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HomeMy WebLinkAbout2024-10-09 Utilities Advisory Commission Agenda PacketUTILITIES ADVISORY COMMISSION Special Meeting Wednesday, October 09, 2024 Community Meeting Room & Hybrid 6:00 PM Utilities Advisory Commission meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference 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. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Masks are strongly encouraged if attending in person. T h e   m e e t i n g   w i l l   b e   b r o a d c a s t   o n   C a b l e   T V   C h a n n e l   2 6 ,   l i v e   o n YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/96691297246) Meeting ID: 966 9129 7246    Phone: 1(669)900‐6833 PUBLIC COMMENTS Public comments will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. All requests to speak will be taken until 5 minutes after the staff’s presentation. Written public comments can be submitted in advance to UACPublicMeetings@CityofPaloAlto.org and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to UACPublicMeetings@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received, the  Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks, posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do not create a facility, fire, or safety hazard; and (3) persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. TIME ESTIMATES Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Commission reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting to adapt to the participation of the public, or for any other reason intended to facilitate the meeting. CALL TO ORDER  6:00 PM – 6:05 PM AGENDA CHANGES, ADDITIONS AND DELETIONS  6:05 PM – 6:10 PM  The Chair or Board majority may modify the agenda order to improve meeting management. PUBLIC COMMENT 6:10 pm – 6:25 pm Members of the public may speak to any item NOT on the agenda. APPROVAL OF MINUTES  6:25 PM – 6:30 PM 1.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on September 4, 2024 UTILITIES DIRECTOR REPORT  6:30 PM – 6:45 PM NEW BUSINESS (a 10 minute break will be imposed during this section) 2.Discussion with Bay Area Water Supply and Conservation Agency (BAWSCA) CEO/General Manager, Nicole Sandkulla: BAWSCA Overview, Regional Water Use and Efficiency, and San Francisco Public Utilities Commission Water Supply Reliability Investments (DISCUSSION 6:45 PM – 7:40 PM) Guest Speaker: Nicole Sandkulla, Chief Executive officer/General Manager 3.Discussion with San Francisco Public Utilities Commission’s Assistant General Manager of the Water Enterprise: Operations, Drought Planning, and Alternative Water Supply Planning (DISCUSSION 7:40 PM – 8:25 PM) Guest Speaker: Steve Ritchie, Assistant General Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale Customer Liaison 4.Utilities Advisory Committee (UAC) Discussion for Director of Utilities Department Recruitment and Input of Candidate’s Key Characteristics FUTURE TOPICS FOR UPCOMMING MEETING and REVIEW OF THE 12 MONTH ROLLING CALENDAR: November 6, 2024 COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTS ADJOURNMENT 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)). INFORMATIONAL REPORTS 12‐Month Rolling Calendar Public Letter(s) to the UAC PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. W r i t t e n   p u b l i c   c o m m e n t s  m a y   b e   s u b m i t t e d   b y   e m a i l   t o UACPublicMeetings@cityofpaloalto.org. 2. Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below 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 may 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 Clerk 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 will be accepted  through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B‐E above. 4. Spoken public comments using a 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. CLICK HERE TO JOIN    Meeting ID: 966 9129 7246   Phone:1‐669‐900‐6833  Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  1 Regular Meeting October 09, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.   UTILITIES ADVISORY COMMISSIONSpecial MeetingWednesday, October 09, 2024Community Meeting Room & Hybrid6:00 PMUtilities Advisory Commission meetings will be held as “hybrid” meetings with the option toattend by teleconference/video conference or in person. To maximize public safety while stillmaintaining transparency and public access, members of the public can choose to participatefrom home or attend in person. Information on how the public may observe and participate in themeeting is located at the end of the agenda. Masks are strongly encouraged if attending inperson. T h e   m e e t i n g   w i l l   b e   b r o a d c a s t   o n   C a b l e   T V   C h a n n e l   2 6 ,   l i v e   o nYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/96691297246)Meeting ID: 966 9129 7246    Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance toUACPublicMeetings@CityofPaloAlto.org and will be provided to the Council and available forinspection on the City’s website. Please clearly indicate which agenda item you are referencingin your subject line.PowerPoints, videos, or other media to be presented during public comment are accepted onlyby email to UACPublicMeetings@CityofPaloAlto.org at least 24 hours prior to the meeting. Oncereceived, the  Clerk will have them shared at public comment for the specified item. To upholdstrong cybersecurity management practices, USB’s or other physical electronic storage devicesare not accepted.Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks,posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do notcreate a facility, fire, or safety hazard; and (3) persons with such items remain seated whendisplaying them and must not raise the items above shoulder level, obstruct the view orpassage of other attendees, or otherwise disturb the business of the meeting.TIME ESTIMATESListed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Commission reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting to adapt to the participation of the public, or for any other reason intended to facilitate the meeting. CALL TO ORDER  6:00 PM – 6:05 PM AGENDA CHANGES, ADDITIONS AND DELETIONS  6:05 PM – 6:10 PM  The Chair or Board majority may modify the agenda order to improve meeting management. PUBLIC COMMENT 6:10 pm – 6:25 pm Members of the public may speak to any item NOT on the agenda. APPROVAL OF MINUTES  6:25 PM – 6:30 PM 1.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on September 4, 2024 UTILITIES DIRECTOR REPORT  6:30 PM – 6:45 PM NEW BUSINESS (a 10 minute break will be imposed during this section) 2.Discussion with Bay Area Water Supply and Conservation Agency (BAWSCA) CEO/General Manager, Nicole Sandkulla: BAWSCA Overview, Regional Water Use and Efficiency, and San Francisco Public Utilities Commission Water Supply Reliability Investments (DISCUSSION 6:45 PM – 7:40 PM) Guest Speaker: Nicole Sandkulla, Chief Executive officer/General Manager 3.Discussion with San Francisco Public Utilities Commission’s Assistant General Manager of the Water Enterprise: Operations, Drought Planning, and Alternative Water Supply Planning (DISCUSSION 7:40 PM – 8:25 PM) Guest Speaker: Steve Ritchie, Assistant General Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale Customer Liaison 4.Utilities Advisory Committee (UAC) Discussion for Director of Utilities Department Recruitment and Input of Candidate’s Key Characteristics FUTURE TOPICS FOR UPCOMMING MEETING and REVIEW OF THE 12 MONTH ROLLING CALENDAR: November 6, 2024 COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTS ADJOURNMENT 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)). INFORMATIONAL REPORTS 12‐Month Rolling Calendar Public Letter(s) to the UAC PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. W r i t t e n   p u b l i c   c o m m e n t s  m a y   b e   s u b m i t t e d   b y   e m a i l   t o UACPublicMeetings@cityofpaloalto.org. 2. Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below 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 may 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 Clerk 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 will be accepted  through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B‐E above. 4. Spoken public comments using a 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. CLICK HERE TO JOIN    Meeting ID: 966 9129 7246   Phone:1‐669‐900‐6833  Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  2 Regular Meeting October 09, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.   UTILITIES ADVISORY COMMISSIONSpecial MeetingWednesday, October 09, 2024Community Meeting Room & Hybrid6:00 PMUtilities Advisory Commission meetings will be held as “hybrid” meetings with the option toattend by teleconference/video conference or in person. To maximize public safety while stillmaintaining transparency and public access, members of the public can choose to participatefrom home or attend in person. Information on how the public may observe and participate in themeeting is located at the end of the agenda. Masks are strongly encouraged if attending inperson. T h e   m e e t i n g   w i l l   b e   b r o a d c a s t   o n   C a b l e   T V   C h a n n e l   2 6 ,   l i v e   o nYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/96691297246)Meeting ID: 966 9129 7246    Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance toUACPublicMeetings@CityofPaloAlto.org and will be provided to the Council and available forinspection on the City’s website. Please clearly indicate which agenda item you are referencingin your subject line.PowerPoints, videos, or other media to be presented during public comment are accepted onlyby email to UACPublicMeetings@CityofPaloAlto.org at least 24 hours prior to the meeting. Oncereceived, the  Clerk will have them shared at public comment for the specified item. To upholdstrong cybersecurity management practices, USB’s or other physical electronic storage devicesare not accepted.Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks,posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do notcreate a facility, fire, or safety hazard; and (3) persons with such items remain seated whendisplaying them and must not raise the items above shoulder level, obstruct the view orpassage of other attendees, or otherwise disturb the business of the meeting.TIME ESTIMATESListed times are estimates only and are subject to change at any time, including while themeeting is in progress. The Commission reserves the right to use more or less time on any item,to change the order of items and/or to continue items to another meeting. Particular items maybe heard before or after the time estimated on the agenda. This may occur in order to bestmanage the time at a meeting to adapt to the participation of the public, or for any other reasonintended to facilitate the meeting.CALL TO ORDER  6:00 PM – 6:05 PMAGENDA CHANGES, ADDITIONS AND DELETIONS  6:05 PM – 6:10 PM The Chair or Board majority may modify the agenda order to improve meeting management.PUBLIC COMMENT 6:10 pm – 6:25 pmMembers of the public may speak to any item NOT on the agenda.APPROVAL OF MINUTES  6:25 PM – 6:30 PM1.Approval of the Minutes of the Utilities Advisory Commission Meeting Held onSeptember 4, 2024UTILITIES DIRECTOR REPORT  6:30 PM – 6:45 PMNEW BUSINESS (a 10 minute break will be imposed during this section)2.Discussion with Bay Area Water Supply and Conservation Agency (BAWSCA)CEO/General Manager, Nicole Sandkulla: BAWSCA Overview, Regional Water Use andEfficiency, and San Francisco Public Utilities Commission Water Supply ReliabilityInvestments (DISCUSSION 6:45 PM – 7:40 PM) Guest Speaker: Nicole Sandkulla, ChiefExecutive officer/General Manager3.Discussion with San Francisco Public Utilities Commission’s Assistant General Managerof the Water Enterprise: Operations, Drought Planning, and Alternative Water SupplyPlanning (DISCUSSION 7:40 PM – 8:25 PM) Guest Speaker: Steve Ritchie, AssistantGeneral Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale CustomerLiaison4.Utilities Advisory Committee (UAC) Discussion for Director of Utilities DepartmentRecruitment and Input of Candidate’s Key CharacteristicsFUTURE TOPICS FOR UPCOMMING MEETING and REVIEW OF THE 12 MONTH ROLLINGCALENDAR: November 6, 2024COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTS ADJOURNMENT 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)). INFORMATIONAL REPORTS 12‐Month Rolling Calendar Public Letter(s) to the UAC PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. W r i t t e n   p u b l i c   c o m m e n t s  m a y   b e   s u b m i t t e d   b y   e m a i l   t o UACPublicMeetings@cityofpaloalto.org. 2. Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below 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 may 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 Clerk 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 will be accepted  through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B‐E above. 4. Spoken public comments using a 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. CLICK HERE TO JOIN    Meeting ID: 966 9129 7246   Phone:1‐669‐900‐6833  Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  3 Regular Meeting October 09, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.   UTILITIES ADVISORY COMMISSIONSpecial MeetingWednesday, October 09, 2024Community Meeting Room & Hybrid6:00 PMUtilities Advisory Commission meetings will be held as “hybrid” meetings with the option toattend by teleconference/video conference or in person. To maximize public safety while stillmaintaining transparency and public access, members of the public can choose to participatefrom home or attend in person. Information on how the public may observe and participate in themeeting is located at the end of the agenda. Masks are strongly encouraged if attending inperson. T h e   m e e t i n g   w i l l   b e   b r o a d c a s t   o n   C a b l e   T V   C h a n n e l   2 6 ,   l i v e   o nYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/96691297246)Meeting ID: 966 9129 7246    Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance toUACPublicMeetings@CityofPaloAlto.org and will be provided to the Council and available forinspection on the City’s website. Please clearly indicate which agenda item you are referencingin your subject line.PowerPoints, videos, or other media to be presented during public comment are accepted onlyby email to UACPublicMeetings@CityofPaloAlto.org at least 24 hours prior to the meeting. Oncereceived, the  Clerk will have them shared at public comment for the specified item. To upholdstrong cybersecurity management practices, USB’s or other physical electronic storage devicesare not accepted.Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks,posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do notcreate a facility, fire, or safety hazard; and (3) persons with such items remain seated whendisplaying them and must not raise the items above shoulder level, obstruct the view orpassage of other attendees, or otherwise disturb the business of the meeting.TIME ESTIMATESListed times are estimates only and are subject to change at any time, including while themeeting is in progress. The Commission reserves the right to use more or less time on any item,to change the order of items and/or to continue items to another meeting. Particular items maybe heard before or after the time estimated on the agenda. This may occur in order to bestmanage the time at a meeting to adapt to the participation of the public, or for any other reasonintended to facilitate the meeting.CALL TO ORDER  6:00 PM – 6:05 PMAGENDA CHANGES, ADDITIONS AND DELETIONS  6:05 PM – 6:10 PM The Chair or Board majority may modify the agenda order to improve meeting management.PUBLIC COMMENT 6:10 pm – 6:25 pmMembers of the public may speak to any item NOT on the agenda.APPROVAL OF MINUTES  6:25 PM – 6:30 PM1.Approval of the Minutes of the Utilities Advisory Commission Meeting Held onSeptember 4, 2024UTILITIES DIRECTOR REPORT  6:30 PM – 6:45 PMNEW BUSINESS (a 10 minute break will be imposed during this section)2.Discussion with Bay Area Water Supply and Conservation Agency (BAWSCA)CEO/General Manager, Nicole Sandkulla: BAWSCA Overview, Regional Water Use andEfficiency, and San Francisco Public Utilities Commission Water Supply ReliabilityInvestments (DISCUSSION 6:45 PM – 7:40 PM) Guest Speaker: Nicole Sandkulla, ChiefExecutive officer/General Manager3.Discussion with San Francisco Public Utilities Commission’s Assistant General Managerof the Water Enterprise: Operations, Drought Planning, and Alternative Water SupplyPlanning (DISCUSSION 7:40 PM – 8:25 PM) Guest Speaker: Steve Ritchie, AssistantGeneral Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale CustomerLiaison4.Utilities Advisory Committee (UAC) Discussion for Director of Utilities DepartmentRecruitment and Input of Candidate’s Key CharacteristicsFUTURE TOPICS FOR UPCOMMING MEETING and REVIEW OF THE 12 MONTH ROLLINGCALENDAR: November 6, 2024COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTSADJOURNMENTSUPPLEMENTAL INFORMATIONThe materials below are provided for informational purposes, not for action or discussion during UAC Meetings (Govt. CodeSection 54954.2(a)(3)). INFORMATIONAL REPORTS 12‐Month Rolling Calendar Public Letter(s) to the UAC PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. W r i t t e n   p u b l i c   c o m m e n t s  m a y   b e   s u b m i t t e d   b y   e m a i l   t o UACPublicMeetings@cityofpaloalto.org. 2. Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below 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 may 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 Clerk 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 will be accepted  through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B‐E above. 4. Spoken public comments using a 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. CLICK HERE TO JOIN    Meeting ID: 966 9129 7246   Phone:1‐669‐900‐6833  Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  4 Regular Meeting October 09, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org.   Item No. 1. Page 1 of 1 Utilities Advisory Commission Staff Report From: Alan Kurotori, Utilities Chief Operating Officer Lead Department: Utilities Meeting Date: October 9, 2024 Report #: 2409-3483 TITLE Approval of the Minutes of the Utilities Advisory Commission Meeting Held on September 4, 2024 RECOMMENDATION Staff recommends that the UAC consider the following motion: Commissioner ______ moved to approve the draft minutes of the September 4, 2024 meeting as submitted/amended. Commissioner ______ seconded the motion. ATTACHMENTS Attachment A: 09-04-2024 DRAFT UAC Minutes AUTHOR/TITLE: Jenelle Kamian, Program Assistant I Item #1     Packet Pg. 5     Utilities Advisory Commission Minutes Approved on: Page 1 of 10 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF SEPTEMBER 4, 2024 REGULAR MEETING CALL TO ORDER Chair Scharff called the meeting of the Utilities Advisory Commission (UAC) to order at 6:00 p.m. Present: Chair Scharff, Vice Chair Mauter, Commissioners Croft, Metz, and Phillips Absent: Commissioners Gupta and Tucher AGENDA REVIEW AND REVISIONS None ORAL COMMUNICATIONS None APPROVAL OF THE MINUTES ITEM 1: ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on July 3, 2024 Chair Scharff invited comments on the July 3, 2024, UAC draft meeting Minutes. ACTION: Vice Chair Mauter moved to approve the draft minutes of the July 3, 2024, meeting as submitted. Commissioner Croft seconded the motion. The motion carried 5-0 with Chair Scharff, Vice Chair Mauter, Commissioners Croft, Metz, and Phillips voting yes. Commissioner Gupta and Tucher absent. UNFINISHED BUSINESS None UTILITIES DIRECTOR REPORT Dean Batchelor, Utilities Director, delivered the Director's Report. Item #1     Packet Pg. 6     Utilities Advisory Commission Minutes Approved on: Page 2 of 10 Gas Price Spike Mitigation: On August 19, Council approved a plan to apply a gas price mitigation adder of 5.5 cents per therm for a period of 3 years generating about $4.5M in revenues. The funds will be used to offset the impact of a gas market price spike above the maximum Gas Commodity Charge of $4 per them. The policy will go into effect November 1. Beware of Scams: We are continually on the lookout for potential utility scams and warn the public to be wary of anyone pretending to fraudulently represent the City of Palo Alto Utilities (CPAU). Recently a customer alerted us to a scam so CPAU is reminding community members to beware and be safe. Scammers may advertise a false CPAU phone number online, try to solicit personal information, and/or demand utility payments. We encourage customers to contact Utilities Customer Service Call at UtilitiesCustomerService@cityofpaloalto.org or (650) 329-2161 with any questions about their account. 