page 2
(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 me eting 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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City of Palo Alto Page 3
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 activity, physic al 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, to 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 attending the mee ting 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 recommendation, on September 21, 2021 (available online here),
that public bodies meet remotely to the extent possible, in addition to recommendations issued
February 28, 2022,1 to continue 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,
The Utilities Advisory Commission RESOLVES as follows:
1 available online at https://covid19.sccgov.org/order-health-officer-02-28-2022-rescission-of-face-covering-order
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NOT YET APPROVED
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 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 or designee Department Head
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City of Palo Alto (ID # 14589)
Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Discussion of Costs and Reliability of Different Back -up Electricity
Technologies
From: Director of Utilities
Lead Department: Utilities
RECOMMENDATION
This report is for the Utilities Advisory Commission’s (UAC) review and discussion of back-up
electricity options at homes. No action is required.
EXECUTIVE SUMMARY
The UAC expressed interest in having City of Palo Alto Utilities (CPAU) staff provide further cost
and reliability information for different back-up electricity options for both everyday power
outages and after major emergencies such as earthquakes. This report presents the analysis
and findings evaluated by CPAU’s Stanford Summer Shultz Fellow and Stanford Graduate
Student Keola Iskander comparing cost and reliability across several different technologies for
back-up power for both single-family homes and multi-family homes.
Any system capable of powering a home during an outage through the home’s electrical system
(i.e. not via extension cords to an external battery or generator) requires involved electrical
wiring and safety switches, which are critical to the safety of utilities workers when restoring
power. The wiring and safety devices require special planning, labor, and materials to install,
additional permitting, extensive interconnection inspections, and associated costs on all
dimensions. Given the extensive time and costs required, there may be limited interest in these
systems, especially with the high electricity reliability of Palo Alto compared to other utilities.
Despite Palo Alto’s generally high reliability, recent outages have been a concern for some
customers.
Some notable takeaways from the study include that for an average Palo Alto single-family
home, a 7 kW solar PV and 13.5kWh battery have a similar annualized price range to a natural
gas whole house generator, and that the solar with battery system is enough to cover energy
needs through a 48-hour outage in a peak summer day. The same system could have potentially
higher reliability in case of fuel disruptions and cover about a third of the peak winter energy,
which could be enough to cover critical winter loads in a major emergency. For context , the
longest electrical outage since 2015 in Palo Alto has been 26 hours. The solar and battery
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system is also silent while the natural gas whole house generator may cause an undesirable
level of noise for some customers.
For a lower annualized cost, a 7 kW solar PV system with single back-up inverter for plug loads
has a similar net cost to portable gasoline generator, and provides about half the back-up
power most days in the summer. Solar PV with a single back-up inverter systems are silent,
convenient, and enough to power refrigerators & WIFI, do not run out of fuel, and does not
have to be run frequently to maintain, and does not carry the risk of carbon monoxide
poisoning. More investigation is needed, but these could be a viable low -cost option for those
who have solar or interested in getting solar. Uninterruptible power supply (UPS) batteries
could be another option for short duration outages for those with critical medical needs.
For multi-family homes, electrifying water heating as well as the heating of the community
room in a specific multifamily residence was found to be cost effective when combined with a
small solar PV and battery installation. The small solar and battery system would be enough to
provide heating or cooling to the community room, as well as refrigeration. This shows some
potential for bundling electrification of heating with solar and storag e and allow community
rooms of multifamily residences to function their own emergency shelter in case of a major
emergency, or during a heat-wave or smoke event.
BACKGROUND
A previous study conducted by another Stanford Shultz Fellow in summer 2021 found that
electrification of single-family residential units did not significantly impact the resiliency of
single-family homes.1 The previous study primarily investigated the resiliency value of back-up
power solutions in different widespread or catastrophic disasters. This study compares
additional systems and delves into costs as well as resiliency provided in different types of
outages, not just widespread catastrophic outages.
The UAC and Council have expressed interest in the viability of renewable gene ration for
providing similar back-up at similar costs to fossil generators, for both everyday outages as well
as in major emergency events. While a great deal of planning is required for wiring of these
systems, proper safety switches and permitting, and thought and pre-prioritization of loads is
needed, this study explores some of the roles for different renewable back-up systems and
their costs, reliability, and in some case other advantages over fossil generators. The reliability
is examined for everyday outages as well as potential major emergencies.
1 Impact of Decarbonization on the Resiliency of Single-Family Homes in Palo Alto
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory-
commission/archived-agenda-and-minutes/agendas-and-minutes-2021/11-03-2021-regular/id-13608.pdf
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Figure 4. Cumulative distribution of the time to restore service (CAIDI) from an electric outage
in Palo Alto from 2015-July 2022. 90% of these power outages in Palo Alto are less than 8 hours,
and 75% of outages are less than 4.5 hours.
An additional tool which might be worth exploring for interested customers is ReOPT, a publicly
available tool available from the National Renewable Energy Laboratory (NREL). ReOPT is an
optimization tool that that applies an estimated monetary value from avoided outages and
allows users to size energy systems for resiliency.2 Furthermore, building electrification can
enhance resiliency of residential homes because swapping out gas furnaces for electric heat
pumps can provide heating and cooling in the summer. Heat pumps provide heating and
cooling needs, along with protection from wildfire smoke and other air pollutants due to closed
windows and doors during operation. Staff has assessed this tool to be underestimating co sts
but it could be used to investigate relative different costs of technologies or provide rough
estimates.
DISCUSSION
Staff evaluated seven different back-up electricity options for single family homes. Staff also
modeled a multifamily residence which has minimal remaining gas appliances, estimated the
net costs of electrifying those appliances, and adding limited back-up power in the form of a
small solar and storage system. This back-up electricity system was sized to provide heating or
cooling, lighting, and refrigeration to the community room in case of an outage.
Single-Family Analysis
Staff examined commercially available back-up energy systems for residential homes such as
solar PV systems with partial back-up solar inverters, grid-forming solar microinverters, battery
storage, whole-house natural gas generators and portable gasoline generators. Generally, solar
2 https://reopt.nrel.gov/tool/
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PV systems will not operate during an outage due to the system being grid -tied. Thus, off-grid
capable solar inverters such as the SMA Sunny Boy inverters and Enphase IQ8 grid-forming
microinverters are required to provide power to homes when there is no available power from
the grid. However, residences must follow proper engineering permitting guidelines and local
regulations to install back-up energy generating systems. Specifically, islanding solar and/or
storage systems from the grid requires an AC disconnect on the property to disconnect the
back-up system from the grid during an outage, thus preventing electricity flow to the grid an d
protecting utility workers servicing the power system.
Annualized net costs presented include the costs and financial benefits. Capital costs of solar
and battery systems will vary depending on the financing term and proportion of energy
consumption offset by solar PV and storage systems. Capital cost of fossil -fuel generators
assumes the cost of a Generac 9 kW Natural Gas Whole House Back-up Generator and a
Generac 3.6 kW Portable Gasoline Generator with installation costs included. Paired solar and
battery storage system assumes battery storage is replaced after 10 years.
Solar PV systems currently do not operate when there is a grid outage, which means these
systems are grid-tied. However, there are commercially available specialized inverters that
allow off-grid energy generation of Solar PV systems by disconnecting (islanding) the system
from the grid when an outage is detected. Two off -grid capable inverters are considered for this
study, which are SMA Sunny Boy inverters and Enphase IQ8 microinverters. SMA Sunny Boy
inverters are string inverters with a unique secure power supply (SPS)3 function that provides 2
kW of power to a dedicated single outlet during a power outage. Enphase IQ8 microinverters
are grid-forming inverters that allow solar PV systems to continue operating on the same grid
frequency in an outage event. These microinverters are capable of supplying power to a sub -
panel or main-panel equal to the capacity of the solar PV system. However, it is not
recommended to connect the microinverters to a main electric panel, unless paired with a
battery storage system to provide whole house back-up power.
Two battery storage systems were also considered for resiliency measures. These are the Tesla
Powerwall 2 batteries and Enphase IQ Battery 10 batteries. Enphase IQ Battery 10 have lower
storage capacities than Tesla Powerwall 2 batteries, but Enphase batteries are composed of a
series of micro-inverters that allow the battery system to continue operating when a
microinverter malfunctions. Enphase batteries were only considered in this study when paired
with a solar system and Enphase IQ8 grid-forming microinverters.
Table 1. Home energy systems considered in the study along with their rated power capacity
and available capacity during an outage.
Energy System Rated Capacity (kW) Storage Capacity
(kWh)
Power Supplied in an
Outage (kW)
3 https://www.sma-america.com/products/solarinverters/sunny-boy-30-us-41-77-us-41.html and
https://www.sma-sunny.com/us/how-to-explain-secure-power-supply-to-homeowners/
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Solar + Partial Back-
up Inverter
7 kW None 1.5 kW
(plug loads only)
Solar + Grid-forming
Microinverters
7 kW None 2 kW
(Back-up for 4
circuits)
Stand-alone Battery
Storage
5 kW 13.5 kWh 5 kW
Solar + Battery
Storage
7 kW / 5 kW BESS 13.5 kWh 5 kW
Solar + Grid-forming
Microinverters +
Battery
7 kW / 3.8 kW BESS 10 kWh 2 kW
3.8 kW BESS
Natural Gas Whole
House Generator
9 kW None 9 kW
Portable Gasoline
Generator4
3.6 kW ~50kWh (delivered
electric from 5-gallon
gasoline tank onsite)
3.6 kW
(plug loads only5)
4 Sale of portable gasoline generators to be banned in 2028 https://ww2.arb.ca.gov/news/carb-approves-
updated-regulations-requiring-most-new-small-road-engines-be-zero-emission-2024
5 For modeled costs, generator is assumed to be used with extension cords plugged into a generator sufficiently far
from windows and doors to not present a risk from exhaust. Portable generators can be connected to a whole
house transfer switch, which requires additional wiring, costs, etc.
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Figure 1. Annualized net cost ranges of the energy systems considered in the study. Solar and
battery storage have lower O&M costs, while portable gasoline generators and natural gas
generators have increasing O&M costs with frequent and longer power outages. Higher
electricity bill savings can be achieved with a solar and battery system. The Solar PV + Partial
Plug Load Back-Up is only compatible with some solar inverters.
The solar inverter and storage systems considered have different power capacities which
affects the electric reliability of a home. However, most of the systems considered in the s tudy6
can supply sufficient energy to meet an average all-electric household energy demand in Palo
Alto. These systems are resilient for outages less than seven hours, but the level of electric
reliability provided by these systems decreases with longer -duration outages. This study also
explores the resiliency of these different energy systems by varying duration of outages and
household energy consumption.
On an average day, an average Palo Alto home modeled as all-electric consumes 12,400
kWh/year, or 34 kWh/day, representing a 65% increase in electricity consumption compared to
a mixed-fuel home. By simulating an outage occurring at every hour of the day for various all-
electric residential energy consumption throughout the year, the study found that mos t of the
energy systems considered in the study can supply sufficient power for an average all -electric
consumption in short to medium term outages (< 12 hours), however resiliency levels can vary
by household consumption, time of year, and hourly performance of solar PV systems.
6 Neither the stand-alone solar PV with partial back-up inverter for 2 kW of plug loads or the grid-forming
microinverters installed without a battery are enough to cover all-electric homes even in the daylight hours of the
summer.
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Figure 2. Average proportion (%) of household load met in an outage for a peak summer
energy consumption scenario of an all-electric single-family home. Modeled peak summer
energy consumption of an all-electric home is 27 kWh/day.
Figure 3. Average proportion (%) of household load met in an outage for a peak winter energy
consumption scenario of an all-electric single-family home. Modeled peak winter energy
consumption of an all-electric home is 92 kWh/day.
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Table 2. Resiliency summary of different energy systems with their respective net system cost
and annualized cost. Energy systems are compared by their level of reliability in different
outage scenarios. High resiliency denotes the system’s capability in providing sufficient
energy for normal consumption in an outage. Moderate resiliency means the system can
provide some energy during an outage but requires consumer behavior modification such as
appliance time-of-use or reduced energy consumption. Low resiliency signifies the system’s
inability to provide adequate energy in longer duration outages and requires users to
conserve energy consumption. Noise level and emissions quantified on separate scale.
Planned Outage
(< 6 hours)
Load Shedding
Event
(< 6 hours)
Storm Event
(6 - 12 hours)
After Major
Earthquake
( >24 hours)
Portable Gasoline
Generator
(Plug Load Back-up)
$120
Solar PV
+ Partial Back-up
Inverter
(Plug-Load Back-up)
$290
Natural Gas
Whole-House
Generator
$630
Solar PV
+ Grid-forming
Microinverters
(Back-up 4 Circuits)
$760
Solar PV + BESS $790
Stand-alone Battery
Storage $1,130
Solar PV
+ Grid-forming
Microinverters
+ Battery
$1,240
Reliability Level Provided For:
Technology Noise Level
Dangerous CO
& CO2
Emissions?