811 Day: August 11 was 8/11, Call Before You Dig Day, which is a helpful reminder to always call 811 before any digging or excavation work to avoid hitting underground utilities and a potentially dangerous situation. This month, CPAU is mailing gas safety awareness brochures to all postal patrons within the zip codes of Palo Alto, as well as to emergency responders, locators, excavators, contractors, public officials, and non-customers living near a gas pipeline. CPAU provides gas safety outreach to customers throughout the year. Visit cityofpaloalto.org/safeutility for more tips on gas and other utilities safety. GOAL Surveys: CPAU will soon begin surveying residents about gas safety through the Gas Overall Awareness Level (GOAL) survey. This survey is one of the methods used to evaluate the effectiveness of our outreach activities as mandated by the Federal Department of Transportation through our Public Awareness Plan. The survey of residential customers is expected to begin sometime within the next few weeks. Customers will receive an automated phone call recording with questions as well as option to complete the survey online. HPWH Program Update: As of August 29, 2024, 323 HPWHs have been installed through the Full Service HPWH program, with 12 of these installed at no cost to income-qualified households through the Residential Energy Assistance Program (REAP). Another 82 HPWH rebates have been approved since January 1, 2023. Separately, CPAU is planning to launch a new Emergency Water Heater Replacement program in September to support the swift replacement of failed gas water heaters with heat pumps. CPAU is partnering with Larratt Brothers to meet the program goal of restoring hot water within 48 hours. In cases where it might take longer than 48 hours to install a heat pump water heater, the contractor will provide a loaner gas water heater as a temporary solution. SunShares Program Update: For the ninth consecutive year, CPAU is partnering with Business Council on Climate Change (BC3) to promote the Bay Area SunShares Program. CPAU customers will receive discounted prices to install residential solar and battery storage systems from two prescreened solar contractors, SolarUnion and Solar Technologies. Program enrollment begins on September 1 and will close on November 15. Business and Key Account Customer Satisfaction Surveys: As a member of the California Municipal Utilities Association (CMUA), CPAU is actively participating in customer satisfaction surveys for small and medium businesses, as well as key account customers. Earlier this year, CMUA’s contractor, GreatBlue Research, conducted a statewide survey covering both municipal and investor-owned utility customers. This survey aims to benchmark and analyze customer satisfaction trends across the state. Item #1     Packet Pg. 7     Utilities Advisory Commission Minutes Approved on: Page 3 of 10 Following the statewide survey, we have initiated an “oversample” survey specifically targeting Palo Alto business customers. This additional survey will help us gain deeper insights into areas of particular interest in Palo Alto while retaining similar questions to those used in the statewide survey for effective comparison. CPAU's oversample survey began on August 13, 2024, and will run through the end of September. We are seeing moderate participation from our customers so far and will be deploying new survey engagement strategies in the coming weeks to boost involvement and enhance our response rates. Commercial Webinar: On July 31, CPAU hosted its second free commercial webinar, which had 25 people in attendance. The presenter, Steve Brennan of CLEAResult, informed attendees about maximizing the efficiency and performance of HVAC systems, with a special focus on heat pumps. Customers learned about energy-saving strategies, and advancements in heat pump technology. Survey results from the webinar proved this topic was well received and customers would like to see more educational webinars on this topic in the future. This webinar was hosted in preparation for the limited time boosted Heat Pump HVAC incentive that Staff will be launching in the coming weeks for commercial customers to remove rooftop gas pack units. Electric Vehicle Programs: The Peninsula Conservation Center (PCC), one of the first commercial buildings to go all-electric in Palo Alto, has recently completed the installation of 6 EV charging stations; these are now available to both staff and visitors for use. In addition, the condominium complex at 101 Alma has completed the installation of 97 chargers (one for each tenant parking space) and the apartment complex at 345 Sheridan has completed the installation of 10 chargers. Together, these projects represent a total of 184 more multifamily units that now have access to onsite charging. Staff is working with these properties to bring EV workshops and mini EV expos to their sites to educate and engage residents about the benefits of switching to an EV. Events and Workshops: Details and registration at cityofpaloalto.org/workshops – UPS Upcoming events Mr. Batchelor introduced Alan Kurotori as the recently appointed Chief Operating Officer prior to Mr. Batchelor's retirement at the end of this year. Staff is working with a consultant on the details of the Director's position. He felt it was important for the Committee to think about what they are looking for in this position. He thanked the Committee for all of their support through his time as Director of Utilities. NEW BUSINESS ITEM 2: DISCUSSION: City of Palo Alto’s Electrical Connection to California Transmission Grid Lena Perkins, Ph.D., Senior Resource Planner, gave a brief update on the current state of the electrical system and connection to the broader transmission grid. There are three transmission lines on two structures along one corridor. This is not ideal since there have been events in the past when all three lines were taken out since they are so close to each other. The City's expected load growth will trigger a mandated upgrade through NERC Reliability Standards, expected in 2025. The City's preferred solution is a new interconnection to the south. Connecting to a second corridor is preferable for reliability, and the power flow is also more efficient interconnecting from the south. Most of the recent load growth is in datacenters, new multifamily housing, and electrifying residential loads. If the CEC replaces their forecast with Palo Alto's internal forecast, which will be known by December 2024/January 2025, that Item #1     Packet Pg. 8     Utilities Advisory Commission Minutes Approved on: Page 4 of 10 will trigger the NERC Reliability Upgrade. If the second transmission corridor is approved by California ISO, it would be roughly 5 years to be built by PG&E and the cost would be mostly covered by all PG&E and ISO ratepayers as a required transmission upgrade. Commissioner Phillips noted something like this came before the Council in 2021 to come through SLAC rather than Ames. He questioned what happened to that. Dr. Perkins explained this was a separate process because that transmission line is owned by the Department of Energy. To interconnect and upgrade it to accommodate the interconnection, it would go through the Federal Department of Energy. She noted Staff is aware of that, but this is probably the fastest path. Dean Batchelor, Director of Utilities, added that the reason the Council did not act on that proposal in 2021 was that Staff did not recommend to use the SLAC because they wanted the City to gold plate their substation and wanted CPAU to pay for upgrades, about $30M to upgrade just that piece of it and then to build the rest of the 230. Council decided that was too expensive and wanted to look at the other route coming up through the south. Kaylee Burton, Utilities Administrative Assistant, requested members of the public interested in speaking raise their hand. Public Comment – Caleb Weis, Clean Coalition, asked about the anticipated costs of this and what the reduced peak load growth would need to be in order to avoid the need for this additional transmission line. He spoke about the economic, environmental, and resilience benefits of community micro-grids compared to anything currently on the grid. He encouraged this be considered in order to reduce the anticipated load growth. He was curious how those costs would measure up and whether they are going to be paid up front or added to the transmission costs of the energy. Dr. Perkins responded that the anticipated required peak load reduction is 30 to 40 megawatts, very large. Costs are still being evaluated. The cost to Palo Altans for capital will essentially be the cost of upgrading the receiving substation. The transmission costs will be spread across all ratepayers, and the additional load will help to lower those costs. The volumetric rates for transmission will be about the same. The substation upgrade might be around $5M but again depends on things that have not been decided with the routing. Mr. Batchelor added that it is not looking at the reduction of load but more about the reliability of the entire system throughout Palo Alto. Commissioner Croft asked if there are other ways to reduce the risk of the planes on the current corridor and if the City would be able to source more power through that corridor and use the existing infrastructure. Dr. Perkins noted it was probably not close to cost competitive and that the least expensive option for all ratepayers was to have a secondary corridor. Mr. Batchelor added that the lines are PG&E lines and felt they would not want to underground all the lines. Item #1     Packet Pg. 9     Utilities Advisory Commission Minutes Approved on: Page 5 of 10 Commissioner Metz questioned the main barrier to making progress on this. Dr. Perkins explained that prior to the load growth, ISO had higher priority transmission upgrades, but with the load growth, Palo Alto is in a new category and getting a lot of response. She discussed the process Santa Clara is going through would be very similar. Alan Kurotori, Chief Operating Officer, added that Santa Clara went through the CEC process for submitting its load forecast and after adoption, the ISO looked at mitigation projects to deal with the load. Palo Alto would go through a very similar process. Commissioner Phillips was skeptical of doing this just on reliability grounds without more information. He did not see that it was urgent. He also clarified that things may change with Stanford but that the focus here was on the southern interconnection. Dr. Perkins clarified that this was the path where Palo Alto pays the least but has the least control over which solution is chosen. It will be an iterative and somewhat collaborative process with the ISO, assuming they acknowledge Palo Alto requires additional transmission capacity and that it is of high enough priority to rise to the top of the queue in this 2025 transmission planning process. The ISO does not want it to interconnect to the current receiving substation. It is an unusual configuration for a community of this size to have only a single receiving substation. Once it is approved, it is still may be five plus years to get built by PG&E or another transmission construction company. She explained that she was prioritizing the ISO process over Stanford because she thought it was a matter of some urgency. Negotiating anything with Stanford, even without SLAC and the Department of Energy, is a multiyear process. She added that it was not mutually exclusive and that one benefit to electrifying everything is that if you have one system, it makes sense to make it stronger and that there are economic efficiencies for that as well. Chair Scharff asked if the load is growing fast enough that ISO would approve it at some point. He asked about both Palo Alto and Santa Clara's current loads. Dr. Perkins responded that it was more about ISO agreeing with the underlying assumptions and Palo Alto demonstrating that the forecast is real. As soon as they believe the forecast, it should get approved. The priority level depends on how fast the load increases. Palo Alto's peak load was 177. Mr. Kurotori added that Santa Clara's load was around 700 and the LS power line will go to around 1200 in terms of the peak. Chair Scharff hoped that when this analysis was done, the option would be chosen that the rates do not go up because the load growth offsets the cost. Dr. Perkins anticipated that it should more than offset but, again, not if the City builds a transmission line on its own in the short term. ACTION: None ITEM 3: DISCUSSION: Overview of Council-Adopted “One Margin” Energy Reach Code Item #1     Packet Pg. 10     Utilities Advisory Commission Minutes Approved on: Page 6 of 10 Jonathan Abendschein, Assistant Director of Climate Action, stated the Energy Reach Codes adopted by the Council in June are currently under review by the CEC. The ordinances amended two sections of the Municipal Code: 16.14 is the Energy Code and 16.17 is the Green Building Code. These ordinances adopt local amendments to the State's codes. When the ordinances go into effect, they will amend the energy code in a way that will encourage electrification consistent with the standards laid out by the Ninth Circuit Court. They would amend the Green Building Code to remove the all-electric requirements and to align with some updates to the State's Green Building Code that took effect in July. The State added a standard to its statewide building codes called Hourly Source Energy, which essentially serves as a proxy for greenhouse gas emissions when modeling the energy use for new construction or major renovations. It is easier for buildings to meet the Hourly Source Energy standards when they use electricity rather than gas. The higher cost of gas heating means it is likely that new homes will install heat pumps for their space and water heating. The Hourly Source Energy requirement does not apply to gas stoves, dryers, or other equipment aside from space and water heating. Commissioner Metz asked what HSE standard would be applied. Mr. Abendschein explained that an Hourly Source Energy metric has to be met. The number comes from the State but takes into account Palo Alto's local conditions when implemented. The requirement differs according to different building classes. He noted it was challenging to get the technical details of it unless you are an energy modeler. He continued that the Green Building Ordinance removes the all-electric requirements but retains electric readiness standards, updates the City's EV requirements, and prohibits outdoor gas grills, stoves, and barbecues. He reviewed the timeline of this item, looking at an effective date of October 4. He expected that even if people do not adopt all-electric homes as aggressively, the City would likely see very little emissions from new construction as a result of this ordinance. Commissioner Metz questioned whether someone could install resistance heating or hot water based on page 2, "Electric space water heating, no additional measured required." Mr. Abendschein believed there were other aspects of the code that would keep people from installing resistance space or water heating. Kaylee Burton, Utilities Administrative Assistant, requested members of the public wishing to speak on this item raise their hands. There were no requests to speak. Chair Scharff asked about any potential unintended consequences of the ordinance on building an all- electric home. He questioned if it applied to just residential or all buildings. Mr. Abendschein responded that every building project is going to be a little different. Building a mixed- fuel home, there may be efficiency measures people need to put into effect. With an all-electric home, there probably will not be the same tighter efficiency measures. Looking into ordinances in place and unintended consequences with those ordinances, Staff has made some adjustments to make it feasible for smaller ADUs to comply. Energy modeling was done on actual Palo Alto building permit applications to verify actual Palo Alto projects could meet the design capacity standards. He also noted that the planning process for the next three-year code cycle is beginning and will be an opportunity to fix any of those issues. He responded that the code applied to all buildings, although industrial buildings have the same standards as the State and no additional local requirement. Item #1     Packet Pg. 11     Utilities Advisory Commission Minutes Approved on: Page 7 of 10 Vice Chair Mauter encouraged making information about the benefits of full electrification, including the elimination of indoor air pollutants associated with indoor gas stoves, available to Palo Alto citizens during the outreach process. She asked what other communities have done from an incentive perspective to encourage electrification. Mr. Abendschein noted Staff was developing a pamphlet on the benefits of full electrification and resources for that to hand out at the Development Center. He responded that typically communities and utilities do not offer incentives for new construction. San Jose has stated that having this standard in place was enough to drive all or nearly all new construction all electric. ACTION: None ITEM 4: DISCUSSION: Implementing Reliability and Resiliency Strategic Plan – Review of Consulting Scope of Work to Scope Projects to Enhance Resiliency Jonathan Abendschein, Assistant Director of Climate Action, explained this was to give an update on the Reliability and Resiliency Strategic Plan and get feedback on the scope for a consultant to implement parts of the plan. The RRSP is intended to address the community's questions about the electric system's reliability, modernization, capacity, and resiliency. He reviewed the six-pronged implementation strategy and how those strategies fit together. The consultant focus is on Strategies 3, 4, and 5, to evaluate the cost benefits, identify any barriers, and identify potential utility programs. There is a list of technologies for the consultant to evaluate, with feedback from the UAC requested. There are two consulting partnerships to cover these strategies, and he reviewed each. The first will cover most of the work on the cost-benefit analysis and identifying the programs. For the second contract, negotiations are in progress with SLAC to evaluate the costs and benefits of flexible technologies for the distribution system. He reviewed the project timeline and discussed additional potential consultant partnerships. Vice Chair Mauter recused herself from this discussion item as a current SLAC employee. Kaylee Burton, Utilities Administrative Assistant, requested members of the public interested in speaking raise their hands. Public Comment – Caleb Weis provided examples of economic benefits of community microgrids. In addition, every megawatt of solar and storage in the area reduces the transmission costs. Strategies such as resilience subscriptions can be flexible ways for members of the community to pay for the resilience benefits from these community microgrids. He felt this was sensible to pursue. Commissioner Metz wanted to add several technologies to be evaluated. He noted conservation was not on the list and felt that improving building envelope and energy efficiency seemed like a high priority and could have a big impact. He was interested in demand-side management, namely a program that subscribes buildings to specific energy reduction when needed by the utility. He also felt it would be valuable to look at benefits through the California Microgrid Incentive Program. Regarding energy efficiency, he noted the impact of the demand management program has been on the order of around 2% to 3% per year of the load. He suggested the consultant look at what that could be if the City were really aggressive in the program. He felt if it could have an impact to cut peak loads, there could be a big financial benefit for the utility and ratepayers. Item #1     Packet Pg. 12     Utilities Advisory Commission Minutes Approved on: Page 8 of 10 Mr. Abendschein explained that this analysis was trying to establish the cost-benefit, which was already known to be positive for energy efficiency. He noted demand-side management was under grid interactive appliances but could be clearer. It was asking the consultant to look at automated demand- side management, not just appliances. As far as microgrids, he stated the PG&E programs are heavily focused on communities that are at risk of power shutoffs. He felt a lot would be learned from the analyses at the airport about neighborhood-scale microgrids in Palo Alto. He noted Commissioner Gupta had submitted questions, which would be responded to by email separately. Commissioner Croft questioned where utility scale storage might come in and whether that would be separate from this project. Mr. Abendschein explained that was being looked at separately, not as part of this consultant analysis. Like the airport microgrids, Staff is looking at potential storage in substations. Since Staff is looking at all of these in parallel, each of these analyses can be used to inform the others. The analyses will give some ballpark estimations about the highest probability programs. The kinds of shifts that result from the interactions between the programs will be worked out without a problem without the need to model those inter-effects in the consultant study. Commissioner Phillips was interested in the set of metrics that will be used to measure reliability and how they will be applied. Regarding reliability, he questioned how frequently the system experiences outages. He wanted to see numerical metrics and ideally scenarios related to different technologies, expected outages, important facility metrics, supply and cost. Mr. Abendschein explained that the consultants were not being asked to work on metrics. There are established electric industry standard sets of metrics, and to set reliability metrics Staff will have to analyze the causes of different outages experienced and understand how items in Strategies 1 and 2 will affect reliability over time. The consultant will, however, look at how different types of resiliency technologies affect people's experience of outages, which will differ on whether you have access to that technology. And lastly, some of the aspects of the grid modernization project involving creating more network connections in the electric distribution system will reduce the scope of outages. Commissioner Phillips asked how extensively Strategy 3 would be looked at. For example, a hypothesis might be that adoption of some new technologies is being held up because the Development Center is understaffed, which is not in Utilities' purview. Mr. Abendschein responded that it is in the purview if it affects the climate action goals. He stated a lot of barrier reduction is already happening. Commissioner Metz had questions about the scope of work related to resilience. He felt longer duration events should be considered in the initial study and should be identified as major events by Palo Alto Office of Emergency Services as these longer duration events are exactly where some of these technologies would have the most benefit. He felt it was a perfect opportunity to tie utilities planning in with the Office of Emergency Services planning and get everybody in the on the same page in terms of what to be prepared for. Mr. Abendschein explained that some of the learnings from the airport microgrid project would address longer duration outages. He felt aligning with OES made sense. Item #1     Packet Pg. 13     Utilities Advisory Commission Minutes Approved on: Page 9 of 10 Dean Batchelor, Director of Utilities, agreed on working with OES but did not think this study would go into that great of detail. The study around the airport will give some ideas in the 2- to 3-day window of outages. Mr. Abendschein felt the airport project was a place to get the basics of managing longer duration outages sorted out. Microgrid solutions for this purpose could be compared to the cost of regular diesel backup generators. The comparison has to factor in benefits that microgrids have that diesel generators do not have and some of the qualitative customer experience issues around things like diesel shortages. Chair Scharff questioned the opportunities around solar and storage. He asked if there was an opportunity to take an office building and put a bunch of batteries in it. He thought vehicle to home for an individual was great but vehicle to the grid made no sense. Mr. Abendschein clarified that the goal with vehicle to grid was not to power the grid in an outage, but to shave peak demand. It can also be a form of demand response, stopping or slowing down charging in response to grid signals. Large-scale batteries are something Staff looks at regularly as part of the electric portfolio. The idea that putting it inside Palo Alto would give some resiliency benefits is being analyzed as part of the substation project. Chair Scharff asked how close the City is to making that work financially. Shiva Swaminathan, Senior Resource Planner, explained that, in terms of central storage versus Palo Alto storage, the energy density of the storage devices is very low. The initial thought is that a substation may not have enough space to put enough batteries to make a difference. The other part is the economies of scale in terms of maintenance and capital costs. Central batteries are more cost effective with economies of scale at the bigger scale. Chair Scharff encouraged Staff to look into buildings to put batteries in Palo Alto. He questioned what that would look like and when it becomes cost effective. Alan Kurotori, Utilities Chief Operating Officer, explained there are ways to look at that and there are also examples of utility scale battery storage outside the area. It does not typically go into an enclosed building. Chair Scharff noted his experience was that it always makes more sense to bring the power in from outside than to generate it in Palo Alto. He questioned what kind of outage problem local battery storage was meant to solve, the frequency and expectation of those outages, and how much money it would take to solve the problem. Mr. Batchelor explained he would like to see fewer outages, especially if the City is going to be 100 percent electrified. The goal is to lower the amount of outages and lessen the amount of people impacted. Chair Scharff asked how any of these technologies to be evaluated actually do that. Mr. Batchelor explained how microgrids can lessen the duration of outages. Item #1     Packet Pg. 14     Utilities Advisory Commission Minutes Approved on: Page 10 of 10 Mr. Abendschein added that microgrids are the only technology on the list that are likely to reduce outages at a neighborhood scale, but added avoiding outages was not the primary goal of the consultant analysis. One of the major goals of the analysis was to figure out how flexible technologies and efficient strategies could reduce energy supply costs, the amount of investment needed in the distribution system for electrification, and how to optimize use of the existing capacity of the distribution system. Resiliency is an additional value stream for some of these technologies that can affect the cost-benefit analysis. A technology might be found to improve the benefit enough that, in combination with the energy supply and the distribution system benefits, it becomes worthwhile to promote. ACTION: None FUTURE TOPICS FOR UPCOMING MEETINGS ON OCTOBER 9, 2024 AND REVIEW OF THE 12 MONTH ROLLING CALENDAR Commissioner Phillips was still extremely interested in the business side of electricity consumption and hoped for a specific discussion in that context. Commissioner Croft expressed interest in hearing about the findings from the citywide lead service line investigation. She also mentioned past discussion of lead testing in schools. Dean Batchelor, Utilities Director, described the lead service line investigation. The program regarding schools was in the process of starting, working with the school board to obtain plans or diagrams of the schools and then going out to test at each school. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS Vice Mayor Ed Lauing stated that he is able to insert what happens at the UAC into the Council meetings and committee meetings like Finance. He felt there was an opportunity for the UAC to send a representative to Finance Committee meetings. ADJOURNMENT Chair Scharff moved to adjourn. Commissioner Phillips seconded the motion. The motion carried 5-0 with Chair Scharff, Vice Chair Mauter, Commissioners Croft, Metz, and Phillips voting yes. Commissioner Gupta and Tucher absent. Meeting adjourned at 8:25 p.m. Respectfully Submitted Kaylee Burton City of Palo Alto Utilities Item #1     Packet Pg. 15     Item No. 2. Page 1 of 2 Utilities Advisory Commission Staff Report From: Alan Kurotori, Utilities Chief Operating Officer Lead Department: Utilities Meeting Date: October 9, 2024 Report #: 2409-3498 TITLE Discussion with Bay Area Water Supply and Conservation Agency (BAWSCA) CEO/General Manager, Nicole Sandkulla: BAWSCA Overview, Regional Water Use and Efficiency, and San Francisco Public Utilities Commission Water Supply Reliability Investments RECOMMENDATION This is a discussion with the Bay Area Water Supply and Conservation Agency (BAWSCA) CEO/General Manager, Nicole Sandkulla. Ms. Sandkulla will provide a BAWSCA overview, discuss regional water use and efficiency, as well as San Francisco Public Utilities Commission (SFPUC) water supply reliability investments. No Utilities Advisory Commission action is requested. EXECUTIVE SUMMARY BAWSCA is a special district created by the legislature in 2002. BAWSCA provides regional water reliability planning and conservation programming for the benefit of its 26 member agencies that purchase wholesale water supplies from the San Francisco Public Utilities Commission (SFPUC).1 Collectively, the BAWSCA member agencies (or wholesale water customers) deliver water to over 1.8 million residents and nearly 40,000 commercial, industrial and institutional accounts in Alameda, San Mateo and Santa Clara Counties. BAWSCA also represents the collective interests of these wholesale water customers on all significant technical, financial, and policy matters related to the operation and improvement of the SFPUC’s Regional Water System. As a member of BAWSCA, the City of Palo Alto is formally represented on the BAWSCA Board of Directors on matters involving decision-making, policy setting and issues of interest to the BAWSCA members. BAWSCA’s CEO/General Manager, Nicole Sandkulla will present to the UAC. Ms. Sandkulla will provide an overview of BAWSCA and its goals and activities on behalf of its member agencies, 1 For a video summary of BAWSCA’s activities, see https://vimeo.com/283596665/5619ce2c11 Item #2     Packet Pg. 16     Item No. 2. Page 2 of 2 provide background about regional water use and efficiency trends and SFPUC’s water supply reliability and water quality investments. ATTACHMENTS Attachment A: Presentation AUTHOR/TITLE: Alan Kurotori, Utilities Chief Operating Officer Item #2     Packet Pg. 17     “A multicounty agency authorized to plan for and acquire supplemental water supplies, encourage water conservation and use of recycled water on a regional basis.” [BAWSCA Act, AB2058 (Papan-2002)] BAWSCA Service Area Every drop counts. Use Water Wisely. BAWSCA Update for the Palo Alto Utilities Advisory Commission Nicole Sandkulla CEO/General Manager, BAWSCA October 9, 2024 Item #2     Packet Pg. 18     What is BAWSCA? (Bay Area Water Supply and Conservation Agency) Special District formed in 2003 to represent the interests of: •26 water suppliers in San Mateo, Santa Clara, and Alameda Counties •1.8 million residents and over 40,000 businesses, and countless community organizations •All rely on the San Francisco (Hetch Hetchy) Regional Water System BAWSCA’s Goal: A reliable supply of high-quality water at a fair price 2 Item #2     Packet Pg. 19     BAWSCA’s 26 Member Agencies are Served by the Regional Water System Alameda County •Alameda County Water District, Hayward Santa Clara County •Milpitas, Mountain View, Palo Alto, Purissima Hills WD, San Jose, Santa Clara, Sunnyvale, Stanford University San Mateo County •Brisbane, Burlingame, Cal Water Service Company, Coastside CWD, Daly City, East Palo Alto, Estero (Foster City), Guadalupe Valley MID, Hillsborough, Menlo Park, Mid-Peninsula WD, Millbrae, North Coast CWD, Redwood City, San Bruno, Westborough CWD BAWSCA Board of Directors is comprised of an elected or appointed representative from each member agency 3 Item #2     Packet Pg. 20     • Stanford • San Mateo • Hayward • San Jose • Daly City San Francisco Hetch Hetchy Regional Water System San Antonio Reservoir Calaveras Reservoir San Andreas Reservoir Hetch Hetchy Reservoir Crystal Springs Reservoir 4 Item #2     Packet Pg. 21     BAWSCA Agencies Rely on Regional Water System for Two-Thirds of Their Total Water Supply Source: BAWSCA FY 2022-23 Annual Survey BAWSCA agencies Purchase two-thirds of the water supplied by the Regional Water System And they pay two-thirds of the costs of the Regional Water System Other Sources 27.40 mgd, 15.5% Groundwater 18.44 mgd, 10.4% SF RWS Customary Purchases 117.91 mgd, 66.8% Surface Water 5.79 mgd, 3.3% FY 2022-23 BAWSCA Total Supply 176.64 mgd SF RWS In Lieu Water 0 mgd, 0% Recycled 7.10 mgd, 4.0% 5 Item #2     Packet Pg. 22     32% Less Water Used Today in BAWSCA Region Compared to FY 1986-87 Despite a 34% Population Increase 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 0 50 100 150 200 250 300 Po p u l a t i o n ( M i l l i o n s ) M i l l i o n s G a l l o n s P e r D a y ( m g d ) Total Water Use Drought Year Population 6 Source: BAWSCA Annual Surveys Item #2     Packet Pg. 23     Water Use Efficiency Investments Result in a 52% Decrease in Residential Per Capita Use in the BAWSCA Region Since 1975-76 Peak: 186.5 gpcd FY 2022-23: 90.6 Peak: 114.9 gpcd FY 2022-23: 55.1 0 20 40 60 80 100 120 140 160 180 200 19 7 5 - 7 6 19 7 6 - 7 7 19 7 7 - 7 8 19 7 8 - 7 9 19 7 9 - 8 0 19 8 0 - 8 1 19 8 1 - 8 2 19 8 2 - 8 3 19 8 3 - 8 4 19 8 4 - 8 5 19 8 5 - 8 6 19 8 6 - 8 7 19 8 7 - 8 8 19 8 8 - 8 9 19 8 9 - 9 0 19 9 0 - 9 1 19 9 1 - 9 2 19 9 2 - 9 3 19 9 3 - 9 4 19 9 4 - 9 5 19 9 5 - 9 6 19 9 6 - 9 7 19 9 7 - 9 8 19 9 8 - 9 9 19 9 9 - 0 0 20 0 0 - 0 1 20 0 1 - 0 2 20 0 2 - 0 3 20 0 3 - 0 4 20 0 4 - 0 5 20 0 5 - 0 6 20 0 6 - 0 7 20 0 7 - 0 8 20 0 8 - 0 9 20 0 9 - 1 0 20 1 0 - 1 1 20 1 1 - 1 2 20 1 2 - 1 3 20 1 3 - 1 4 20 1 4 - 1 5 20 1 5 - 1 6 20 1 6 - 1 7 20 1 7 - 1 8 20 1 8 - 1 9 20 1 9 - 2 0 20 2 0 - 2 1 20 2 1 - 2 2 20 2 2 - 2 3 Pe r C a p i t a C o n s u m p t i o n Gross Per Capita (gpcd)Residential Per Capita (gpcd) Dashed line indicates drought year7 FY 2022-23 Palo Alto Per Capita •Residential: 71 gpcd •Gross: 125.7 gpcd Item #2     Packet Pg. 24     State Mandated Water System Improvement Program is 99% Complete •AB 1823 (2002, L. Papan), required SF to fix earthquake vulnerable Regional Water System •All projects scheduled to be complete by June 2032 •$4.8 billion funded by water rate payers •43 regional projects •AB 2962 (2024, D. Papan) extends State oversight to January 1, 2036 8 New Bay Tunnel Item #2     Packet Pg. 25     San Francisco is Investing in a Robust 10-Year Capital Plan to Ensure a Reliable Regional Water System •SFPUC 10-Year Capital Plan (FY 24-FY 33) identifies and prioritizes capital investments for Regional Water System Water Enterprise: $1.135B Hetchy Water (Water + Joint): $0.754B •BAWSCA provides oversight of SFPUC’s capital planning work on behalf of Wholesale Customers Sunol Valley Water Treatment Plant Tesla UV Treatment Plan Mountain Tunnel Repair/Improvements 9 Item #2     Packet Pg. 26     Taking Actions Today for a Reliable Water Supply for Its Member Agencies and Their Water Customers •BAWSCA agencies rely on water from Regional Water System in accordance with San Francisco’s: Legal obligations including the 184 mgd Supply Assurance Contractual obligations including meeting Level of Service goals •BAWSCA region’s investments in water use efficiency are reducing water use today •BAWSCA and its member agencies are investing in potential new supplies throughout region •BAWSCA and its member agencies are actively engaged in several long-term planning studies, including one with SFPUC BAWSCA’s Long-Term Reliable Water Supply Strategy 2050 BAWSCA’s Regional Water Demand Projections and Sensitivity Analysis SFPUC’s Alternative Water Supply Plan 10 Item #2     Packet Pg. 27     •BAWSCA’s updated regional demand projections with a robust sensitivity analysis will support planning and decision making •BAWSCA’s Long Term Reliable Water Supply Strategy 2050 will evaluate what actions should take to improve reliability of non-SFPUC supplies •SFPUC’s Alternative Water Supply Program (AWSP) will develop necessary technical and financial data to inform decision making •Timely and informed decision-making by Commission is necessary to ensure SF meets its legal and contractual obligations to BAWSCA member agencies •BAWSCA and wholesale customers will remain actively engaged on AWSP and associated Commission deliberations Planning Today to Support the Right Investments in Our Water System for a Reliable High Quality Water Supply in Future Hetch Hetchy Reservoir 11 Item #2     Packet Pg. 28     Item No. 3. Page 1 of 1 Utilities Advisory Commission Staff Report From: Alan Kurotori, Utilities Chief Operating Officer Lead Department: Utilities Meeting Date: October 9, 2024 Report #: 2409-3503 TITLE Discussion with San Francisco Public Utilities Commission’s Assistant General Manager of the Water Enterprise: Operations, Drought Planning, and Alternative Water Supply Planning RECOMMENDATION This is a discussion with San Francisco Public Utilities Commission’s Assistant General Manager of the Water Enterprise. No Utilities Advisory Commission action is requested. EXECUTIVE SUMMARY The City of Palo Alto receives 100% of its potable water from the San Francisco Public Utilities Commission (SFPUC) through the Hetch Hetchy Regional Water System (RWS). Approximately 85 percent of this supply is from the Tuolumne River in the Sierra Nevada, delivered through the Hetch Hetchy aqueducts, and approximately 15 percent is treated water produced by the SFPUC from its local watersheds and facilities in Alameda and San Mateo Counties. The SFPUC owns and operates the RWS which serves 2.7 million residents and thousands of businesses in the San Francisco Bay Area. Steve Ritchie SFPUC’s Assistant General Manager of the Water Enterprise will present to the UAC. Mr. Ritchie will provide an overview of SFPUC’s operations, drought planning, and Alternative Water Supply Plan. ATTACHMENTS Attachment A: Presentation AUTHOR/TITLE: Alan Kurotori, Utilities Chief Operating Officer Item #3     Packet Pg. 29     1 Overview, Drought Planning & Alternative Water Supply Plan Steven R. Ritchie October 2024 Operated by the San Francisco Public Utilities Commission Item #3     Packet Pg. 30     SFPUC Overview and Water Supply (Drought) Planning 2 •24/7/365 Perpetual Service: •As a critical public service, we have no end date to our operations. •Every day 2.7 million residents and thousands of businesses rely on the Hetch Hetchy Regional Water System for drinking water for public health, fire protection, and all aspects of their daily lives/businesses. •85% of the supply comes from the Tuolumne River, the remaining 15% is from local watersheds and reservoirs. •Smart Operations and Drought Planning: •Our daily operations emphasize high water quality and long-term water supply reliability. •Having junior water rights on the Tuolumne River means we have rights to very little water in dry years, but plenty of water in very wet years. As a result, we are very reliant on our stored water for reliability. Item #3     Packet Pg. 31     3 •Smart Operations and Drought Planning: •Our management decisions and planning are guided by “Water First”, Experience, and Risk Management. •“Water First”: Water supply is top priority with hydropower generation a secondary consideration. •Experience: 1987-92 and recent droughts were very real and can be repeated or worse. •Risk Management: How bad can conditions get, knowing that we cannot operate to zero storage at any point? Zero water in storage means no cushion for the next potential dry water year. •Drought Planning: We analyze a drought worse than that of 1987-92 by adding two additional dry years. SFPUC Overview and Water Supply (Drought) Planning Item #3     Packet Pg. 32     4 O’Shaughnessy Dam Upstream Face – March 1991 All outlets except for Canyon Tunnel are dry Item #3     Packet Pg. 33     Wise Water Use and Regular Planning 5 •Active Conservation Programs: •Both in San Francisco, and, through BAWSCA, regional efforts are always underway to promote conservation and the wise use of water. •Among the Lowest Consumption Per Capita in the State •San Francisco currently averages 41 gallons of residential per capita use, and Wholesale Customers average 55.1 gpcd (a 52% decrease since 1975-78 in residential per capita use). •Urban Water Management Planning •Every 5 years, all water agencies need to demonstrate that they have enough supply to accommodate anticipated growth over the ensuing 25 years. Item #3     Packet Pg. 34     Challenges Ahead 6 •2018 Adopted Bay-Delta Plan: •Unimpaired flow paradigm and existing agreements may require up to 93 million gallons per day (mgd) of impact to Regional Water System supplies. Healthy Rivers and Landscapes Program is an alternative being considered by the State. It also contains greater instream flow contributions but less than the Bay-Delta Plan. •State Actions: Curtailment, Proposed Legislation •Potential impact on water rights. •Population Growth and Demand Hardening •Population will continue to grow (e.g. State Housing General Plan Elements). Demand can only be reduced to a certain amount. •Climate Change •UMass Amherst Long-Term Vulnerability Study of our system shows shifts for more precipitation as rain than snow, with changes in runoff patterns. Item #3     Packet Pg. 35     Alternative Water Supply Plan for the Regional Water System 7 Item #3     Packet Pg. 36     Plan for Obligations, Build for Demands 8 •This plan was requested by both the San Francisco Public Utilities Commission and the BAWSCA Board of Directors. •This is not an adopted plan. •It is not a plan to construct any particular project or projects. •It is a living planning document that gives decision-makers information regarding potential future water supply issues and potential actions to augment the Regional Water System supplies to retain our current, appropriate risk management approach. Item #3     Packet Pg. 37     Plan for Obligations, Build for Demands 9 •Regional Water System Existing and Potential Obligations: •The Supply Assurance of 184 mgd for the Wholesale Customers •Supply allocation of 81 mgd for San Francisco •San Jose and Santa Clara combined supply assurance of 9 mgd •Combined total of 274 mgd •Total Regional Water