Annualized Cost
($)
Multi-family Analysis
Palo Alto Libraries and community centers can become cooling centers during extreme heat
events, however, in certain conditions, these facilities could be overpopulated and strained to
provide adequate emergency service response. By transforming multi-family common areas to
localized community centers with back-up power, the City can improve community emergency
preparedness and resiliency during a power outage event. During an outage, multi -family
residents can gather in the common area for heating/cooling needs, refrigeration of food or
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medical supplies, cooking, and charging electronics. Adding heat pumps to common areas
provides cooling capabilities and can offer protection from wildfire smoke because it allows
residences to close windows and doors in the common area.
The study found that a stand-alone 7 kW-DC solar PV system has a lifetime cost of $5,700 to
$15,000 depending on the inverter used, and pairing solar PV systems with a 5 kW/13.5 kWh or
a 3.84 kW/10.08 kWh battery storage can increase the system cost range to $16,000 - $25,000.
The estimated cost to add a 10 kW-DC solar PV and 5 kW / 13.5 kWh battery storage on a multi-
family property is $11,000. Stand-alone solar PV systems were found to be a net benefit to
consumers depending on the proportion of daily energy consumption from solar and
equipment financing terms, however the addition of battery storage is still a net cost to
consumer.
Community area and shared gas appliances in multi-family residentials generally include gas
ranges, water heaters, furnaces, and dryers. This study finds that electrification of two central
gas water heaters, one central gas furnace, and two gas dryers removes 21 tons of CO 2 annually
and has an estimated cost of $40,000. The estimated 20-year net present value of natural gas
savings is $46,000 with a payback period of 17 years. Savings potential will vary depending on
the multi-family property’s gas consumption. Higher gas consumption for space and water
heating will generate higher savings when switching to the more efficient heat pumps and heat
pump water heaters. Table 3 shows the estimated natural gas savings based on different
discount rates.
The majority of the savings from electrification is the switch to heat pump water heaters from
gas water heaters. Switching from a gas dryer to an electric dryer was found to be a net cost
because electric dryers are usually less energy efficient than gas dryers. In addition, multi-family
property owners must navigate contractual agreement s with laundry machine providers to
switch to an electric dryer if the current gas dryers on the property are leased. Multi -family
property owners can also switch to heat pump dryers commercially available that could be
more efficient than current electric and gas dryers
Table 3. Net present value from 20 years of natural gas savings with different discount rates.
Base analysis assumes a discount rate of 5%.
Discount Rate (%) NPV of Natural Gas Savings ($)
3% $55,813
5% $46,047
8% $35,348
This study estimated that a 10 kW-DC solar PV system can provide 95% of the electricity
consumption from average usage of two heat pump water heaters, one 18,000 BTU/hr heat
pump, one refrigerator, one electric stove, and two gas dryers in a s mall multi-family property.
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The lifetime system cost of a 10 kW-DC solar PV system with a 5 kW/13.5 kWh battery storage
is estimated to be $11,000, including the electricity bill savings following the NEM 2.0 rate and
the 30% investment tax credit (ITC) for the solar and storage system. Paired solar and battery
system assumes battery replacement after 10 years.
With electrification savings, the multi-family property studied can reduce the cost of solar and
storage systems to about $5,000 and increase energy resiliency for multi-family tenants. In
addition, the solar and battery storage system will reduce the cost of electricity for property
owners to a levelized cost of $0.06/kWh, which is lower than the $0.20/kWh Tier 2 electricity
rate in Palo Alto and the $0.14/kWh Tier 1 electricity rate. Solar and storage costs can be
greatly reduced with a different size solar system, having more favorable loan terms, or aligning
the majority of the energy consumption during solar production hours.
Figure 4. Estimated cost of community room and solar with battery storage installation. Total
cost of electrification and adding solar and battery storage system is $4,809 after savings.
The study finds that a 10 kW-DC solar and 5 kW/13.5 kWh battery storage system can maintain
adequate reliability in the common area for long-duration outages. Multi-family property
owners can consider partial back-up inverters or microinverters to provide additional reliability
during an outage, but the decision should be weighed with the incremental cost of the system.
Moreover, full back-up power to individual tenant units needs to be accurately assessed for the
solar and battery system to deliver electricity to support the potential maximum load on the
property.
The solar and battery storage system is limited to the power output of the battery because
solar PV systems will not operate in an outage without off -grid capable inverters. Thus,
behavior modification may be necessary to avoid overloading the energy system.
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Limitations
• Emissions and Toxic Pollutants: Natural gas generators and portable gasoline generators
emit toxic pollutants such as Carbon Monoxide (CO) and Carbon Dioxide (CO2) during
operation. Proper ventilation is required when operating fossil-fuel generators, and indoor
use of portable gasoline generators is highly discouraged. Gasoline generators are known to
produce the highest levels of CO and CO2 emissions among fossil-fuel based generators.7
Portable gasoline generators frequently cause deaths and injuries during outages from
carbon monoxide poisoning. The state of California will ban the sale of portable gasoline
generators on January 1, 2028.
• Fuel supply: Portable gasoline generators and natural gas generators require constant fuel
supply for operation. During an outage, gasoline pumps in Palo Alto do not currently have
back-up power and will be inoperable, thus limiting access to gasoline supply during power
outages. Storing gasoline onsite has issues with fuel stability. Natural gas pipes can be
affected by earthquakes and other physical damage that disrupts fuel supply to specific
areas.
• Maintenance: Both whole-home natural gas generators and portable gasoline generators
are meant to be run for about two hours a month to insure proper engine readiness.
• Grid-powered Battery: Stand-alone battery storage systems such as the Tesla Powerwall
batteries are restricted in their ability to charge from the grid if it is not allowed by the local
utility, or if the battery is owned by a third part y.8 The ability to charge from the grid is set
by the local utility, or installer, and the Tesla Powerwall must be in Back-up-only or Time-
Based-Control mode. Tesla Powerwall batteries will not charge from the grid if paired with a
solar system,9 therefore adequate sizing of solar system is required to sufficiently charge
the battery storage and home consumption. Moreover, when Tesla Powerwall batteries are
set to charge from the grid in Back-up Mode, the grid power charge is limited to 3.3 kW.10
• Local regulations: Natural gas generators can produce 55 – 90 dB measured 23ft (7m) away
from the equipment. According to Palo Alto Municipal Code (PAMC) Chapter 9.10, exterior
noise produced by machinery may not exceed six dB above the 40 dB “local ambient”
sound. PAMC 9.10.060 has an exception for residential power equipment that meets a
certain decibel level, at certain hours.11 Additionally, noise-producing equipment are
required to be “located out of setback abutting or within 50 ft of residential properties and
shall be screened from view from the residential property”. Therefore, natural gas
generators may not be allowed to be installed in residential units depending on its location
within the property. There are exemptions for back-up power that may allow both natural
7 https://www.natureworldnews.com/articles/47383/20210908/how-bad-are-generators-for-the-
environment.htm
8 https://www.tesla.com/support/energy/powerwall/mobile-app/powerwall-modes
9 https://www.tesla.com/support/energy/powerwall/learn/combining-systems
10
https://www.tesla.com/sites/default/files/pdfs/powerwall/Powerwall%202_AC_Datasheet_en_northamerica.pdf
11 https://www.cityofpaloalto.org/files/assets/public/public-works/engineering-services/webpages/forms-and-
permits/other-guidelines/cpa-noise-ordinance-030507.pdf
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gas and gas generators. The sale of portable gasoline generators will be prohibited in
California beginning in 202812.