System Demands •244 mgd based on 2020 Urban Water Management Plans Item #3     Packet Pg. 38     Plan for Obligations, Build for Demands 10 Item #3     Packet Pg. 39     Alternative Water Supply Projects Throughout the Service Area 11 1. Daly City Recycled Water Expansion 2. PureWater Peninsula 3. South Bay Purified Water 4a. Los Vaqueros Reservoir Expansion (LVE) 4b. Supply Alternatives for LVE 4c. Conveyance Alternatives for LVE 5. ACWD-USD Purified Water 6. Calaveras Reservoir Expansion Item #3     Packet Pg. 40     Alternative Water Supply Plan Recommendations and Actions 12 •Consider decisions on projects that are close to construction •Los Vaqueros Reservoir Expansion •Daly City Recycled Water Expansion •Advance the planning of Purified Water Projects •South Bay Purified Water •PureWater Peninsula • ACWD-USD Purified Water •Hire a Purified Water Program Manager Item #3     Packet Pg. 41     Alternative Water Supply Plan Recommendations and Actions 13 •Further develop supplies from existing and other projects •Regional Groundwater Storage and Recovery Project •Alameda Creek Recapture Project •San Francisco Groundwater Project •PureWaterSF •Potential projects with Turlock and Modesto Irrigation Districts •Develop additional demand scenarios •Explore the feasibility of a Regional Water System grant program Item #3     Packet Pg. 42     Financial Update 14 Total dollars spent for the AWS Program between July 2020 and May 2024: $12.4 million Item #3     Packet Pg. 43     Financial Update 15 •Earlier this year, the SFPUC approved a 10-year Capital Improvement Plan, including funding for AWS regional project planning. The FY2025-34 CIP totals: •$1.63 Billion Regional Water, $1.53 Billion Hetchy Water •The AWS Program represents $260.1M in the 10-year plan •In FY24-25 thru FY25-26, $10.89M in AWS spending is planned. •This funding supports Purified Water and Other Studies, Daly City Recycled Water Expansion Project, and South Bay Purified Water Project. Item #3     Packet Pg. 44     Financial Update 16 •Delivering our significant CIP takes sound financial planning. •This includes: •Smart infrastructure planning and investment •Low-cost debt funding (SRF, WIFIA, Tax-Exempt Bonds) •Conservative Financial Policies: Reserve, Debt Coverage, Ratepayer Affordability •Numerous proactive audits •Setting rates compliant with Prop 218 and the Water Supply Agreement •As such, we plan our finances to support our infrastructure needs without overly burdening our constituents. Item #3     Packet Pg. 45     What Is San Francisco Doing In Its Retail Service Area? 17 Recycled Water Expansion •Maximizing recycled water use for large- scale irrigation with the construction of the Westside Recycled Water Project •Established and expanded ordinance since 2012, with 45 systems permitted and 29 planned •Continuing to seek new technologies to generate water savings and supplies at every scale (e.g., atmospheric water generation, efficient point-of-use fixtures) Innovations Program Groundwater Expansion Onsite Water Reuse Conservation Program •Robust active conservation program for over 30 years •Leak Alert Program has resulted in estimated savings of 73 million gallons in FY 2022-23 •Implementing recommendations of independent Pacific Institute review •Plans to continue expanding use in drinking water supply (up to 4 mgd) Item #3     Packet Pg. 46     FYE 2025 Projected Wholesale Rate FYE 2025 Rate = $327.6𝑀𝑀−$4.3M+$19.4𝑀𝑀127.4 𝑀𝑀𝑀𝑀𝑀𝑀=$5.55/𝑐𝑐𝑐𝑐𝑐𝑐 FYE 2025 Rate Increase = 6.5% Factors driving rate increase: •Growth in capital spending •Continued low water usage •Balancing account being drawn down to make up for deferral in FYE 2024 Wholesale Revenue Requirement −Fixed Fee ±Balancing AccountWholesale VolumesWholesale Rate = 1 Item #3     Packet Pg. 47     2 Adopted / Forecasted Rates $ 4.10 $ 4.10 $ 4.10 $ 4.10 $ 4.10 $ 4.75 $ 5.21 $ 5.55 $ 5.63 $ 5.93 $ 6.37 $ 6.60 Rate Change 9.3%0.0%0.0%0.0%0.0%15.9%9.7%6.5%1.4%5.3%7.4%3.6% Rate w/o Balancing Account $ 3.64 $ 4.14 $ 3.70 $ 3.98 $ 4.56 $ 5.34 $ 5.37 $ 5.24 $ 5.63 $ 5.92 $ 6.38 $ 6.59 2 Historic and Projected Wholesale RatesItem #3     Packet Pg. 48     Questions? 33 Item #3     Packet Pg. 49     Item No. 4. Page 1 of 4 Utilities Advisory Commission Staff Report From: Ed Shikada, City Manager Lead Department: Human Resources Meeting Date: October 9, 2024 Report #: 2410-3569 TITLE Utilities Advisory Committee (UAC) Discussion for Director of Utilities Department Recruitment and Input of Candidate’s Key Characteristics RECOMMENDATION This item is for the UAC discussion and feedback, no action necessary. BACKGROUND The Director of Utilities position will become vacant when the incumbent Dean Batchelor retires at the end of the calendar year after serving as the Director for 6 years. Staff is preparing to launch this executive recruitment and receiving the UAC feedback on key challenges facing the department and leadership characteristics required to help guide in the identification of potential candidates. Human Resources is executing a contract with Executive Recruiter Teri Black & Company. Teri Black will lead the recruitment and use this feedback to conduct outreach and recruit a new Director. ANALYSIS A recruitment process lead by the City Manager as the hiring manager will be facilitated by the Human Resources Department and the executive recruiter. Input and feedback gathered from the Utilities Advisory Commission, members of the public, the City Council (via the Finance Committee), and City staff will assist Teri Black & Company to develop the recruitment brochure as well as to screen potential candidates. The goal is to open the recruitment in November. Upon selection of a recommended candidate, this position is submitted to the City Council for confirmation of the City Manager’s hire. This position is responsible for a number of policies and procedures internally including rate setting for the five utilities, and Outage Communication to the community. It coordinates department activities with those of other departments and outside agencies (Northern Item #4     Packet Pg. 50     Item No. 4. Page 2 of 4 California Power Agency, California Municipal Utilities Association, and Bay Area Water Supply & Conservation Agency), provides staff assistance to the City Manager and the City Council; prepares and presets staff reports and other necessary correspondence. A key factor in this position is to establish work plans, key performance indicators, assign work activities, monitor workflows and evaluate work products. The Department is on the forefront of key investments such as partnering on the City’s ambitious Sustainability & Climate Action Plan, increase electric grid reliability and modernization for electrification, and a pilot project establishing fiber-to-the- premises. The number one goal for the department is making sure every staff member goes home safe at the end of the day. For reference, staff have included relevant documents to this role including the job description (Attachment A) and relevant sections in the City’s annual operating and capital budget (Attachment B and C respectively). The Utilities Director role is specified in the City’s Municipal Code. Palo Alto Municipal Code (section 2.08.200) includes the following responsibilities for the department of utilities under the direction of the director of utilities who shall be accountable to the City Manager: (1) To plan, direct and coordinate the operations of the city's utilities department; (2) To coordinate the forecasting of the city's long-range utility needs and develop financial plans to ensure that the city's utilities rate, reserve and revenue levels will be able to meet customer service, operating and financial requirements; (3) To provide administrative support to the utilities advisory commission on matters relating to the department; (4) To generate appropriate reports as may be required by county, state and federal agencies or by law; (5) To operate a responsive customer service center, to manage customer service utilities billing, inquiries and complaints and to provide a fast and courteous response to each customer's request for utility service; (6) To establish rates to offset operating costs of all city utility operations designated as utilities enterprise funds and to provide a fair and reasonable rate of return on the city's capital improvement investment in those utilities designated as utilities enterprise funds; (7) To provide technical or other efficiency services to enable residential, commercial and industrial utilities customers to reduce their operating costs, improve the quality of the environment and maintain a high level of customer satisfaction; (8) To forecast and plan the acquisition and disposition of sufficient least-cost resource supplies to meet existing and future supply requirements in an environmentally acceptable manner; (9) To negotiate for the purchase and sale of water, gas and electricity and contract with water, gas and electric power producers, suppliers and marketers for resource supply at the best available price or cost; Item #4     Packet Pg. 51     Item No. 4. Page 3 of 4 (10) To recommend capital construction and improvements of all utility systems, and to administer such programs when approved; (11) To inspect all construction work done by or for the utilities and require compliance with all contracts made in connection therewith; (12) To prepare or cause to be prepared all utility maps of the utilities, and to keep and to maintain such records as are necessary for the fulfillment of this function; (13) To provide operations, maintenance, and construction necessary to ensure the safe, efficient and reliable delivery of electric, water, gas and wastewater collection services to all customers; (14) To provide operations, maintenance, and construction necessary to ensure the proper operation of the city's traffic signal, street lighting and communication systems; (15) To perform or cause to be performed all duties required by this code or other law of the director of utilities and the department of utilities; and (16) To perform such other duties as may be required. (b) For organizational purposes, the department of utilities shall consist of the following divisions: administration; customer support services; resource management; engineering; and operations. FISCAL/RESOURCE IMPACT An executive recruitment for this role is within existing contract authority and salary savings from the position while vacant will be sufficient to provide the funding necessary. Utilities is a highly competitive industry and more so when recruiting for oversight of five utilities; consideration of amendment to the compensation range may be necessary to attract qualified candidates to this role. STAKEHOLDER ENGAGEMENT Both this Utilities Advisory Commission and the City’s Finance Committee will host discussions in which stakeholders may engage and provide feedback for consideration as part of this recruitment process. ENVIRONMENTAL REVIEW This is not a project. ATTACHMENTS Attachment A: Utilities Director Job Description Attachment B: FY 2025 Adopted Operating Budget Utilities Excerpts Item #4     Packet Pg. 52     Item No. 4. Page 4 of 4 Attachment C: FY 2025 Adopted Capital Budget Utilities Excerpts AUTHOR/TITLE: Sandra Blanch, Human Resources Director Item #4     Packet Pg. 53     ATTACHMENT A: Utilities Director Job Description Class Title: DIRECTOR UTILITIES Class Code: 121 Salary: $251,409.60 - $377,104.00 Annually Reports To: City Manager Supervises: Assistant Directors - Engineering/Operations; Administrative Services, Resource Management; Administrator, Utilities; Executive Secretary Purpose of Classification The Director of Utilities directs the activities of the Utilities Department, including water, gas and electric supply planning and acquisition, the operation of water, gas and electric distribution systems, a dark fiber telecommunications system, wastewater collection system, as well as the Customer Service Center. Essential Duties Essential and other important responsibilities and duties may include, but are not limited to, the following: •Work with Utilities Department management personnel, interpreting policies of the City Council and City Manager, establishing department priorities, monitoring department performance, identifying action which will increase the department's level of performance in coordinating Utilities Department activity with other City departments. •Participate as a member of the City Manager's Senior Management Group to review and help develop overall approaches to City issues and priorities. •Establish and maintain a good working relationship with the City Council and Council committees on matters relating to Utilities Department activities in order to gain maximum cooperation and assistance. •Staff liaison with the Utility Advisory Committee. •Establish and maintain good working relationships with public groups interested in Utility services including commercial and industrial customers, environmental organizations, etc. •Provide general directions for negotiations with water, gas and electric power producers and marketers to meet existing and forecasted supply requirements at the lowest possible cost consistent with policies of the City Council. •Advises the City Manager in all matters pertaining to delivering and selling utility services. •Supervise plans to ensure that the City will be able to meet customer service, operating and financial requirements. •Assure that the City's utilities operations are run in a safe, reliable efficient and economic Item #4     Packet Pg. 54     manner. •Assure that the Utilities annual operating and capital budget is consistent with goals, service needs, budget policies and procedures, and that rates are adequate to meet operating requirements to maintain appropriate levels of reserves, as well as provide a reasonable transfer to the General Fund consistent with the City Council's policies. •Assure that the Utilities distribution and supply businesses are competitive in the electric and gas industry deregulated environment. •Assure that the City of Palo Alto is competently represented in state regional and joint powers functions, such as the Northern California Power Agency, Bay Area Water Users, California Power Exchange (PX), and Independent System Operator (ISO). •Assure that employee development, safety and training programs are designed and successfully implemented within the Utilities Department. •Assure that cost effective technology is deployed within the department to meet Utility strategic objectives, industry information requirements, to enhance staff productivity and improve customer service. •Assure that Utilities plans and programs are consistent with the City's Comprehensive Plan. •Perform related duties and responsibilities as required. Minimum Qualifications Sufficient education, training and/or work experience to demonstrate possession of the following knowledge, skills, and abilities which would typically be acquired through: •Possession of a bachelor's degree or equivalent in engineering, business, public administration or a field directly relevant to the management of a utility; master's degree in public or business administration or a related field is preferred. and •Ten years experience in engineering, operations and/or business in a multi utilities organization, five years of which should be in a senior management capacity. Special Requirements: Possession of a valid California driver's license. Knowledge, Skills, and Abilities •Demonstrated ability in operations, financial management, organization and planning, as well as operational understanding of major utility functions. •Flexibility, imagination, and the ability to develop and implement state-of-the-art programs, both from an operational understanding of major utility functions. •Knowledge of and sensitivity to the interrelationship and coordination which must exist between utilities functions and other municipal programs. •Ability to interact effectively with staff, public, elected and appointed officials, representatives of business, industry, the press, and other governmental agencies. •Ability to analyze an effective resolution of complex operational problems in a multiple- utilities environment; maintain flexible and creative approach to issues. Item #4     Packet Pg. 55     •Ability to make sound financial and personnel decisions and exercise sound judgement on matters affecting the long-term viability of the Utilities. •Ability to communicate effectively, orally and in writing, with a wide variety of individuals and groups; work independently on diverse and demanding projects; plan and implement new programs; keep informed of advances in utility and business technology. •Skill in identifying, analyzing and resolving problems; dealing effectively with others; participating as a supporting member of a team to identify and resolve problems. •Management skills, including the ability to organize, prioritize and evaluate work as well as the ability to supervise and direct staff are essential to success in this position. •Knowledge of deregulation of the electric and natural gas industries in California. Item #4     Packet Pg. 56     • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 1ZECONOMICDEVELOPMENT & TRANSITION Z COMMUNITY HEALTH, SAFETY, WELLNESS & BELONGING Z CLIMATE CHANGE AND THE NATURAL ENVIRONMENT: PROTECTION & ADAPTATION Z HOUSING FOR SOCIAL AND ECONOMIC BALANCE FISCAL YEAR 2025 Item #4     Packet Pg. 57     ENTERPRISE FUNDS OVERVIEW ENTERPRISE FUNDS OVERVIEW •CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 121 Enterprise Funds OverviewOverview The City of Palo Alto’s Utility and Public Works operations are comprised of the Airport, Electric, Fiber Optics, Gas, Refuse, Stormwater Management, Wastewater Collection, Wastewater Treatment, and Water Funds. A financial summary of the funds follows this overview along with discussion and pertinent information in each fund section. REVENUES The total budgeted revenue of the Enterprise Funds for FY 2025 is $630.6 million, which represents a $105.0 million, or 20.0% increase from the FY 2024 Adopted Budget of $525.6 million. The major sources of the change are from a $53.9 million increase in estimated debt financing recorded in Other Revenue, and a $16.7 million increase in Net Sales. Enterprise Fund services with rate increases for FY 2025 include Electric, Fiber Optics, Gas, Stormwater Management, Wastewater Collection, and Water. Refuse rates will remain the same for FY 2025. Details on these changes and the specific rate increase for each service is discussed below. EXPENDITURES The total budgeted expenditure of the Enterprise Funds for FY 2025 is $724.4 million, which rep- resents a $97.7 million, or 15.6% increase from the FY 2024 Adopted Budget of $626.7 million. The primary driver for this year-over-year change is the increase to Capital Improvement Program fund- ing of $93.4 million, partially offset by a $4.3 million reduction in debt service and a $4.2 million decrease in Utility Purchase or commodity costs compared to FY 2024. In addition, increases to Allocated Charges, Contract Services, General Expenses, Equity Transfers, and Salary & Benefits, resulted in a combined increase of $12.3 million from FY 2024 to FY 2025. UTILITY RATE CHANGES The FY 2025 Budget includes rate adjustments for Electric, Fiber Optics, Gas, Stormwater Manage- ment, Wastewater Collection, and Water. In general, there has been a gradual upward pressure on rates as commodity and transmission costs continue to rise across all utilities. In addition current models suggest pandemic economic recovery extend through calendar year 2024, with consump- tion stabilizing on the long run average by 2025. The size and timing of rate adjustments address both current and future revenue requirements, including the purchase of commodities, providing customer service, capital infrastructure investments, and maintenance of adequate reserve levels. Rate adjustments may also help smooth the impacts on customer bills by spreading larger rate adjustments over consecutive or alternate years. Item #4     Packet Pg. 58     ENTERPRISE FUNDS OVERVIEW 122 ENTERPRISE FUNDS OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET Electric Fund - Scheduled rate increase for median residential customer is 9.0% for FY 2025 due to cost of service analysis which requires rate changes varying by customer class and consumption pattern to reflect the cost to serve. Rate changes vary between a 6% decrease to 9% increase depending on customer class. Fiber Optics Fund - Scheduled rate increase for customers on the EDF-1 rate is 2.6% for FY 2025, based on Consumer Price Index (CPI) for All Urban Consumers in the San Francisco Bay Area. Gas Fund - Scheduled rate increase is 12.5% for FY 2025 due to the need to replenish reserves, cover rising capital and operating costs, and support the increased equity transfer to the General Fund. Refuse Fund - No rate adjustment is scheduled for FY 2025 due to adequate reserves. Stormwater Management Fund - Scheduled rate increase of 2.6% for FY 2025, based on CPI for All Urban Consumers in the San Francisco Bay Area. Water Fund - Scheduled rate increase is 9.5% for FY 2025 due to wholesale water supply and capital and operating cost increases. Wastewater Collection Fund - Scheduled rate increase is 15.0% for FY 2025 due to rising costs driven by the rehabilitation of the Regional Water Quality Control Plant, acceleration of capital main replacements, and replenishment of reserves. RENT Enterprise Funds pay market-based rental fees to the General Fund for the sites needed to conduct their business operations. Rent is adjusted on an annual basis consistent with CPI for All Urban Consumers in the San Francisco Bay Area, 2.6% for FY 2025. Despite this rent increase, the overall costs remain unchanged, because the Water Fund’s rental costs decreased by $0.2 million due to no longer needing to pay for two of its well sites. Consequently, the rent paid by the Enterprise Funds to the General Fund remains at $12.4 million. EQUITY TRANSFERS In FY 2009, the City Council adopted a change to the methodology used to calculate the equity transfer from Electric Fund to the General Fund. Beginning in FY 2010, the equity transfer is based on the asset base in the Electric Fund, along with the rate of return for each utility, which is based on Pacific Gas and Electric’s (PG&E) rate of return on equity as approved by the California Public Utilities Commission (CPUC). For FY 2025, no change is projected for the equity transfer of $15.1 million from the Electric Fund. The Gas Fund equity transfer to the General Fund was originally authorized by City voters in 1950 (similar to the Electric Fund equity transfer). In November 2022, voters approved Measure L, affirming the continu- ation of this practice by adding section 2.28.185 to the Municipal Code. Each year the City Council may transfer from the gas utility to the General Fund an amount up to 18% of the gross revenues of the gas util- ity, though Council may choose to transfer a lesser amount. A 14.5%, or $10.9 million transfer is pro- grammed for FY 2025, representing an increase of approximately $3.2 million from the previous year’s $7.7 million. This is within the voter-approved changes codified in PAMC 2.28.185. An annual transfer increase to 18% of gross revenues by FY 2026 is also recommended. Item #4     Packet Pg. 59     ENTERPRISE FUNDS OVERVIEW ENTERPRISE FUNDS OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 123 RESERVES The financial revenue and expense forecasts are estimates at a single point in time. Some Utilities reserves serve as balancing accounts, which mitigate the risk of commodity price swings and insure against default by the City’s wholesale suppliers. Other reserves are used to provide funding for capital infrastructure improvement projects, replacement parts during an emergency infrastructure failure or serve as temporary parking for planned expenditures. Reserve levels that are above guidelines may be returned to customers in the form of lower future rates or used to pay for expenses, which also result in lower future rates. Based on the actions included in this budget, the total Enterprise Fund Reserve Balances are projected to end in FY 2025 at $50.8 million, decreasing by $93.8 million from a projected FY 2024 ending fund balance of $144.6 million. UTILITIES ENTERPRISE FUNDS Across the Electric, Gas, Water and Wastewater utilities, costs continue to increase, including construction cost inflation, commodity price increases, and the rising cost to transport energy and water. Additionally, infrastructure is aging and investment is needed to maintain the health of utilities and protect reliability. The City absorbed utility cost increases during the pandemic, and increased costs for construction, opera- tions, energy, and water were not fully passed through to customers in FY 2020 – FY 2022 but were instead absorbed from reserves. As a result, revenues are too low to maintain normal operations in all utili- ties. Reserves are lower than expected, because although the City intended to phase in rate increases more slowly using reserves, rising energy prices, inflation and other factors led to the need to use the reserves more quickly, causing low reserve levels in all utilities. The City relied on reserves heavily over the past few years to minimize rate increases following Council direction to keep rates flat or minimize rate increases to provide economic relief for residential and com- mercial customers without compromising the safety and integrity of the utility systems and impacting ser- vice delivery. Rate increases ensure the City maintains the ability to replenish depleted reserves and provide sufficient funding for continually increasing expenses in commodity costs to repair and replace the City’s aging utility infrastructure through various capital projects; and to achieve Sustainability and Climate Action Plan (S/CAP) goals including grid modernization to support electrification. For more information on Utilities Rates, please visit: https://www.cityofpaloalto.org/Departments/Utilities/Customer-Service/Utilities-Rates. Electric FY 2025 electric rates are scheduled to increase by 9.0% for the median residential customer. Rate changes vary significantly by customer class from a decrease of 6.0% to an increase of 9.0% depending on con- sumption patterns. To ensure that electric rates continue to represent the Utility’s cost to serve customers, the City completed a cost of service analysis in February 2024. The cost of service analysis showed the need for different changes by customer class ranging from a 6.0% decrease for small nonresidential cus- tomers (E-2) to a 2.0% increase for the residential class as a whole. However, recommended changes to the tier structure and the addition of a fixed charge result in a range of changes for residential customers Item #4     Packet Pg. 60     ENTERPRISE FUNDS OVERVIEW 124 ENTERPRISE FUNDS OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET depending on usage, with the median residential customer seeing a 9.0% increase. Palo Alto residential electric bills are approximately 50% lower than neighboring communities served by PG&E. Fiber Optics FY 2025 Fiber optics rates are scheduled to increase by 2.6% for customers on the EDF-1 rate schedule as part of their contractual lease agreement. CPAU provides commercial dark fiber optic services within the boundaries of the City. In September 2006, the City Council approved the Dark Fiber Licensing Agreement with a one-time promotion allowing commercial fiber optic accounts to be enrolled under the EDF-1 rate schedule, which is adjusted annually in accordance with CPI. Subsequent fiber customer enrollments are under the Dark Fiber Licensing Services Rate Schedule EDF-3, which has not changed since 2006. Upon the expiration of contracts on EDF-1 rates, these contracts are renewed and enrolled under the EDF-3 rate. Most contracts on the EDF-1 rates have expired or voluntarily moved from the EDF-1 rate to the EDF-3 rate for cost saving purposes. Gas FY 2025 gas rates are scheduled to increase by 12.5% to ensure the utility is recovering its costs of capital projects, operations, and rebuilding reserves. This adjustment also supports the increased equity transfer to the General Fund, which increases to $10.9 million from $7.7 million in FY 2024. In FY 2021 and FY 2022, the Gas Utility maintained minimal rate increases, leading to revenues struggling to match the rising expenses, resulting in a significant depletion of reserves. Additionally, costs reflect a longer-term mitigation strategy against potential future gas price spikes such as those experienced in FY 2023, which increased gas bills exponentially. Water FY 2025 water rates are scheduled to increase by 9.5%. As part of the water rate increase, the San Fran- cisco Public Utilities Commission (SFPUC) is projecting a wholesale rate increase of 6.5% for FY 2025, which is a pass-through commodity charge to CPAU customers and will impact CPAU water rate increases. Due to the drought and water conservation efforts together with near record-setting precipitation and snowpack in the winter of 2022-2023, the water utility’s sales revenue declined in FY 2023 by $4.9 million or 10% compared with sales revenue in FY 2021. The Water Utility used available reserves to hold rates flat for two years (FY 2021 and FY 2022) while also managing through two years of drought-related sales rev- enue reductions (FY 2022 and FY 2023). Wastewater Collection FY 2025 Wastewater Collection rates are scheduled to increase by 15.0%. Wastewater Collection costs are projected to rise over the forecast due to increasing treatment costs related to capital improvements and operational costs at the Regional Water Quality Control Plant (RWQCP), as well as increasing collection system operational and Capital Improvement Program (CIP) costs. In FY 2023, Operations Reserve ended the year with a negative balance due to higher CIP expenses and lower sales revenues than anticipated. The proposed increase will gradually replenish the reserve and enable a reduced-size 1.25 miles main replacement in FY 2026 to address highest priority mains for replacement. The accelerated 5-mile sewer Item #4     Packet Pg. 61     ENTERPRISE FUNDS OVERVIEW ENTERPRISE FUNDS OVERVIEW • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 125 main replacement every other year would resume with construction scheduled in FY 2028. This accelera- tion will allow the Wastewater Collection Utility to replace the last main no more than approximately 10 years beyond its anticipated 100 year life expectancy. [Content regarding a department other than Utilities Department operations removed for brevity] Item #4     Packet Pg. 62     UTILITIES UTILITIES •CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 449 UtilitiesMission Statement The City of Palo Alto Utilities mission is to provide safe, reliable, environmentally sustainable, and cost-effective services. Purpose The purpose of the City of Palo Alto Utilities is to provide high quality, cost-effective elec- tric, gas, fiber optics, water and wastewater collection services; promote effective energy and water efficiency programs; support the City’s sustainability and climate action goals through greenhouse gas emissions reduction efforts; proactively manage infrastructure needs and replace deteriorated or aging facilities with new technologies to ensure safe and reliable delivery of services; and ensure the City’s utilities are in sound finan- cial condition. Item #4     Packet Pg. 63     UTILITIES 450 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET   ƫ ƫ Dean Batchelor   ƫ  ƫĒƫ ƫ 2.00 Administrative AssociateII 1.00AssistantDirectorUtilities (OHFWULFDQG)LEHU 1.00 BusinessAnalyst .00 Coordinator Utilities Projects &HPHQW)LQLVKHU 3.00 Electrician Assistant I (OHFWULFLDQ/HDG 1.00 Electric EquipmentTechnician .00 ElectricHeavyEquipmentOperator .00 ElectricProjectEngineer 2.00 Electric UndergroundInspectors 1.00 ElectricUndergroundInspector-Lead 1.00 EngineeringManager–Electric .00 EngineerTechnicianIII +HDY\(TXLSPHQW2SHUDWRU,QVWDOOHU 5HSDLUHU 8WLOLWLHV,QVWDOOHU5HSDLUHU 10.00 Lineperson / CableSplicer .00 Lineperson / CableSplicer-Lead 1.00 ManagerElectricOperations .00 MeteringTechnician 1.00 Metering Technician-Lead 2.00 Overhead/Underground Troubleman 2.00 8WLOLWLHV6\VWHP $QDO\VW .00 SeniorElectricalEngineer 6HQLRU8WLOLWLHV)LHOG6HUYLFH 5HSUHVHQWDWLYH 6HQLRU8WLOLWLHV6\VWHP2SHUDWRU .00 Street Light,Traffic Signal&Fiber Technician 2.00 Street Light, Traffic Signal&Fiber Technician-Lead 6.00 SubstationElectrician 2.00 SubstationElectrician-Lead 3.00 Utilities CompTech 1.00Utilities CompTech-Lead 3.00 Utilities EngineerEstimator 1.00 Utilities EngineerEstimator-Lead 8WLOLWLHV)LHOG6HUYLFH5HSUHVHQWDWLYH 3.00 Utilities Locator 6.00Utilities Supervisor .00 Utilities System Operator 1.00AssistantDirectorUtilities Customer Support Services 2.00Credit andCollections Specialist 2.00 Customer Service Specialist-Lead .00Customer Service Representative .00 Customer Service Specialist 1.00 ManagerCustomer Service 1.00 Manager,Utilities CreditandCollections .00MeterReader &RRUGLQDWRU8WLOLWLHV3URMHFWV .00AssistantDirector, Resource Management 1.00 Administrative Associate II $VVRFLDWH6XVWDLQDELOLW\3URJUDP $GPLQLVWUDWRU 1.00 BusinessAnalyst 3.00 KeyAccountRepresentative .00 ManagerUtiliWLHV ProgramServices .00 6XVWDLQDELOLW\Program Administrator .00 ResourcePlanner SeniorResourcePlanner ƫƫƫƫ  ƫ   ƫ 1.00 AdministrativeAssistant 1.00 Administrative Associate II 2.00 BusinessAnalyst 1.00 ChiefOperatingOfficer 1.00 ComplianceManager 1.00 Coordinator,Utilities Projects 1.00 Manager Communications 1.00 ManagerUtilities Telecom 1.00 PrincipalBusinessAnalyst .0 Program Assistant 6DIHW\2IILFHU 3.00 Senior Business Analyst 1.00 Senior ResourcePlanner 1.00 StrategicBusiness Manager ƫ  ƫĒƫ ƫ 2.00 Administrative AssociateII 1.00 Assistant DirectorUtilities :*: 2.00 BusinessAnalyst 1.00Cathodic ProtectionTech-Asst 1.00Cathodic Technician 2.00CementFinisher .00 Coordinator Utilities Projects 4.00 Engineer 1.00 EngineeringManager –WGW (QJLQHHULQJ7HFKQLFLDQ,,, 1.00 Gas & Water Meter Measurement and ControlTechnician-Lead .00Gas &WaterMeterMeasurement and ControlTechnician 4.00 HeavyEquipmentOperator /Installer Repairer 2.00 MaintenanceMechanic Welding 1.00 ManagerWGWOperations 1.00Program Assistant 5.00 ProjectEngineer 1.00RestorationLead 5.00 SeniorProjectEngineer 1.00Senior Mechanic 2.00 Utilities EngineerEstimator 1.00 UtilitiesInstaller/Repairer 8WLOLWLHV,QVWDOOHU5HSDLUHU$VVLVWDQW .00 UtilitiesInstall/Rep-Lead 3.00 UtilitiesInstall/Rep-Welding .00 UtilitiesInstall/Rep-Welding-Lead 6.00 Utilities Supervisor 5.00WGW HeavyEquipmentOperator :*:8WLOLWLHV)LHOG,QVSHFWRU ƫĂĀĂĆƫ  ƫ  20- Full-time -Hourly This organizational chart represents citywide Full-Time Equivalents (FTEs) for this department. The Department Summary tables summarize FTEs by position allocation. 1.00 0DQDJHPHQW$QDO\VW +HDY\(TXLSPHQW2SHUDWRU1.00 Principal 8WLOLWLHV3URJUDP0DQDJHU 1.00AssistantDirector 0DQDJHU7HOHFRPPXQLFDWLRQV 0DQDJHU,QIRUPDWLRQ7HFKQRORJ\ 1.00 6HQLRU0DUNHW$QDO\VW ƫƫƫ ƫƫ  ƫƫ ƫ ƫ  ƫ   Item #4     Packet Pg. 64     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 451 Description The City of Palo Alto offers a full array of utility services to its citizens and businesses. Because of this, the City has a unique opportunity to partner with the Palo Alto community to enjoy the benefits and achievements of reliable, home- grown, and environmentally focused utilities. Palo Alto has a tradition of over 125 years of successful public utility operations. It is a tradition that continues to provide the Palo Alto community with safe and reliable utilities service, local decision-making over policies, utility rate-making, environmental programs, and customized services. The City of Palo Alto Utilities (CPAU) continues to focus on customer service, infrastructure reliability, regulatory compliance, and cost containment. CPAU also supports the City’s sustainability goals by building a low-carbon energy supply through renewable energy, carbon emission offsets and by promoting programs to help customers use energy and water more efficiently, reduce their carbon footprint, and help them integrate new technologies. At CPAU, our people empower tomorrow’s ambitions while caring for today’s needs. We make this possible with our outstanding professional workforce, leading through collaboration, and optimizing resources to ensure a sustainable and resilient Palo Alto. ADMINISTRATION Utilities Administration is responsible for the overall management of CPAU including communication, regu- latory compliance, strategic planning, budget coordination, legislation and regulatory policy analysis, and personnel and administrative support to the entire Department. CUSTOMER SUPPORT SERVICES Customer Support Services annually bills approximately $350 million for the City’s electric, natural gas, water, commercial fiber optic, wastewater collection (operated by CPAU), storm water management, and refuse (operated by Public Works) services; operates the Customer Service Call Center with 75,000 annual customer interactions; reads 90,000 utility meters per month; and implements Credit and Collection poli- cies and financial assistance programs. Item #4     Packet Pg. 65     UTILITIES 452 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET ENGINEERING Engineering is responsible for managing all phases of CPAU’s capital improvement projects which include providing new or upgrading existing service to customers and replacing and rehabilitating the City’s elec- tric, fiber, gas, water, and wastewater distribution systems. OPERATIONS Utilities Operations is responsible for the operations, maintenance, and emergency response for the elec- tric, fiber, gas, water, and wastewater distribution systems. RESOURCE MANAGEMENT Resource Management is responsible for the long-term resource acquisition plans for electricity, natural gas, and water; contract negotiations to acquire renewable resources; financial planning; rate development; energy efficiency and water conservation programs; and management of key accounts. Accomplishments •Established pilot area boundaries for Grid Modernization (Grid Mod) and Fiber-to-the-Premise (FTTP) projects. The pilot will determine the most efficient, least disruptive and most cost-effective way to implement residential electrification and provide fiber-speed internet services in residential neighborhoods. The pilot will serve approximately 1,200 residences. Once the pilot is completed the Grid Mod and FTTP projects will be expanded to approximately 5,000 additional residences. •Execution of a public/private partnership with Tesla to expedite construction upgrade of Hanover Substation to increase electrical capacity to support new electrical load. •Awarded $16.5 million federal grant for Natural Gas Distribution Infrastructure Safety and Modernization to replace existing polyvinyl chloride (PVC) material distribution mains and services (gas main replacement projects). •Succession planning and concerted efforts are underway to recruit, train, and retain line-workers, system operators, engineers, inspectors to maintain system and respond to outages effectively. Staff have also contracted with third-party contractors to supplement staff to undertake emergency response, maintenance, and capital improvement projects. •Installed approximately 38,000 or 40% of advanced or smart electric, gas, and water meters as part of the Advanced Metering Infrastructure (AMI) project. The AMI meters will empower customers to more efficiently utilize energy and water, better enable customer adoption of distributed energy resources (DER) such as solar photovoltaics, energy storage, and electric vehicles, and enable the timely detection of water leaks. AMI will also enable Utilities to optimize operations and improve reliability by reducing restoration time for outages. •New outage management system has substantially improved Utilities’ ability to notify customers and mobilize resources in response to electric outages and emergencies. •Approval of the Reliability and Resiliency Strategic Plan for the Electric Distribution Utility. The plan addresses the need for a modernized electric system with enhanced reliability to support an electrified community and a desire among community members for ways to maintain some level of electric supply during outages, particularly with an electrified home. •430 residents have installed or signed contracts to install a heat pump water heater. Nine multi-family (MF) properties representing 415 housing units (about 4% of all multi-family units in Palo Alto) have installed EV chargers facilitated through the City’s EV programs. Item #4     Packet Pg. 66     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 453 Initiatives •Complete construction of the Grid Mod and FTTP pilot to enable residential electrification and offer Palo Alto Fiber internet service to the 1,200 residences. •Complete the development of the One Water Plan for Palo Alto to evaluate alternative water supplies, define existing and future uncertainties and supply risks, and identify community needs and priorities and serve as a long-term guide to better prepare for future uncertainties like multi-year drought. •Add resources in the Development Service Center and continue collaboration with other City departments on efforts to streamline the permitting process related to rooftop solar, energy storage, building electrification, and electric vehicle charging infrastructure. •Complete the 2023/2024 Sanitary Sewer Management Plan to comply with new state regulations applicable to the management of the City’s sewer system. •Complete deployment of the remaining 43,000 AMI electric, gas and water meters. Enable customers to view their daily interval utility consumption on the Utilities customer account services portal MyCPAU and subscribe to water leak alerts. •Complete testing to comply with updated state and federal Lead and Copper Rule regulations requiring all water service lines be verified prior to October 2024. •Commence a natural gas study to evaluate the preferred approach for downsizing the gas system and identifying potential locations to conduct as a proof of concept. •Issue debt financing and continue to explore grant opportunities to fund phase 1 of the Grid Mod project. •Continue working with the Utilities Advisory Commission (UAC), City Council, City departments, and community to implement and adopt initiatives and programs on the Sustainability and Climate Action Plan (S/CAP) and Utilities Reliability and Resiliency Strategic Plan. Item #4     Packet Pg. 67     UTILITIES 454 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET Key Performance Measures COMPARABLE AND COST-EFFECTIVE SERVICES Goal Ensure fiscally sound and cost-effective services. Objective Reduce the cost of delivering services through best management practices. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Palo Alto’s average residential monthly utility bill above/below the median of neighboring cities (20)%(12)%(10)%(12)%(12)% Description This compares the average residential monthly utility bill which includes electricity, gas, water, and wastewater services to the nearby communities (Menlo Park, Mountain View, Santa Clara, Hayward, Redwood City). Purpose This measure compares the City’s average utility rates charged to residents to other comparable cities (e.g., similar size, similar commodity purchase options, similar geography). Status The monthly median utility bill for Palo Alto at the end of calendar year 2023 was lower compared to nearby communities (Menlo Park $421, Redwood City $388, Mountain View $346, Hayward $327, Santa Clara $248). Palo Alto’s monthly average residential utility bill was $304, and for all the communities combined the average was $346. Electric rates were significantly lower than PG&E though higher than Santa Clara. Natural gas rates were slightly higher than PG&E due to the price spike in the winter of 2022/23. Water rates were higher primarily due to differing system characteristics, levels of infrastructure investment, and sources of supply. Palo Alto’s water supply comes from the San Francisco Public Utilities Commission (SFPUC), which is undergoing a $4.8 billion improvement project, and Palo Alto is also investing more than other communities in improving our local distribution pipelines and enhancing our emergency water supply system. Item #4     Packet Pg. 68     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 455 CUSTOMER SATISFACTION Goal Provide excellent customer service. Objective Maintain a high level of customer satisfaction, equal to or greater than 83 percent of Palo Alto citizens rating satisfaction of utility services as "Excellent" or "Good" in the Palo Alto Community Survey. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percent rating services (electric, gas, wastewater, and water) "Good" or Excellent" 85%79%85%79%79% Description This data is collected as part of the Palo Alto Community Survey that is conducted annually. Purpose To get feedback on whether customers are satisfied with the nature, extent and delivery of services provided, using random-selection survey processes that include a good cross- section of the customer base. Status The most recent Palo Alto Community Survey was completed in September 2023. The full report can be found on the City website: https://www.cityofpaloalto.org/Departments/City- Manager/Community-Engagement/Palo-Alto-Community-Survey. Workload Measures FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Total cost of Capital Improvement Program annually (Millions) $27.20 $35.00 $123.60 $99.00 $68.00 Key Performance Measures Item #4     Packet Pg. 69     UTILITIES 456 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET Budget Summary FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change $ FY 2025 Change % Dollars by Fund Electric Fund 191,981,933 206,174,744 267,028,976 281,206,576 14,177,600 5.3% Fiber Optics Fund 3,695,645 3,147,057 29,148,398 31,689,607 2,541,209 8.7% Gas Fund 54,491,097 72,639,470 76,100,312 74,585,345 (1,514,967)(2.0)% Wastewater Collection Fund 19,163,957 24,819,213 25,375,497 25,108,669 (266,828)(1.1)% Water Fund 47,864,059 50,760,603 76,757,131 63,818,946 (12,938,184)(16.9)% Total Dollars by Fund $317,196,690 $357,541,086 $474,410,315 $476,409,144 $1,998,829 0.4% Revenues Charges for Services 363,196 478,018 260,000 260,000 ——% Charges to Other Funds 388,740 357,665 337,970 337,970 ——% From Other Agencies 1,588,358 561,362 576,632 576,632 ——% Net Sales 269,707,701 333,653,237 345,541,823 359,968,805 14,426,982 4.2% Operating Transfers-In 2,613,966 4,836,286 2,635,966 2,466,125 (169,841)(6.4)% Other Revenue 11,722,006 33,734,695 35,740,500 50,819,000 15,078,500 42.9% Return on Investments 3,496,674 3,858,370 4,694,000 5,785,500 1,091,500 23.3% Total Revenues $289,880,641 $377,479,633 $389,786,891 $420,214,032 $30,427,141 7.8% Positions by Fund Electric Fund 113.58 121.42 121.61 128.65 7.04 5.8% Fiber Optics Fund 6.90 6.55 10.55 10.55 ——% Gas Fund 53.57 55.35 54.86 56.10 1.24 2.3% Utilities Administration Fund 19.46 20.46 22.29 22.15 (0.14)(0.6)% Wastewater Collection Fund 27.50 28.67 28.76 28.71 (0.05)(0.2)% Water Fund 46.83 47.65 47.59 49.10 1.51 3.2% Total Positions by Fund 267.84 280.10 285.66 295.26 9.60 3.4% Item #4     Packet Pg. 70     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 457 ELECTRIC FUND Description On January 16, 1900, the City of Palo Alto began operation of its own electric system. A steam engine was the initial source of the City’s electricity and was replaced by a diesel engine in 1914. As demand for electricity and the population continued to grow, the City of Palo Alto Utilities (CPAU) connected to the Pacific Gas and Electric distribution system and purchased power from additional sources. The integrity of the infrastructure required for achieving a high level of reliability and value for customers is of paramount importance to CPAU. The Electric Fund strives to enhance the customer service connection experience, increase energy efficiency participation, and increase the percentage of electric supply obtained from renewable energy supplies. The City has entered into a number of contracts with producers of wind, landfill gas, and solar energy for more than 15-year terms. Accomplishments •430 residents have installed or signed contracts to install a heat pump water heater (228 through the full-service Heat Pump Water Heater Pilot Program, 44 residents on their own, receiving a rebate from the City). •As of June 2024, twelve multifamily properties representing 453 residential units (representing 4% of all multifamily units in Palo Alto) have installed a total of 82 charging ports facilitated through the City’s EV programs, with another 15 multifamily projects in the pipeline representing an additional 1,021 multifamily units and 372 charging ports. •Installed over 13,000 electric Advanced Metering Infrastructure (AMI) total meters as part of the AMI project. •Overhead to Underground conversion project for wildfire mitigation efforts in the Foothills. This project is to reduce fire risks related to utility infrastructure and support reliability and resiliency. Phase 1 and 2 are completed, Phase 3 of this project is at approximately 70% completion. •Electric operations launched a fault indicator program to improve reliability and reduce service interruptions. Utilizing fault detection devices and equipment will be a key component for grid modernization. The addition of fault indicators will enhance our grid in reducing outage times and provides engineering with circuit analysis. •Due to the increased emphasis on the proactive infrastructure replacement program(s) and grid modernization, replacing infrastructure before failure is key to supporting reliability and resiliency. 65 electric utility poles were replaced in FY 2023 and 46 were completed in the FY 2024 cycle. Item #4     Packet Pg. 71     UTILITIES 458 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET •Completed the 2023 Integrated Resource Plan to ensure Palo Alto will have sufficient resources to reliably meet forecasted customer electrical energy and capacity needs in the most cost-effective way while satisfying environmental and other public policy objectives. •Council approved extending the current 2009 Long-Term Layoff Agreement for the City’s California- Oregon Transmission Project rights for ten years until February 1, 2034. The agreement represents approximately $13 million in savings for Palo Alto. •Completed the electric cost of service analysis. •Added a new long-term contract for a geothermal electricity resource to help diversify the supply portfolio and acquire additional local capacity and round-the-clock renewable electricity. •Sold 160,000 MWh of PCC1 (in-state) renewable energy credits, swapping them for less expensive PCC3 (out-of-state) renewable energy credits, yielding over $3 million in net revenue to be applied to local decarbonization programs. Initiatives •Continue pursuing federal and state grant opportunities for electric grid modernization, electric vehicle chargers, sustainability and climate initiatives, and electrification programs. •Develop and implement an electric grid modernization plan to increase system capacity and resiliency and allow community-wide electrification, including a phased roll out plan over the next several years. •Collaborate with the Planning Department to develop new codes and ordinances to facilitate electrification in existing buildings and new construction projects where feasible. •Develop electric rates compatible with electrified homes, Electric Vehicle (EV) charging, and solar + storage microgrid customers. •Expand EV charging access for multi-family and income-qualified residents. •Convert all Palo Alto municipal vehicles to EVs when feasible and when the replacement is operationally acceptable. •Partner with employers and business districts to promote commuter EV adoption and EV charging access as well as alternative commute promotion. •Design and identify pilot area for whole residential home electrification and gas decommissioning. •Enhance and promote the Advanced Heat Pump Water Heater Pilot Program with the goal of reaching at minimum 10 installations per week on average by the end of 2024 (500 per year), and ideally 20 per week (1,000 per year). •Continue progress on a new potential 115kV electric interconnection, which would enhance City electric power reliability and resilience. Efforts will involve risk analysis, power flow studies, and formal requests to the California Independent System Operator (CAISO). •Continue undergrounding the new 12kV Electric and Fiber Optic distribution system in the foothills. This multi-year project will be conducted in one to two miles sections and is scheduled to be completed in FY 2025. •Rebalance the electric portfolio including reaching a decision regarding the City’s Western Resource. •Conduct a preliminary analysis of the cost of 24x7 carbon-free electricity. •Add additional carbon-free electric resources to the supply portfolio. Item #4     Packet Pg. 72     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 459 Goals and Objectives Goal 1 Provide safe and reliable delivery of electric services to customers. Objectives: •Develop a plan to complete a second electric transmission line source to improve service reliability. •Accelerate network component upgrade (wire, cable, transformers, and substation equipment) to support new electrification load through the Grid Modernization (GMOD) effort. •Implement activities outlined in the Utilities Wildfire Mitigation Plan to reduce the possibility of fires in the western foothills of Palo Alto caused by overhead electric lines. •Increase emphasis on the proactive infrastructure replacement program, replacing infrastructure before failure, to support reliability and resiliency. •Enhance planned maintenance programs for all utilities through clearly defined maintenance plans, improved management reporting, and developing innovative ways to ensure efficient completion of all maintenance. •Implement activities from the Reliability and Resiliency Strategic Plan to maintain and enhance community reliability, resiliency, grid capacity, and grid modernization Goal 2 Increase environmental sustainability and promote efficient use of resources. Objectives: •Achieve cumulative 10-year energy efficiency savings of 4.4 percent of the electric load by 2031. •Facilitate the acceleration of Electric Vehicle (EV) adoption by both Palo Alto-based and inbound vehicles by providing EV education and outreach, incentives for electric infrastructure upgrades and more charging infrastructure. •Expand effort to lower greenhouse gas emissions by promoting electrification of buildings in Palo Alto. Item #4     Packet Pg. 73     UTILITIES 460 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET Key Performance Measures ENVIRONMENTAL SUSTAINABILITY Goal Support environmental sustainability and promote efficient use of resources. Objective Achieve Renewable Portfolio Standard (RPS) of at least 50 percent by 2030. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percent of retail electric sales volume provided by renewable supply resources under long-term PPAs 39%39%39%41%44% Description This measures the fraction of the City’s retail electric sales volume that is provided by renewable supply resources that are under long-term power purchase agreements (PPAs). Purpose The Clean Energy and Pollution Reduction Act (SB 350) of 2015 raised the state’s renewable portfolio standard (RPS) to 50 percent by 2030 and required a doubling of energy efficiency savings by 2030. Status The City sold Bucket 1 renewable energy credits (RECs) in Q1-Q4 FY 2023 accordingly, which caused the City’s RPS levels to drop to a new norm (compared to the levels in FY 2019 and other previous years), but the City still remains in compliance with its RPS requirements. Under the updated Carbon Neutral Plan that was approved by Palo Alto City Council in August 2020, the City was authorized to sell all Bucket 1 RECs exceeding the amount required to comply with the City’s RPS requirements, and to replace them with Bucket 3 REC purchases. RPS compliance is based on aggregate RPS procurement over the entire compliance period (2021-2024), which ensures that the City is still in compliance with the state RPS requirements. ENVIRONMENTAL SUSTAINABILITY - SOLAR Goal Support environmental sustainability and promote efficient use of resources. Objective Increase the penetration of local solar installations. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Cumulative installed capacity of photovoltaic (PV) systems measured in megawatts (MW) 16 19 16 20 21 Description This represents the cumulative installed capacity of PV systems in Palo Alto, measured in MW. It includes PV systems installed prior to the passage of California Senate Bill 1 (SB1), which enacted the Million Solar Roofs Initiative and expands upon the current California Solar Initiative (CSI) and the Energy Commission’s New Solar Homes Partnership (NSHP). Purpose This measure supports the City’s goal of achieving a 100 percent carbon neutral electric supply portfolio, meeting 4 percent of the City’s electricity needs through local solar by 2023, and complying with California Senate Bill 1 (SB1) to increase PV installations. Increasing the cumulative installed capacity of PV systems will also benefit the environment and expand the flexibility of the City’s electric generation portfolio. Item #4     Packet Pg. 74     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 461 Status In FY 2023, a total of 171 residential PV systems and 5 nonresidential PV systems were installed, bringing the cumulative total to 1,342 residential PV installations and 106 nonresidential PV installations since 1999 when CPAU launched the PV Partners Program to incentivize local PV system installations. SYSTEM RELIABILITY Goal Provide safe and efficient delivery of electric services to customers. Objective Provide exceptional system reliability. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Average duration of customer outages in minutes as reported using industry guidelines 80 115 100 120 120 Description System Average Interruptible Duration Index (SAIDI) is a measure of outage duration. It measures the number of minutes over the year that the average customer is without power. Purpose Reliability indices were introduced in order to keep track of utility performance. This information will help Utilities prioritize capital and operating spending so that reliability can be improved without increasing costs. Status There were a total of 64 outages experienced in FY 2023, of which 51 outages were weather-related and 13 were equipment failures. As of June 2024, there were 62 outages; of that 32 were weather-related. It is anticipated that the equipment-related outages will decline over time as aged infrastructure are replaced. Workload Measures FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Number of Customer Accounts (Electric)29,863 30,002 30,112 30,138 30,138 Number of momentary outages*1 0 0 1 0 Percent of residents surveyed who rate the quality of the Electric Utility as "Good" or "Excellent" 80%74%90%74%74% Total Number of Outages 22 64 25 65 40 Key Performance Measures *The most recent Palo Alto Community Survey was completed in September 2023. The full report can be found on the City website: https://www.cityofpaloalto.org/Departments/City-Manager/Community-Engagement/Palo-Alto-Community-Survey. Item #4     Packet Pg. 75     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 473 FIBER OPTICS FUND Description In 1996, the City built a dark fiber ring around Palo Alto capable of supporting multiple network developers and service providers with significant growth potential. The fiber backbone network was routed to pass by and provide access to key City facilities and the Palo Alto business community, including research centers and commercial properties. Dark fiber optics service consists of providing the fiber optics cabling, splice points, service connections, and other infrastructure providing high-capacity bandwidth needed to transport large quantities of data. This service excludes the transmitters, receivers, and data itself, which are owned and operated by each customer. Accomplishments •Completed first iteration of a fiber management system (FMS) to plan, design, construct, and manage the City’s fiber network. •Dedicated internal resources to implement and coordinate Fiber-to-the-Premise (FTTP) project and Electric Grid Modernization project to implement the pilot. •Finalized the pilot area for FTTP and Grid Mod at Embarcadero Rd, Louis Rd, Colorado Ave, Greer Rd, and West Bayshore Rd servicing about 1,200 customers. •Finalized fiber construction drawings, reviewed bids, and awarded contract for the Fiber Hut. •Secured space at the Equinix data center for FTTP network equipment and connections to Internet providers. Initiatives •Expanding the fiber backbone and undergrounding fiber in the Foothills to provide internet service to residents, wireless communication to City staff, and fiber connectivity for advanced metering infrastructure (AMI) and water reservoir. •Issue invitations for bids for construction and request for proposals for operations for Phase 1 of FTTP, which may reach an additional 5,000 customers, from 1,200 customers to 6,200. •Determine best mix of existing resources, new hires and strategic vendors for FTTP. •Launch FTTP to residents and businesses offering fast speed, reliable, and affordable internet service in the pilot and phase 1 areas. Item #4     Packet Pg. 76     UTILITIES 474 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET •Begin building a new fiber backbone to support utilities, City departments, dark fiber customers and FTTP. •Conduct a cost and benefit analysis and market comparison of dark fiber pricing. Goals and Objectives Goal 1 Increase the value of fiber utility services to customers through the City’s Fiber-to-the-Premise (FTTP) business. Objectives: •Provide high-quality, competitively priced fiber optic utility services to City departments and commercial customers in the City of Palo Alto. •Manage costs and add new dark fiber license agreements with commercial customers. •Offer affordable, fast, reliable and secure internet service to residents and businesses. Goal 2 Expand capacity and enhance reliability of the City’s fiber network. Objectives: •Ensure sufficient fiber optic cables are available to meet future City and customer needs. •Reinvest and make system enhancements to prevent damage from outside sources and improve reliability. Item #4     Packet Pg. 77     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 475 Key Performance Measures CUSTOMER SATISFACTION Goal Provide excellent customer service. Objective Provide high-quality and competitively-priced fiber optic utility services to City departments and commercial customers in the City of Palo Alto. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Number of commercial fiber connections 168 169 157 164 170 Description This measure shows the growth of the Fiber Enterprise based on customers and connections. Estimates are based on analyzing the number of upcoming developments, anticipating how many customers would sign on for Fiber, and taking into account how many existing connections may result in disconnections such as companies leaving. Some customers may also have multiple fiber connections at various locations. Purpose The purpose of this measure is to add value to companies doing business in Palo Alto by providing a cost-effective, world class telecommunications system. The goal is to build out and fully leverage the fiber network to add value to the business and other communities as needed. Status The Fiber enterprise Utility has 137 commercial customer connections and 32 City customer connections. As part of the City’s fiber expansion project, there will be opportunities to add new dark fiber leasing to commercial customers in areas where the existing dark fiber ring does not serve. Workload Measures FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Number of Customer Accounts (Fiber)45 42 45 41 39 Number of Wholesale re-sellers 14 12 14 13 14 Item #4     Packet Pg. 78     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 481 GAS FUND Description The municipal natural gas system began operations in 1917 when Palo Alto acquired a privately-owned gas business. During the early years, gas was manufactured from coal tar. Gas supplied by coal tar was replaced in the 1920s by natural gas supplied from Pacific Gas and Electric (PG&E). Today, all gas for the City of Palo Alto is purchased from PG&E. The Gas Utility is responsible for planning, designing, and budgeting the operations, maintenance, and constructing major capital improvements for the City’s gas distribution system. Accomplishments •Awarded $16.5 million from Department of Transportation funding from the Natural Gas Distribution Infrastructure Safety and Modernization program to enhance safety of the City’s natural gas distribution infrastructure. •Implemented winter 2023-24 strategy for mitigating potential gas commodity price spikes. •Completed the Gas Main Replacement 24A (GS-14003) project around the Stanford Shopping Center, with replacement of approximately 2,500 linear feet of 4” Polyvinyl Chloride (PVC) gas main with 4” Polyethylene (PE) gas main and associated services. •Retrofitted over 12,000 gas Advanced Metering Infrastructure (AMI) total meters as part of the AMI project. •Replaced a 400 foot section of steel gas main on Seneca St between Forest Ave and Homer Ave. •Started construction on Gas Main Replacement 24B (GS-14003) project to replace 18,000 linear feet of PVC gas main with PE gas main in various neighborhoods throughout the City of Palo Alto. Initiatives •Commence a study in FY 2025 to evaluate the preferred approach for downsizing the gas system and identifying potential locations to conduct as a proof of concept. •Complete the construction of Gas Main Replacement Project 24B (GS-14003) portion of the project, in March of 2025 to replace 18,000 linear feet of gas mains and natural gas service pipelines made of Polyvinyl Chloride (PVC). •Retrofit the remaining 16,000 gas meters to make them AMI-compatible. •Apply for subsequent years of the Natural Gas Distribution Infrastructure Safety Modernization multi- year grant to accelerate gas main replacement capital projects and enhance safety of the City’s natural gas distribution infrastructure. •Recommend a long-term gas hedging strategy to Council to mitigate future gas commodity price spikes. Item #4     Packet Pg. 79     UTILITIES 482 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET •Begin phase IV of the cross-bore verification program to inspect 400-500 sewer laterals in areas with high density and where gas service and sewer lateral are within 15 feet or less. Goals and Objectives Goal 1 Provide safe and efficient delivery of natural gas to customers. Objectives: •Continue repairing 100 percent of laterals damaged by crossbore within 24 hours. •Remove and replace the remaining Polyvinyl Chloride (PVC) pipe with Polyethylene (PE) pipe. •Complete a mobile gas leak survey of all distribution mains annually and complete a walking gas leak survey of all gas services, for 50 percent of the City, each year. Complete a walking leak survey of all gas services within business districts each year. Goal 2 Increase environmental sustainability and promote efficient use of natural gas resources. Objectives: •Reduce the carbon intensity of the gas portfolio in accordance with the Sustainability and Climate Action Plan (S/CAP) using offsets. Key Performance Measures GAS LEAKS REPAIRED Goal Provide safe and efficient delivery of natural gas to customers. Objective Respond to and repair all Grade 1 gas leaks immediately. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percentage of Grade 1 leaks responded to within 24 hours 100%100%100%100%100% Description This measures the total response time to Grade 1 leaks found during the walking and mobile (vehicle) surveys and any reported leaks classified as Grade 1. The City’s policy is to respond and repair Grade 1 leaks within 24 hours. Grade 1 leaks are hazardous leaks that pose an immediate hazard to persons or property and require continuous action until conditions are no longer hazardous. Purpose Leaks are assigned priority gradings according to location, extent of migration, gas concentration, potential for concentration, ignition sources, and potential hazard to the public and property. These priority grades are intended only as guidelines. Status Utilities Operations responds immediately to Grade 1 leaks. The average repair time can vary depending on the size and location of the gas leak. Item #4     Packet Pg. 80     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 483 GAS SAFETY Goal Provide safe and efficient delivery of natural gas to our customers. Objective Complete a walking gas leak survey for 50 percent of the City and a mobile gas leak survey of services in business districts and 100 percent of the City’s gas mains on an annual basis. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percentage of gas system surveyed by mobile (vehicle) 100%100%100%100%100% Percentage of gas system surveyed by walking 100%100%100%100%100% Description A walking survey is conducted to check for gas leaks on service/gas meters and covers one-half of the City (approximately 105 miles of gas mains and 36 miles of service lines) every year, so that the entire City’s gas service system can be reviewed in a two-year period. The Federal Department of Transportation (DOT) regulations require a survey of the entire City once every five years. In addition to a walking survey, a mobile (vehicle) survey of all gas mains and some gas service lines (services in the business district) are conducted annually. Purpose To ensure the safety of all who live and work in Palo Alto and to comply with Federal DOT requirements. Status The department is meeting the requirements and repairing all discovered gas leaks in a timely manner. Workload Measures FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Number of Customer Accounts (Gas)23,781 23,837 23,818 23,818 23,818 Number of gas leaks repaired 102 102 110 90 100 Key Performance Measures Item #4     Packet Pg. 81     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 493 WASTEWATER COLLECTION FUND Description In 1898, Palo Alto approved $28,000 in bond money to fund construction of the City’s first sewer network, which was completed in 1899. Private cesspools and privies were banned, and the City Health Officer had residents connected to the sewer system within a few years. Wastewater Collection’s staff is responsible for design, construction, operation, and maintenance of approximately 216 miles of sewer mains and approximate 18,000 City-owned laterals. Staff continues overlapping the design and construction elements of rehabilitation and augmentation projects. Wastewater Collection’s priorities are: maintaining infrastructure reliability; identifying problems in mains and service laterals through expanded use of video technology; complying with all regulatory requirements; and maintaining its excellent safety record. Accomplishments •Completed Sanitary Sewer Replacement Project 31 (WC-19001) on time and under budget which consists of replacement of approximately 10,924 linear feet of sanitary sewer mains and associated laterals on El Camino Real between Page Mill Road and Cesano Court. •Awarded professional services contract to update the 2004 Sewer Master Plan Study of the wastewater collection system. The sewer master plan study will evaluate the City’s existing wastewater collection system, flows, and flow patterns to determine the adequacy of the system’s hydraulic capacity to meet current and anticipated future wastewater flow demands. Initiatives •Complete replacement of sanitary sewer overflow monitoring units in 39 sewer manholes throughout the City. •Complete the 2024-2025 Sewer Master Plan Study of the wastewater collection system. The study will consist of flow analysis, recalibration of the sewer system hydraulic model, and prioritize capital improvement projects. The anticipated completion is in the spring of 2025. Item #4     Packet Pg. 82     UTILITIES 494 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET •Monitor the financial health of the Wastewater Collection Fund and make structural adjustments to replenish reserves and accelerate sewer main replacements from 1 mile to 2.5 miles per year. Goals and Objectives Goal 1 Maintain and provide reliable and cost-effective wastewater services to customers. Objectives: •Clean and maintain sewer mains in commercial areas on a quarterly basis. •Clean and video a minimum of 17% of the City-owned laterals annually to comply with the City’s Sewer Overflow Reduction Plan. •Maintain the integrity of the City’s wastewater collection system by replacing mains and laterals as identified in the Wastewater Collection System Rehabilitation/Augmentation Capital Improvement Project plan. •Minimize sanitary sewer overflows and stoppages. •Maintain a fleet of dependable vehicles to provide high quality cleaning and servicing of the sewer system. Key Performance Measures MAINTAIN AND PROVIDE RELIABLE SERVICES Goal Maintain and provide a reliable wastewater system to customers. Objective Clean and video a minimum of 17 percent of the City-owned laterals annually to comply with the City’s Sewer Overflow Reduction Plan. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percentage of sewer laterals inspected annually 23%16%17%13%13% Description The purpose of the Sewer System Management Plan (SSMP) is to maintain and improve the condition of the collection system infrastructure; control infiltration and provide appropriate sewer capacity; and minimize the number and impact of sanitary sewer overflows. The goal is to perform sewer main cleaning of the entire collection system every 30 months (81.6 miles per year). This measures inspections and maintenance of 17 percent of City-owned laterals annually using closed-circuit television (CCTV) inspection data, including results of the on-going crossbore lateral inspection program, to target sewer mains and lower laterals for rehabilitation and replacement. Purpose To prevent blockage, sewer overflows, and to comply with the City’s SSMP, all the City’s sewer mains must be cleaned within 30 months. Status The City has not met the objectives of its SSMP in FY 2024 due to staffing resources. Staff anticipate that staffing levels will return to normal in FY 2025. Item #4     Packet Pg. 83     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 495 Workload Measures FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Number of Customer Accounts (Wastewater)22,393 22,499 22,482 22,482 22,482 Number of miles of sewer lines cleaned/ treated in a fiscal year 82 99 90 90 95 Percent of sewage spill responses within two hours 96%98%100%95%95% Percent of surveyed residents rating the quality of the Sewer Service as good/ excellent* 95%85%86%87%90% Number of sewage overflows 52 37 50 50 50 Percent of miles of sewer lines replaced 0.40%0.00%0.95%1.00%0.00% * The most recent Palo Alto Community Survey was completed in September 2023. The full report can be found on the City website: https://www.cityofpaloalto.org/Departments/City-Manager/Community-Engagement/Palo-Alto-Commu- nity-Survey. Item #4     Packet Pg. 84     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 503 WATER FUND Description From 1895 until 1928, the City’s water supply came from deep wells. When the groundwater supply started to decline, water was purchased from the San Francisco Regional Water System to supplement the local water system. Since 1962, when Palo Alto’s wells were discontinued as the primary water system, 100 percent of the water has come from the Regional Water System: 85 percent derived from snow melt flowing into the Hetch Hetchy Reservoir and the balance from runoff stored in San Francisco Bay Area reservoirs. The Water Fund focuses on increasing infrastructure reliability and responsiveness to meet the City’s water supply needs during an emergency; maintaining high-quality and reliable sources of water; updating water efficiency goals; and implementing water efficiency programs and services. Additionally, the Engineering Division is implementing a seismic upgrade to the existing reservoirs, wells and receiving stations to increase supply reliability during catastrophic emergencies. Accomplishments •Completed construction of Water Main Replacement Project 28 (WS-14001) and replaced approximately 13,700 linear feet of water main pipelines in various locations throughout the City. •Completed design of Water Main Replacement Project 29 (WS-15002) to replace approximately 8,000 linear feet of water main pipelines in Evergreen Park and Ventura neighborhoods, as well as California Business District. The construction of this project started in November 2023 and the anticipated completion is in August 2024. •Exchanged or retrofitted over 13,000 water Advanced Metering Infrastructure (AMI) total meters as part of the AMI project. •Completed the two turnouts (a.k.a. water receiving stations) Project (WS-07000). The work at California Avenue turnout included a seismic retrofit of the facility, replacement of all piping, electrical and SCADA upgrades, added roof access from street, drainage improvements, and lead paint removal. Page Mill Turnout included work to restrain a valve to remove an unsafe condition to operators working in the vault. •Began the One Water Plan, a long-term 20 year water supply plan to address supply reliability, droughts, and climate change. Held two community workshops on community water needs and priorities as well as exploring water supply options. Developing initial results to share with the community in spring/summer 2024. More information and links are available on Palo Alto’s One Water Plan website: https://www.cityofpaloalto.org/Departments/Utilities/Sustainability/Water-Efficiency/ One-Water-Plan Item #4     Packet Pg. 85     UTILITIES 504 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET Initiatives •Complete the development of the One Water Plan for Palo Alto to evaluate alternative water supplies, define existing and future uncertainties and supply risks, and identify community needs and priorities and serve as a long-term guide to better prepare for future uncertainties like multi-year drought. •Complete the tests for lead and copper in water service laterals in elementary schools and childcare facilities by Oct 2024 and to comply with the revised Environmental Protection Agency’s lead and copper rule. •Complete construction of Water Main Replacement Project 29 (WS-15002). The project will complete replacement of approximately 8,600 linear feet of water main pipelines and associated services on streets around California Avenue, downtown, and along Park Avenue. •Complete design of Water Main Replacement Project 30 (WS-15002) to replace approximately 8,000 linear feet of water main pipelines and associated services on streets around Towle Place, Christine Drive, and Lambert Avenue. •Exchange or retrofit the remaining 13,000 water meters to make them AMI-compatible. •Allocate more resources to the Backflow Prevention Program to ensure wastewater does not flow back into the potable water distribution system and to comply with the State Water Resource Control Board’s backflow program requirements. •Execute contract for engineering design for the seismic retrofit of Park and Dahl Reservoirs. Goals and Objectives Goal 1 Provide safe and clean drinking water for customers. Objectives: •Ensure drinking water meets all regulatory standards. •Maintain and update water infrastructure to ensure reliable service. •Educate customers about backflow prevention as part of the City’s Cross Connection Control Program. •Ensure adequate water supplies are available to meet existing and future water demands. •Complete storage and supply upgrades to water system (e.g. reservoirs, receiving stations, and wells). Goal 2 Increase environmental sustainability of the water supply system. Objective: •Increase water conservation and efficiency participation. •Complete the One Water Plan which will identify the best water supply alternatives. Item #4     Packet Pg. 86     UTILITIES UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET 505 Key Performance Measures PROVIDE SAFE AND CLEAN DRINKING WATER FOR OUR CUSTOMERS Goal Provide safe and clean drinking water for customers. Objective Ensure drinking water meets all regulatory standards. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percent of customer-owned water backflow prevention devices in compliance 89%90%90%90%90% Description Customer-owned and maintained backflow devices are an integral part of the City’s Cross Connection Control Program, which began in early 2010. The devices help to ensure that no contaminants of any kind (e.g. chemicals, debris, reclaimed water) enter the potable water system. Purpose The California Department of Public Health provides regulations for the City and its customers through California Code of Regulations, Title 17. These regulations specify the types of hazards that require backflow devices. Status The City is achieving a compliance rate of up to 90 percent on an annual basis. There are 4,632 active backflow devices in compliance. This number is growing every year as current codes require backflow installation for residences as well as commercial properties. WATER EFFICIENCY Goal Increase environmental sustainability of the water supply system. Objective Increase water conservation and efficiency participation. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Annual savings achieved through water efficiency programs as a percentage of total sales 1.31%1.38%0.70%1.35%1.40% Description The department measures specific savings achieved by the installation of water efficiency improvements through the programs that the City offers through the Santa Clara Valley Water District. The California drought greatly affected the City’s water savings numbers with the largest amount of savings attributed to the non-residential installation of drought tolerant landscapes and water efficient irrigation hardware. Purpose Improving water efficiency for homes and businesses can result in water supply, water operations, and wastewater processing savings. This measure supports the Water Fund’s long-term goal to exceed the Making Conservation a California Way of Life requirements by 5%. Previously, this measure supported the ten-year goal to reduce expected water use by 20 percent by 2020. Status Water savings were high in FY 2023, led by savings from the Landscape Conversion Rebate Program. Item #4     Packet Pg. 87     UTILITIES 506 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET WATER QUALITY Goal Ensure the provision of safe and clean drinking water for customers. Objective Safe testing of drinking water to meet all regulatory standards. FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percentage of samples passed from all sampling stations 100%100%100%100%100% Description The City of Palo Alto (CPA) regularly collects and tests water samples from connection points between the San Francisco Public Utilities Commission/City of Palo Alto (SFPUC/CPA), storage reservoirs, emergency wells, residential areas, and sample station locations within the distribution system to ensure that the water quality meets all California Department of Public Health (CDPH) and U.S. Environmental Protection Agency (EPA) prescribed regulations that limit the amount of contaminants in the drinking water. The City has 18 sampling stations and collects 84-105 samples monthly to test levels of chlorine residual, coliform and pH levels are within regulatory guidelines. All sample results are reported to CDPH on a monthly basis. Purpose Complying with regulations guarantees the City maintains its high standards of water quality and avoids fines. Status Palo Alto drinking water continues to be in complete compliance with all existing county, state, and federal standards for water quality. Workload Measures FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2024 Estimated FY 2025 Adopted Budget Percent of miles of water mains replaced 0.20%0.00%0.7%0.66%0.00% Number of Customer Accounts (Water)20,650 20,533 20,616 20,616 20,616 Percent of surveyed rating the quality of the Drinking Water (Water) as "Good" or "Excellent"* 91%87%89%87%90% Key Performance Measures * The most recent Palo Alto Community Survey was completed in September 2023. The full report can be found on the City website: https://www.cityofpaloalto.org/Departments/City-Manager/Community-Engagement/Palo-Alto-Com- munity-Survey. Item #4     Packet Pg. 88     • CITY OF PALO ALTO FISCAL YEAR 2025 PROPOSED CAPITAL BUDGET 1ZECONOMICDEVELOPMENT & TRANSITION Z COMMUNITY HEALTH, SAFETY, WELLNESS & BELONGING Z CLIMATE CHANGE AND THE NATURAL ENVIRONMENT: PROTECTION & ADAPTATION Z HOUSING FOR SOCIAL AND