• Plug-load only supply: Portable gasoline generators and partial back-up inverters such as
the Secure Power Supply on a SMA Sunny Boy inverter13 can only support plug-load
appliances. Hence, appliances requiring 240V cannot be supplied, such as heat pumps,
electric ranges, electric/heat pump water heaters, and electric dryers. Moreover, outlets
are located near the solar inverter or on portable gasoline generators. Thus, plug-load
appliances could only be used outside the home or with an appropriate extension cord. In
contrast, natural gas generators, solar microinverters, and battery storage systems can
provide power for 240V rated appliances and supply electricity to a home’s back-up electric
panel or main electric panel. Portable gas generators could be connected via a whole -home
transfer switch if desired.
• Product compatibility: Enphase IQ8 microinverters are compatible with Tesla Pow erwall 2
batteries, but installation and communication between technologies can be challenging. It is
recommended to pair Enphase IQ8 microinverters with an Enphase battery system for
whole-house back-up. Using grid-forming microinverters for back-up power during daylight
hours only supports four critical load circuits. Using the grid-forming microinverters for
whole home back-up power without a battery is currently not a recommend use case.
• Sunlight: Solar PV systems can only operate when there is sunlight and may not output
electricity at maximum power capacity due to sky conditions. Thus, solar PV systems will not
deliver electricity to homes in the evening and in periods of little -to-no sunlight such as
cloudy days or the winter season. Outages occurring at night can only be supported by
battery storage systems and fossil-fuel generators.
Alternative Resiliency Options
Through the partnership with Office of Emergency Services, the team also identified other
resiliency options to enhance residential energy resiliency during an outage. These include:
• Uninterruptable Power Supply (UPS): UPS systems are lower cost short-term back-up
systems that provide electricity to plug load equipment during outages. UPS systems
generally have small power capacity- a 900 W system costs $250- and can last from 30
to 60 minutes depending on the load. These systems could be used to support medically
fragile individuals during an outage as they can power medical equipment such as
ventilators, nebulizers, or oxygen concentrators.
• Solar trailers: Solar trailers are mobile solar PV arrays that are attached to trailers and
can be paired with a battery back-up system. These solar trailers can be attached to a
vehicle with a trailer hitch and provide electricity in open areas with sufficient sunlight.
Depending on the manufacturer and solar capacity, the cost of solar trailers can range
from $40,000 for a 2kW PV + 25 kWh BESS to $86,000 for a 5.6 kW PV + 80 kWh BESS.
12 https://ww2.arb.ca.gov/news/carb-approves-updated-regulations-requiring-most-new-small-road-engines-be-
zero-emission-2024
13 https://www.sma-sunny.com/us/how-to-explain-secure-power-supply-to-homeowners/
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City of Palo Alto Page 13
• Vehicle-to-home EV chargers: Bi-directional EV chargers allow bi-directional capable
EVs to supply power to a home back-up electrical panel, which can support households
and neighbors in emergency services during an outage. Additionally, the City could
create a similar pilot program in El Cajon, which utilizes electric school buses as a form
of grid management.14
RESOURCE IMPACT
This is a discussion item, no next steps are specifically recommended by staff at this time.
POLICY IMPLICATIONS
This discussion of back-up power options is consistent with the Utilities Strategic Plan, the
Utilities Electric Integrated Resources Plan, Sustainability Implementation Plans, and the City’s
Sustainability and Climate Action Plan (S/CAP).
ENVIRONMENTAL REVIEW
Staff’s discussion of different back-up power options does not require California Environmental
Quality Act review, because it does not meet the definition of a project under Public Resources
Code Section 21065 and CEQA Guidelines Section 15378(b)(5), as an administrative
governmental activity which will not cause a direct or in direct physical change in the
environment.
NEXT STEPS
Reliability and resiliency planning has been delegated to the Council’s Ad Hoc Sustainability and
Climate Action Plan Committee, which is considering it in the context of a work plan to be
delivered to Council. Next steps will be determined as part of that work plan.
Attachments:
• Attachment A: Presentation
14 https://www.latimes.com/business/story/2022-07-27/electric-school-buses-in-el-cajon-will-send-power-to-the-
grid
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Discussion of costs and reliability of
back-up power options
Keola Iskander, 2022 Stanford Shultz Fellow
Lena Perkins, PhD, Senior Resource Planner CPAU
December 7, 2022
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Figure 1. Annualized net cost ranges of the energy systems considered in the study. Solar and battery storage have lower
O&M costs,while portable gasoline generators and natural gas generators have increasing O&M costs with frequent and
longer power outages. Higher electricity bill savings can be achieved with a solar and battery system.The Solar PV +
Partial Plug Load Back-Up is only compatible with some solar inverters.
2,000
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Annualized Cost($)
Natural Gas
Whole-House
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Solar PV
+ Grid-forming
Microinverters
(4 Circuits Back-up)
•
•
Solar PV
+ Battery
Battery Only Solar PV
+ Grid-forming
Micro inverters
+ Battery
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Figure 2.Average proportion (%) of household load met in an outage for a peak summer energy
consumption scenario of an all-electric single-family home. Modeled peak summer energy consumption
of an all-electric home is 27 kWh/day.
% Total Loads Covered in Summer Peak
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Duration of Outage (hours)
liiiil Portable Gasoline Generator Iii Solar PV ■ Natural Gas Solar PV ■ Solar PV ■ Battery Only ■ Solar PV
+ Partial Back-up Inverter Whole-House
(Plug Load Back-up) (Plug-Load Back-up) Generator
+ Grid-forming Microinverters + Battery
(Back-up 4 Circuits)
+ Grid-forming Microinverters
+ Battery
2.a
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Figure 3. Average proportion (%) of household load met in an outage for a peak winter energy consumption scenario
of an all-electric single-family home. Modeled peak winter energy consumption of an all-electric home is 92
kWh/day.
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+ Partial Back-up Inverter Whole-House
(Plug Load Back-up) (Plug-Load Back-up) Generator
+ Grid-forming M icroinverters + Battery
(Back-up 4 Circuits)
+ Grid-forming Microinverters
+ Battery
2.a
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Planned Outage
(< 6 hours)
Load Shedding
Event
(< 6 hours)
Storm Event
(6 - 12 hours)
After Major
Earthquake
( >24 hours)
Portable Gasoline
Generator
(Plug Load Back-up)
$120
Solar PV
+ Partial Back-up
Inverter
(Plug-Load Back-up)
$290
Natural Gas
Whole-House
Generator
$630
Solar PV
+ Grid-forming
Microinverters
(Back-up 4 Circuits)
$760
Solar PV + BESS $790
Stand-alone Battery
Storage $1,130
Solar PV
+ Grid-forming
Microinverters
+ Battery
$1,240
Reliability Level Provided For:
Technology Noise Level
Dangerous CO
& CO2
Emissions?
Annualized Cost
($)
Table 2. Resiliency summary of
different energy systems with their
respective net system cost and
annualized cost. Energy systems are
compared by their level of reliability
in different outage scenarios.
High resiliency denotes the system’s
capability in providing sufficient
energy for normal consumption in an
outage. Moderate resiliency means
the system can provide some energy
during an outage but requires
consumer behavior modification
such as appliance time-of-use or
reduced energy consumption. Low
resiliency signifies the system’s
inability to provide adequate energy
in longer duration outages and
requires users to conserve energy
consumption.
Noise level and emissions quantified
on separate scale.
2.a
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Multifamily Analysis
40,250
57,528
4,809
(46,047)(46,922)
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
80,000
Community Room Electrification 10-kW Solar PV + 5 kW/13.5 kWh BESS Total Project Cost
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(
$
)
Total Cost Natural Gas Savings NEM 2.0 Savings 30% ITC
Figure 4. Estimated cost of community room and solar with battery storage installation. Total cost of electrification and
adding solar and battery storage system is $4,809 after savings.
■ ■ ■ ■
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City of Palo Alto (ID # 14730)
Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Presentation and Update on the City's Electric Grid Modernization
Analysis
From: Director of Utilities
Lead Department: Utilities
Discussion
This is a presentation of the Utility’s Department’s Electric Distribution Infrastructure
Modernization analysis, which will identify community needs, staff needs, and infrastructure
needs.
Attachments:
• Attachment A: Presentation
• Attachment B: Presentation
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Electric Distribution Infrastructure Modernization Update
December 7, 2022 www.cityofpaloalto.org
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Electric Infrastructure Analysis Report
•Consultant is currently analyzing the system.
•Changes will be needed in the secondary system and
transformers.
•Consultant to provide recommendation on diversified
system design loading. (Average KVA per electrified home.)
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Current Impacts of Electrification*
•More customers are needing 400A and 600A panels.
•Increasing number of transformer additions and upgrades.
•Beginning to see more customer electric quality complaints
due to overloaded facilities.
•More load and generation is being added to the system
without utility review (or sometimes even notification),
which can result in system issues impacting customers.
•Heat pump water heaters have the least grid impact of all
electrification appliances and equipment –City prioritizing
these for early S/CAP action
* “Electrification” in this presentation refers to building and vehicle electrification, solar PV, and batteries
3.b
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Current Constraints
Need for system upgrades is increasing.
Transformer replacements are accelerating.
Transformer delivery lead times are 1 to 2 years.
Training new staff to process current requests.
Backlog of infrastructure projects.
Staffing and Retention
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Steps for Modernization
•Analyze and prioritize feeders and substations requiring upgrades.
•Initiate development of Electrification ready Secondary Distribution
System.
•Establish contracts to design and build improvements for each circuit
and associated substation.
•Coordinate marketing plans for whole home electrification with areas
where the system now has adequate capacity.
3.b
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Staffing Needs for Grid Modernization
Engineering and Operations Staffing
•Insufficient staffing to manage existing programs due to on-going
vacancies.
•No staffing to manage Grid Modernization program and contracting.
•Need to attract qualified experienced candidates for positions.
•Development and execution of retention and recruitment plan.
3.b
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City of Palo Alto (ID # 14677)
Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Discussion of City of Palo Alto Utilities' Long -Term Electric Load
Forecast Through 2045
From: Director of Utilities
Lead Department: Utilities
EXECUTIVE SUMMARY
Staff prepared this report on the development of long-term electricity demand forecasts for the
Utilities Advisory Commission’s review and discussion; no action is requested at this time. S taff
developed three long-term electricity demand forecasts for the City of Palo Alto Utilities (CPAU)
that build off long-term demand trends while also incorporating the projected impacts of
industrial businesses leaving the City, data centers growing, building efficiency improving,
customers adding solar, increasing numbers of electric vehicles (EVs), and customers switching
from natural gas to electric appliances.
The purpose of these three forecasts is to create a realistic projection of energy demand based
on known trends while acknowledging the substantial uncertainty that exists around the
impacts of these trends in the future. These low, mid, and high long-term forecasts are updated
at a minimum every five years, as part of CPAU’s Integrated Resource Plan (IRP) development
process, and will be used as the basis for electric supply procurement decision -making. Staff will
continue to adjust these forecasts periodically, as actual changes in loads are observed
BACKGROUND
Staff updated the long-term electric load forecast to aid electricity supply planning and for use
in CPAU’s 2023 electric IRP. To coordinate with the state’s 2045 goal of powering all retail
electricity sold in California with renewable and zero-carbon resources, the forecast extends to
2045. The purpose of the load forecast is to create a realistic projection of future electricity
demand, incorporating the impacts of known trends while acknowledging the substantial
uncertainty around these trends given the time horizon of the forecast and the unprecedented
technology transitions that are currently underway.
This set of forecasts is the first step in designing a supply portfolio with the right fit for CPAU’s
electricity needs, understanding CPAU’s overall exposure to changing market price profiles, and
appropriately valuing supply resources.
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City of Palo Alto Page 2
The range of uncertainty that exists around the three forecasts also will be factored into t he
City’s IRP modeling for designing a supply portfolio that has sufficient optionality and flexibility,
and for appropriately valuing that optionality.
Staff will adjust these forecasts periodically on the basis of observed changes in load and usage
patterns, and adjust the City’s electricity procurement plans to reflect these changes as well. A
detailed long-term electricity forecast update is undertaken every five years at a minimum.
DISCUSSION
Staff develops CPAU’s load forecasts by starting with a linear regression based on past
consumption history, and then exogenously incorporating the nonlinear impacts of new trends,
which in this case include: new data centers planned in the next three years, the nonlinear
growth component of EV load, and load growth from building electrification. These three
subsets are modeled separately because staff anticipates that their future growth will far
exceed their recent historical growth, and therefore the linear regression analysis will not
adequately represent their future impact on total load.
Linear Regression Forecast Component
Staff developed the linear regression econometric forecast using a trend variable to capture
load reductions caused by industrial businesses leaving Palo Alto, building efficiency
improvements, and solar on homes and businesses.
The recession caused by COVID-19 required an additional ‘COVID-19 recession dummy
variable’1 to be superimposed on top of this linear load reduction trend variable, given the
exceptional nature of the pandemic. As shown in Figure 1 below, Palo Alto’s electricity
consumption is rebounding as the country exits the COVID-19 recession, and the pandemic’s
impacts on the City’s electricity demand are expected to largely disappear by the end of 2023.
1 A dummy variable is a variable used in regression analysis that can take a value ranging from 0 to 1, where the
values indicate the presence or absence of something. The COVID-19 recession dummy variable values are
depicted by the yellow bars in Figure 1, and they represent the relative magnitude of the pandemic-induced
economic recession each year.
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City of Palo Alto Page 3
Figure 1. Graph of Long-term Linear Load Loss and COVID-19 Recession
In the linear regression, staff captured all of the above variables into a single trend variable,
which is assumed to continue until some point in the future. For the ‘mid’ forecas t, staff has
assumed that this load loss trend will continue at the same pace until 2035, at which point
loads will stabilize. For the ‘high’ forecast, staff assumed substantial data center growth
combined with load loss stabilizing in 2030. For the ‘low’ forecast staff has modeled the current
load loss trend that began in 2004 continuing all the way through 2045, since this has been a
long-standing trend that includes behind-the-meter solar, customer and building code
efficiency improvements, and the departure of industrial businesses.
Table 1. Assumptions Concerning Long-term Linear Load Loss Trend
Linear Regression Assumptions Low Projection Mid Projection High Projection
Year when load decline from
deindustrialization, efficiency,
and solar is assumed to end
2045 2035 2030
Nonlinear Additional Load Growth Component
After defining the linear regression trends, staff exogenously added the nonlinear component
of load growth from additional data centers, electric vehicles, and bui lding electrification. The
assumptions for the low, mid, and high cases are shown in Table 2 below. For both electric
vehicle adoption and building electrification rate, the high case assumes achieving a 71%
reduction in the City’s total CO2 emissions from 1990 levels by 2030. The low forecasts for both
electric vehicle adoption and building electrification rate assume a linear extrapolation of the
trends of the last three to five years. The mid forecasts for both electric vehicles and building
electrification are an aggressive but realistic projection. The additional data center load growth
shown in Table 2 is based on projections provided by customers for new data centers which
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City of Palo Alto Page 4
are planned for the next three years, with the mid case assuming that 30% of t hese customer-
projected load increases are actually realized, while the high case assumes 100% realization of
the projected load increases.
Table 2. Additional Load Impacts, Including Linear and Nonlinear Components
2020 2045 projection
Additional Modeled Load Growth Actual Low Mid High
Additional Data Centers, GWh
-
0
(0%)
70
(8%)
230
(27%)
Electric Vehicles, GWh
10
(1%)
46
(5%)
129
(15%)
165
(19%)
Building Electrification, GWh
1
(0.1%)
16
(2%)
69
(8%)
91
(11%)
Total, GWh
11
(1%)
62
(7%)
268
(32%)
486
(57%)
Table 3. Assumed Growth Factors for Data Centers, Electric Vehicles, and Building
Electrification
Low Projection Mid Projection High Projection
Assumptions for Additional Loads 2020 2030 2045 2020 2030 2045 2020 2030 2045
Data Centers
% Additional Data Center Planned - - - - 30% 30% 100% 100% 100%
Electric Vehicles
% Residents with EVs 10% 21% 42% 10% 31% 61% 10% 44% 86%
% EVs of New Vehicles Purchased 30% 40% 62% 30% 50% 80% 30% 85% 100%
Building Electrification
% Single Family All-electric 1% 7% 26% 1% 10% 87% 1% 100% 100%
% Gas Packs Converted - - - - - 75% - 100% 100%
% School Sq ft Converted - - - - - 75% - 100% 100%
% Large Commercial Converted - - - - 5% 100% - 100% 100%
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Figure 2. Building Electrification Load Assumptions
Overall Forecasts Including Linear and Nonlinear Trends
The combined low, mid, and high load forecasts are shown in Error! Reference source not
found., including the total expected additional data center load, EV load, and building
electrification load. The EV load projections include both a linear component (capturing the
roughly linear growth in EV numbers over the past decade) as wel l as a nonlinear component
(projected future growth exceeding the trendline from the past decade). Neither the data
center load nor the building electrification load has components captured in the historical
linear regression, so these load projections are entirely nonlinear.
Figure 3. Low, Mid, and High Load Forecasts through 2045
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Changes in Seasonal and Hourly Usage Patterns
Staff is also exploring the changing patterns of electricity usage and have updated the hourly
models to encompass these hourly and seasonal trends (higher winter and nighttime loads),
behind-the-meter solar and batteries, and elevated temperatures from climate change (i.e.
more air conditioning and less heating load overall).
Approximately half of the projected building electrification load is expected to come from
heating homes and businesses, which will result in more usage in the winter and at night.
Electric vehicles used for commuting are also assumed to charge more in the evenings and at
night. Staff also expects solar installations at customer premises to continue at approximately
the current pace. Staff has integrated all of these changes in usage patterns into their hourly
forecast models and will continue to monitor them and adjust the models as needed.
RESOURCE IMPACT
The updated forecasts will be incorporated into long-term budgeting and will be used to design
the most cost-effective portfolio through the electric IRP.
POLICY IMPLICATIONS
This updated range of forecasts is consistent with the Utilities Strategic Plan, the Utilities
Electric Integrated Resource Plan, Sustainability Implementation Plans, and the City’s
Sustainability and Climate Action Plan (S/CAP).
ENVIRONMENTAL REVIEW
The UAC’s discussion of these electric load forecasts does not require California Environmental
Quality Act review, because it does not meet the definition of a project under Public Resources
Code Section 21065 and CEQA Guidelines Section 15378(b)(5), as an administrative
governmental activity which will not cause a direct or indirect physical change in the
environment.
NEXT STEPS
Staff will continue to refine these load projections as well as the hourly usage models and
incorporate them into the IRP modeling effort and electricity supply planning.
Attachments:
• Attachment A: Presentation
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Electric Load Forecast
Discussion
Lena Perkins, PhD Senior Resource Planner
December 7, 2022
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Figure 1. Graph of Long-term Linear Load Loss and COVID-19 Recession
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Table 2. Additional Load Impacts, Including Linear and Nonlinear Components
2020 2045 projection
Additional Modeled Load Growth Actual Low Mid High
Additional Data Centers, GWh
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70
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230
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165
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16
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91
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Total, GWh
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62
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486
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Figure 3. Low, Mid, and High Load Forecasts through 2045
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City of Palo Alto (ID # 14908)
Utilities Advisory Commission Staff Report
Meeting Date: 12/7/2022 Report Type:
City of Palo Alto Page 1
Title: Informational Update on Electric Supply Portfolio Optimization and
Rebalancing Initiatives
From: Director of Utilities
Lead Department: Utilities
REQUEST
This is an informational report to the Utility Advisory Commission (UAC); no action is required.
EXECUTIVE SUMMARY
While the City’s total electric supply matches closely with the City’s electrical demand on an
annual basis, considerable load-resource imbalances exist within the portfolio on a seasonal and
daily basis. This seasonal/daily imbalance has existed since 2005, when the current 20-year
Western Base Resource (WBR) hydro contract became effective. Over the past 18 years the City
has balanced its loads and generation supplies by: a) entering into long-term renewable
resource contracts, b) making monthly market purchases and sales to address seasonal
imbalances, and c) making daily/hourly market purchases and sales to address intraday
imbalances. (See Attachments A and B for graphs depicting the seasonal and daily load -resource
balances.)
While this strategy has worked to date, staff has been seeking ways to better balance loads and
resources to minimize cost uncertainty associated with managing the portfolio, while
minimizing the overall cost of electric supply. The decline in market elect ricity prices during
periods of high solar production (when Palo Alto’s electric supply portfolio is in surplus) and the
projected increase in night-time electricity prices (when Palo Alto’s portfolio is in deficit), and
projection for these trends to continue in the future, is expected to reduce the value of the
City’s supply portfolio and increase its exposure to market price volatility. In response, staff is
actively exploring ways to rebalance the portfolio to minimize its market price exposure and
increase its value.
DISCUSSION
The City’s 2018 Integrated Resource Plan (IRP) included a Work Plan (Attachment C) with several
new initiatives, including one on portfolio rebalancing: to “evaluate the merits of rebalancing
the electric supply portfolio to lower seasonal and daily market price exposure by more closely
matching the City’s hourly and monthly electric loads.” Along those lines, in recent months staff
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City of Palo Alto Page 2
has explored procuring firm, baseload geothermal energy and simultaneously selling surplus
solar generation in the spring and summer months. The City currently has an opportunity to
enter into a 12-year agreement to procure 10-20 MW of output from the Calpine Geothermal
project, as part of a larger purchase with other Northern California Power Agency (NCPA)
members. Staff is also exploring a sale of 40-80 MW of solar output during Q2 and Q3 from one
or more of the City’s long-term contracts. These combined transactions will more closely
balance the City’s loads and resources on a daily/monthly basis to better hedge market energy
price shifts in the long-term while maintaining the portfolio’s annual energy position close to
current levels.
In addition to the above rebalancing strategies, staff is also exploring agreements to add energy
storage systems at existing solar project sites. Such resources would help the City meet its long-
term resource adequacy capacity obligations while also shifting a portion of the City’s solar
generation from lower-priced to higher-priced hours. Staff has also recently evaluated procuring
output from another hydroelectric project, but ultimately chose not to participate in that
project, finding the contract price to be not very competitive and in view of the fact that the
resource would add to the City’s already heavy reliance on hydroelectric resources.
Another important initiative included in the City’s 2018 IRP Work Plan was evaluating the merits
of committing to a new 30-year WBR contract starting in 2025. (Although the City has officially
executed the new WBR contract, it retains the ability to reduce its share of the contract or even
opt out entirely until the end of June 2024.) Staff’s preliminary analysis suggests that it may be
best to retain the City’s share of the WBR contract in 2025, while continuing to evaluate the
option to reduce City’s share or exit the contract in 2030 if the resource becomes
uncompetitive.1
The third major initiative in the City’s 2018 IRP Work Plan was to evaluate how to best utilize the
City’s share of the California-Oregon Transmission Project (COTP) when the long-term layoff of
this asset ends in 2024. On this front, staff’s preliminary analysis suggests that utilities outside
of the California Independent System Operator (CAISO) balancing area may be better able to
maximize the value of the resource than the City. As such, staff is exploring options to further
lay-off the asset to such utilities until 2039; at that point the COTP layoffs of several other NCPA
members will also be coming to an end, and the City will be able to consider t he long-term use
of this resource with these other members in a more coordinated fashion.
Staff has issued (or plans to issue in the near future) several Requests for Proposals to
competitively purchase, sell, or lay-off various resources as described above. Palo Alto has also
retained Ascend Analytics to more rigorously model and analyze the economics and portfolio fit
of the options staff is exploring. Staff expects to return to the UAC in the coming months to
1 Staff’s preliminary analysis of Western’s value relative to other resource accounts for the fact that Western’s
output has trended downward in recent years due to the effects of drought and climate change, as well as the
impact that weather-related volatility has on the City’s overall supply cost uncertainty and the need for a Hydro
Rate Adjuster mechanism.
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City of Palo Alto Page 3
present the results of this analysis and share staff’s recommendations, all in conjunction with
the development of the City’s 2023 IRP.
STAKEHOLDER ENGAGEMENT
Staff discussed the process of developing the Integrated Resource Plan with the UAC in June
2022 (Staff Report 14279). The current report further informs the community on the progress
made on this front in the past six months. In the next 12 months, staff will continue engaging
community stakeholders on these initiatives via several upcoming meetings with the UAC. Input
would be sought on ways to optimally procure and rebalance the City’s electric supply portfolio
to cost-effectively and sustainably meet the City’s growing electricity demand.
POLICY IMPLICATIONS
This update on staff’s efforts to optimize and rebalance the electric supply portfolio is in line
with the Utilities Strategic Plan, the City’s Energy Risk Management Policy, its 2018 Electric IRP,
and its Sustainability and Climate Action Plan (S/CAP) goals.
ENVIRONMENTAL REVIEW
The Utilities Advisory Commission’s review of this update on el ectric supply portfolio
optimization and rebalancing does not meet the definition of a project under Public Resources
Code 21065 and therefore California Environmental Quality Act (CEQA) review is not required.
Attachments:
• Attachment A: Monthly Load-Resource Balances for 2021
• Attachment B: Daily Load-Resource Balances for 2021
• Attachment C: 2018 Electric IRP Work Plan
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Attachment A
Monthly On-Peak and Off-Peak Load-Resource Balances for CY 2021
Figure A-1: Monthly On-Peak Load-Resource Balance for CY 2021, with Potential Calpine Geothermal
Output Included
Figure A-2: Monthly Off-Peak Load-Resource Balance for CY 2021, with Potential Calpine Geothermal
Output Included
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Attachment B
Daily Load-Resource Balances for CY 2021 (January, April, July, and October)
Figure B-1: Average Hourly Load-Resource Balance for January 2021, with Potential Calpine
Geothermal Output Included
Figure B-2: Average Hourly Load-Resource Balance for April 2021, with Potential Calpine Geothermal
Output Included
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Attachment B
Figure B-3: Average Hourly Load-Resource Balance for July 2021, with Potential Calpine Geothermal
Output Included
Figure B-4: Average Hourly Load-Resource Balance for October 2021, with Potential Calpine
Geothermal Output Included
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Attachment C
2018 Electric IRP Strategies & Related New Initiatives
There are a number of new initiatives and numerous on-going tasks related to implementing the
EIRP Strategies. These activities are supported by about six to eight CPAU staff, both from the
supply side and demand-side (or customer) programs. In addition, CPAU relies on joint action
agencies and external service providers to implement programs and initiatives. Supply and
customer program staff also coordinates with retail rate development, distribution system
engineering, and operations staff to implement programs and investments in an integrated
manner.
Described below are the nine strategies and eight new initiatives that are expected to be
undertaken in the next three to six years. Work tasks related to on-going activities have not been
called out separately.
EIRP Strategies & Related New Initiatives
1. Pursue an Optimal Mix of Supply-side and Demand-side Resources: When procuring to
meet demand, pursue an optimal mix of resources that meets the EIRP Objective, with
cost-effective energy efficiency, distributed generation, and demand-side resources as
preferred resources. Consider portfolio fit and resource uncertainties when evaluating
cost-effectiveness.
a. Initiative #1: Evaluate the merits of committing to a new 30-year contract with
Western starting in 2025. [Recommendation on initial commitment to the UAC in
early 2020; recommendation on final commitment in early 2024.]
b. Initiative #2: Evaluate the merits of rebalancing the electric supply portfolio to
lower its seasonal and daily market price exposure, by more closely balancing the
City’s long-term supplies with its hourly and monthly electric loads. [Initial scoping
assessment report to the UAC by December 2019.]
c. Initiative #3: Evaluate how to best utilize the City’s share of the California-Oregon
Transmission Project (COTP), when the long-term layoff of this asset ends in 2024.
[Initial assessment report to UAC by December 2019, in tandem with Initiative #2
initial scoping assessment report.]
d. Continue ongoing evaluation of all cost-effective distributed energy resources
(DERs), such as energy efficiency, distributed generation, energy storage, and
demand response. Update forecasts of DER impacts on retail sales and load shapes
for use in strategic planning, rate-making, and budget forecasting. [Initial
assessment to be completed in Distributed Energy Resource (DER) and Customer
Program Plan for Council approval by June 2019.]
2. Maintain a Carbon Neutral Supply: Maintain a carbon neutral electric supply portfolio to
meet the community’s greenhouse gas (GHG) emission reduction goals.
a. Initiative #4: In addition to ensuring 100% of City’s annual electricity energy
needs are met with carbon neutral supplies (on a kWh basis), evaluate the
carbon content of the electric portfolio on an hourly basis, and recommend the
merits of buying carbon offsets to ensure the carbon content of the cumulative
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Attachment C
hourly portfolio is zero on an annual basis. Also evaluate the manner in which the
City communicates with customers about the carbon content of the electric
portfolio. [Initial staff recommendation to the UAC by December 2019.]
3. Actively Manage Portfolio Supply Cost Uncertainties: Structure the portfolio or add
mitigations to manage short-term risks (e.g. market price risk and hydroelectric variability)
and build flexibility into the portfolio to address long-term risks (e.g. resource availability,
customer load profile changes, and regulatory uncertainty) through diversification of
suppliers, contract terms, and resource types.
a. This is an on-going active management strategy; no new initiatives are planned.
4. Manage Electric Portfolio to Ensure Lowest Possible Ratepayer Bills: Pursue resources
in a least-cost, best-fit approach in an effort to ensure ratepayer bills remain as low as
possible, while achieving other Council-adopted sustainability, rate, and financial
objectives.
a. Initiative #5: Investigate the merits and economics of monetizing excess
renewable energy certificates to minimize the cost of maintaining an RPS
compliant and carbon neutral electricity supply portfolio. [Initial staff
recommendation to the UAC by December 2019.]
5. Partner with External Agencies to Implement Optimization Opportunities: Actively
engage and partner with external agencies to maximize resource value and optimize
operations.
a. Initiative #6: Explore greater synergistic opportunities with NCPA and other
agencies – such as newly formed community choice aggregators – to lower Palo
Alto’s operating costs and rebalance the supply portfolio. [Initial assessment to
UAC by December 2019.]
6. Manage Supplies to Meet Changing Customer Loads and Load Profiles: Maintain electric
supply resource flexibility in anticipation of potential changes in customer loads due to
distributed energy resources, efficiency, electrification, or for other reasons. At the same
time, use retail rates and other available tools to influence customer load changes in a
manner that minimizes overall costs and achieves other Council objectives.
a. Initiative #7: Implement 2018 Utilities Strategic Plan Priority 4, Strategy 4, Action
2 by undertaking a competitive assessment for the electric utility within the
context of the large proliferation of customer-sited DER technologies,
electrification initiatives, changing customer expectations, and potential
regulatory changes. Develop contingencies to address the potential for large
changes in the City’s load level or load profile. [Initial assessment to UAC in
December 2020.]
7. Ensure Reliable and Low-cost Transmission Services: Work with the transmission system
operator to receive reliable service in a least-cost manner.
a. This is an on-going activity; no new initiatives are planned.
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Attachment C
8. Support Local Electric Supply Resiliency: Coordinate supply portfolio planning with utility-
wide efforts to support local measures and programs that enhance community electric
supply resiliency.
a. On-going supporting role in utility-wide efforts.
9. Comply with State and Federal Laws and Regulations: Ensure compliance with all
statutory and regulatory requirements for energy, capacity, reserves, GHG emissions,
distributed energy resources, efficiency goals, resource planning, and related initiatives.
a. Ongoing activities in collaboration with NCPA, CMUA and other joint action
agencies.
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