ECONOMIC BALANCE FISCAL YEAR 2025 Item #4     Packet Pg. 89     CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 403 ELECTRIC FUND Item #4     Packet Pg. 90     ELECTRIC FUND 404 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET Overview The City of Palo Alto offers a full array of utility services to its citizens and businesses. The municipal electric power system began operation in 1900 and continues to provide safe, reliable, and cost effective electric ser- vice to residents and customers of Palo Alto. For the 2025-2029 Capital Improvement Program (CIP), approxi- mately $320.1 million (315.8 million in projects) is projected, with $75.8 million ($75.1 million in projects) budgeted in Fiscal Year 2025. Overall, a total of 19 projects are planned over the 5-year CIP. Electric Fund Expenditures Major projects funded in the 2025-2029 CIP include the Grid Modernization Project ($243.2 million), Substa- tion Improvement projects ($16.1 million), Electric Customer Connections ($13.6 million), Electric System Improvements ($15.9 million), Foothills Rebuild Fire Mitigation ($8.2 million), Underground System Rebuild projects ($1.8 million), Wood Pole Replacement ($3.8 million), and Smart Grid Technology Installation (2.7 mil- lion). The budget for the Electric Fund CIP is categorized into three types of projects: Customer Connections, System Improvements, and Undergrounding Projects. Infrastructure Inventory CLASSIFICATION QUANTITY Miles of 60kV sub transmission lines 19 miles Substations (w/300 MVA total capacity) 9 Traffic Signals (intersections) maintained 101 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 FY 2021 Actuals FY 2022 Actuals FY 2023 Actuals FY 2024 Estimate FY 2025 Adopted FY 2026 Projected FY 2027 Projected FY 2028 Projected FY 2029 Projected Item #4     Packet Pg. 91     ELECTRIC FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 405 Customer Connections As customers’ electric power needs continually change due to equipment additions, new construction, build- ing expansions, building remodels, teardowns and rebuilds, and new building occupancy types, the electric system must evolve to meet these needs. The Electric Customer Connections Project is the only project within this category (Fiscal Year 2025: $2.7 mil- lion; 5-Year CIP: $13.6 million). Projects range from new buildings associated with larger commercial buildings to residential electric panel upgrades. These projects allow for the completion of work required to meet the needs of customers who have applied for new or upgraded electric service, need temporary power for con- struction, or require other services. The Electric Fund pays for a portion of these projects, while remaining costs are supported by reimbursements from customers for project work performed by the City. Electric Engineering received 5 applications for small cell attachments to Electric utility streetlight and wood poles in FY 2023. These applications are still under review. The Electric Utility has about 5,903 wood poles and 6,922 streetlight poles citywide, which are of interest to mobile phone companies. This trend of small cell appli- cations is anticipated to rapidly increase in the next few years, which would increase both the workload and associated revenue in the Electric Customer Connections project. Recent Accomplishments •Completed approximately 441 customer service projects at a cost of approximately $1.2 million in Fiscal Year 2023. 2025-2029 Capital Improvement Program Recurring Projects There is one recurring project in the Electric Customer Connections category in the 2025-2029 CIP (Fiscal Year 2025 $2.7 million; 5-Year CIP: $13.6 million), which is comprised of individual customer projects and bud- geted based on historical customer applications for service. System Improvements Key elements for ensuring reliable electric service to City of Palo Alto residents and customers include replac- ing electric system components before they reach their end of life; ensuring there is adequate capacity for the projected electric load; and installing protective equipment to minimize the impact of system problems. Proj- ects in the System Improvements category allow for a variety of improvements, including the replacement/ upgrade of old cables and equipment and bringing designs up to current standards, installation of protective equipment and switches, conversion of the electric system from 4,160 Volts (4kV) to 12,470 Volts (12kV), and installation of capacitors to improve efficiency. Streetlights maintained 6,922 Overhead Primary Distribution 116 miles Underground Primary Distribution 199 miles Overhead Secondary Distribution 93 miles Underground Secondary Distribution 84 miles Infrastructure Inventory CLASSIFICATION QUANTITY Item #4     Packet Pg. 92     ELECTRIC FUND 406 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET The 2025-2029 CIP includes total funding of $302.2 million in this category, with $72.4 million allocated in Fis- cal Year 2025. Significant projects in this category include Grid Modernization ($43.2 million), Foothills Rebuild ($8.2 million), Substation Physical Security ($3.4 million), Smart Grid Technology Installation ($2.7 million), Electric System Improvements ($3.0 million), Wood Pole Replacements ($0.8 million), Substation Breaker Replacements ($3.7 million), and various projects to substation components. The 2025-2029 CIP includes the Grid Modernization project that will perform the necessary electric system upgrades needed to support the City’s transition to a citywide residential electrification scenario, which has major impacts on the City’s electric transmission and distribution grid. This project will include studies to eval- uate the impacts of projected electrification loads on the City’s distribution and substation transformers, pri- mary/secondary distribution circuits, and lead to proposals for upgrades necessary to mitigate overloads. The estimated cost to construct the necessary electric system upgrades for a 100% electrification scenario is $300 - $350 million, for which the City is exploring alternative funding options such as debt financing. Recent Accomplishments •Installed potential transformers and station power transformers for bus 1 and bus 2 at Colorado Power Station for power reliability. •Replaced and upgraded approximately 21 deteriorated utility wood poles. •Completed Part 1 and 2 of the Electrification study, which evaluated the impacts of electrification loads on Palo Alto’s distribution and substation transformers, primary/secondary distribution circuits, and also includes proposes upgrades needed to mitigate overloads. •Replaced remote terminal units (RTU) for the SCADA system at Hanover Substation. •Installed fiber optic cable between Maybell and Park Boulevard Substations to improve relay and SCADA communications. •Installed Nexus Power Quality meters at Hansen Way and Colorado Substations to provide essential power quality information such as voltage dips and faults at the feeder level. •Installed seven capacitor banks at several substations for power factor monitoring to keep the electrical system in compliance. 2025-2029 Capital Improvement Program Recurring Projects A total of $27.8 million is programmed for System Improvements recurring projects in the 2025-2029 CIP, with $5.3 million allocated in Fiscal Year 2025. Recurring projects in this category include the following: •Communication System Improvements (Fiscal Year 2025: $0.1 million; 5-Year CIP: $0.5 million) •Electric System Improvements (Fiscal Year 2025: $2.9 million; 5-Year CIP: $15.9 million) •Electric Utility Geographic Information System (Fiscal Year 2025 $0.2 million; 5-Year CIP: $1.0 million) •SCADA System Upgrades (Fiscal Year 2025 $0.2 million; 5-Year CIP: $1.3 million) •Substation Facility Improvements (Fiscal Year 2025: $0.4 million; 5-Year CIP: $2.1 million) •Substation Protection Improvements (Fiscal Year 2025: $0.3 million; 5-Year CIP: $1.6 million) •Underground System Rebuild (Fiscal Year 2025: $0.3 million; 5-Year CIP: $1.8 million) •Wood Pole Replacements (Fiscal Year 2025: $0.8 million; 5-Year CIP: $3.8 million) Non-Recurring Projects A total of $274.4 million is programmed in the 2025-2029 CIP for non-recurring System Improvement projects, with $67.1 million allocated in Fiscal Year 2025. Significant projects include : Item #4     Packet Pg. 93     ELECTRIC FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 407 •Grid Modernization for Electrification: (Fiscal Year 2025: $43.2 million; 5-year CIP: $243.2 million) •Substation Physical Security: (Fiscal Year 2025: $3.4 million; 5-year CIP: $4.2 million) •Substation Breaker Replacement: (Fiscal Year 2025: $3.7 million; 5-year CIP: $5.7 million) •Colorado Power Station Equipment Upgrades: (Fiscal Year 2025: $3.7 million; 5-year CIP: $6.8 million) •Smart Grid Technology: (Fiscal Year 2025: $2.7 million) •Foothills Rebuild Fire Mitigation (Fiscal Year 2025: $8.2 million) Undergrounding Projects The City of Palo Alto began a program to underground overhead electric, telephone, and cable TV facilities in 1965 with a project along Oregon Expressway. Since that time, 47 Underground Districts have been formed. The undergrounding of electrical lines is a joint process between the City and AT&T, due to joint ownership of the poles, and Comcast, which leases pole space from AT&T. All three entities share in the cost of the installa- tion of underground conduit and boxes necessary to enclose and protect wires and equipment. The City typi- cally takes the lead in the design, bidding, and construction processes with AT&T and Comcast reimbursing the City for construction and administrative costs. To align with current staffing levels and project priorities, under- ground districts 42 and 43 are incorporated into the Grid Modernization Project (EL-24000) with design to begin in FY 2026. Construction timeline will be updated as more information is available. Electric Fund Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total SOURCE OF FUNDS Other EL-89028 Electric Customer Connections 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 8,500,000 EL-24000 Grid Modernization for Electrification 25,000,000 0 40,000,000 25,000,000 25,000,000 25,000,000 25,000,000 140,000,000 EL-19004 Wood Pole Replacement 150,000 150,000 150,000 150,000 150,000 150,000 150,000 750,000 Other Total $26,850,000 $1,850,000 $41,850,000 $26,850,000 $26,850,000 $26,850,000 $26,850,000 $149,250,000 Total Sources $26,850,000 $1,850,000 $41,850,000 $26,850,000 $26,850,000 $26,850,000 $26,850,000 $149,250,000 USE OF FUNDS Customer Connections EL-89028 Electric Customer Connections 5,865,825 5,244,857 2,700,000 2,700,000 2,700,000 2,700,000 2,781,000 13,581,000 Customer Connections Total $5,865,825 $5,244,857 $2,700,000 $2,700,000 $2,700,000 $2,700,000 $2,781,000 $13,581,000 System Improvements EL-06001 115 kV Electric Intertie 341,335 191,335 250,000 283,300 250,000 0 0 783,300 EL-16002 Capacitor Bank Installation 62,855 12,855 0 0 0 0 0 0 EL-22002 Colorado Distribution Feeder Outlet Replacement 389,424 389,424 0 0 0 0 0 0 EL-19001 Colorado Power Station Equipment Upgrades 1,850,000 116,989 3,733,011 2,000,000 1,100,000 0 0 6,833,011 Item #4     Packet Pg. 94     ELECTRIC FUND 408 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET EL-19002 Colorado Substation Site Improvements 1,165,000 26,706 1,138,294 0 0 0 0 1,138,294 EL-89031 Communications System Improvements 150,000 38,837 100,000 100,000 103,000 107,000 110,210 520,210 EL-98003 Electric System Improvements 4,248,732 4,248,732 2,980,070 4,171,450 3,161,670 2,739,650 2,816,950 15,869,790 EL-02011 Electric Utility Geographic Information System 440,889 440,888 165,000 165,000 170,000 238,000 245,140 983,140 EL-21001 Foothills Rebuild (Fire Mitigation)4,505,495 2,301,643 8,203,852 0 0 0 0 8,203,852 EL-14000 Grid Mod - Coleridge/Cowper/ Tennyson 4/12kV Conversion 1,000,000 0 0 0 0 0 0 0 EL-17001 Grid Mod - East Meadow Circles 4/ 12kV Conversion 1,474,439 150,000 0 0 0 0 0 0 EL-16000 Grid Mod - Rebuild Underground District 26 623,000 120,000 0 0 0 0 0 0 EL-24000 Grid Modernization for Electrification 25,000,000 6,817,360 43,182,640 50,000,000 50,000,000 50,000,000 50,000,000 243,182,640 EL-24001 Hanover Substation Upgrade Project 15,000,000 15,000,000 0 0 0 0 0 0 EL-17005 Inter-substation Line Protection Relay 463,280 775 637,505 175,000 200,000 208,000 214,240 1,434,745 EL-10006 Rebuild Underground District 24 522,000 100,934 139,066 0 0 0 0 139,066 EL-02010 SCADA System Upgrades 282,229 95,098 225,000 185,000 220,000 308,000 317,240 1,255,240 EL-11014 Smart Grid Technology Installation 12,396,094 11,388,345 2,748,734 0 0 0 0 2,748,734 EL-17002 Substation Breaker Replacement 2,477,480 130,146 3,697,334 1,000,000 1,000,000 0 0 5,697,334 EL-89044 Substation Facility Improvements 1,303,605 45,480 400,000 400,000 412,000 430,000 442,900 2,084,900 EL-16003 Substation Physical Security 4,021,348 1,104,759 3,386,379 165,000 300,000 189,150 169,950 4,210,479 EL-89038 Substation Protection Improvements 633,747 341,999 300,000 300,000 309,000 320,000 329,600 1,558,600 EL-16001 Underground System Rebuild 350,000 0 350,000 350,000 350,000 364,000 374,920 1,788,920 EL-19004 Wood Pole Replacement 1,983,301 1,783,568 750,000 750,000 750,000 750,000 750,000 3,750,000 System Improvements Total $80,684,253 $44,845,873 $72,386,885 $60,044,750 $58,325,670 $55,653,800 $55,771,150 $302,182,255 Undergrounding Projects EL-12001 Underground District 46 - Charleston/El Camino Real 1,367 1,367 0 0 0 0 0 0 Undergrounding Projects Total $1,367 $1,367 $0 $0 $0 $0 $0 $0 Total Uses $86,551,445 $50,092,097 $75,086,885 $62,744,750 $61,025,670 $58,353,800 $58,552,150 $315,763,255 Electric Fund (Continued) Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total Item #4     Packet Pg. 95     CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 461 FIBER OPTICS FUND Item #4     Packet Pg. 96     FIBER OPTICS FUND 462 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET Overview The City of Palo Alto offers a full array of utility services to its citizens and businesses. The most recent addi- tion to this list of services provided to City of Palo Alto residents and commercial customers is the licensing of dark fiber service connections on a dark optical fiber backbone network (fiber network), originally designed and built by the City in the mid to late 1990s. Major efforts to rebuild the dark fiber backbone and coordinate this work with the roll out of Fiber to the Premise (FTTP) and electric grid modernization in the Electric fund began in FY 2024. Fiber Optics Fund Expenditures For the 2025-2029 Capital Improvement Program (CIP), expenditures of $42.5 million ($42.1 million in projects) are programmed, with $27.4 million ($27.3 million in projects) allocated in Fiscal Year 2025. Major projects funded in the 2025-2029 CIP include Fiber-to-the-Premise ($13.9 million) and Fiber Network System Rebuild ($25.5 million). The budget for the Fiber Optics CIP can be categorized into two types of projects: Capacity Improvements and Customer Connections. Infrastructure Inventory CLASSIFICATION QUANTITY Route Miles of Backbone Fiber Cable 56.3 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 FY 2021 Actuals FY 2022 Actuals FY 2023 Actuals FY 2024 Estimate FY 2025 Adopted FY 2026 Projected FY 2027 Projected FY 2028 Projected FY 2029 Projected Item #4     Packet Pg. 97     FIBER OPTICS FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 463 blank row (will print white) Capacity Improvements Advances in technology have increased the need for high-bandwidth broadband connectivity. The capacity of the City’s fiber optic network must be expanded to accommodate increases in online services and applica- tions, and the significant growth of data transmission. To ensure secure, reliable, and resilient fiber optic service for internal City operations, Palo Alto residents and commercial customers, network components such as fiber optic cables and splice cabinets need to be upgraded, added, or rebuilt to increase capacity; mitigate damage by animals; and safeguard against hazardous conditions. In Q4 of FY 2024, a pilot was initiated to help inform the City how closely electrification grid modernization projects may be coordinated with fiber projects. The goal is to start construction for the pilot in Q2 of FY 2025. Aligning these projects may help reduce construction costs, minimize community disruption, and streamline project implementation. Recent Accomplishments •Began deployment of pilot to coordinate the Grid Modernization Project and Fiber-to-the-Premises (FTTP) Project, which will upgrade the electric grid and provide homes and businesses with broadband internet in a pilot area. •Completed a 60% design of electric make-ready engineering in alignment with Fiber-to-the-Premises make-ready deployment in the pilot area. 2025-2029 Capital Improvement Program Recurring Projects There is one recurring project in the Capacity Improvements category in the 2025-2029 CIP: •Fiber Optics Network System Improvements (Fiscal Year 2025: $0.6 million; 5-Year CIP: $1.4 million) Non-Recurring Projects There are two non-recurring projects in the Capacity Improvements category in the 2025-2029 CIP: •Fiber Optics Network System Rebuild (Fiscal Year 2025: $12.5 million; 5-Year CIP: $25.5 million) •Fiber-to-the-Premises (Fiscal Year 2025: $13.9 million) Customer Connections The fiber network is dynamic, reflecting changes in customer fiber optic needs from equipment additions, new construction, building expansions, building remodels, teardowns, rebuilds, and new building occupancy types. Projects in this category include work required to meet the needs of customers who have applied for new, replaced, or upgraded dark fiber optic service connections. Labor and material costs incurred are offset by Route Miles of Overhead Backbone Fiber Optic Cable 21.6 Route Miles of Underground Backbone Fiber Optic Cable 34.6 Infrastructure Inventory CLASSIFICATION QUANTITY Item #4     Packet Pg. 98     FIBER OPTICS FUND 464 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET non-recurring charges (NRC) collected from customers to establish the connection, and ongoing dark fiber license fees or monthly recurring charges (MRC). 2025-2029 Capital Improvement Program Recurring Projects There is one recurring project in the Fiber Optics Customer Connections category with amounts in the 2025 - 2029 CIP: •Customer Connections (Fiscal Year 2025: $0.3 million; 5-Year CIP: $1.2 million) Non-Recurring Projects There are no non-recurring projects in this category. Fiber Optics Fund Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total SOURCE OF FUNDS Other FO-10000 Fiber Optics Customer Connections 200,000 200,000 200,000 200,000 200,000 200,000 200,000 1,000,000 Other Total $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $1,000,000 Transfer from Electric Fund FO-16000 Fiber Optics Network - System Rebuild 0 0 0 13,000,000 0 0 0 13,000,000 Transfer from Electric Fund Total $0 $0 $0 $13,000,000 $0 $0 $0 $13,000,000 Total Sources $200,000 $200,000 $200,000 $13,200,000 $200,000 $200,000 $200,000 $14,000,000 USE OF FUNDS Capacity Improvements FO-10001 Fiber Optics Network - System Improvements 617,605 92,989 602,500 203,300 203,900 210,000 210,000 1,429,700 FO-16000 Fiber Optics Network - System Rebuild 16,104,526 2,259,229 12,530,000 13,000,000 0 0 0 25,530,000 FO-24000 Fiber-to-the-Premises (FTTP)12,000,000 6,074,836 13,925,164 0 0 0 0 13,925,164 Capacity Improvements Total $28,722,131 $8,427,054 $27,057,664 $13,203,300 $203,900 $210,000 $210,000 $40,884,864 Customer Connections FO-10000 Fiber Optics Customer Connections 351,600 3,071 253,100 254,100 254,900 263,000 200,000 1,225,100 Customer Connections Total $351,600 $3,071 $253,100 $254,100 $254,900 $263,000 $200,000 $1,225,100 Total Uses $29,073,731 $8,430,125 $27,310,764 $13,457,400 $458,800 $473,000 $410,000 $42,109,964 Item #4     Packet Pg. 99     CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 481 GAS FUND Item #4     Packet Pg. 100     GAS FUND 482 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET Overview The City of Palo Alto offers a full array of utility services to its citizens and businesses. The municipal natural gas distribution system began operation in 1917 and provides safe, reliable, and cost-effective gas service to residents and customers of Palo Alto. For the 2025-2029 Capital Improvement Program (CIP), approximately $45.4 million ($43.6 million in projects) is projected, with $13.6 million ($13.4 million in projects) allocated in Fiscal Year 2025. Overall, a total of nine projects are planned for the 5-year CIP. Gas Fund Expenditures Major projects funded in the 2025-2029 CIP include Gas Main Replacements (cumulative total of $32.7 million), Gas System, Customer Connections ($3.5 million), Gas Distribution System Improvements ($3.2 million), and Gas Meters and Regulators ($2.7 million). The budget for the Gas Fund CIP can be categorized into three sep- arate types of projects: Gas Main Replacements, Customer Connections, and System Improvements. Infrastructure Inventory CLASSIFICATION QUANTITY Total miles of gas main distribution system 210.58 Total miles of gas service extension to residents and businesses 200.83 Number of gas receiving stations 4 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 FY 2021 Actuals FY 2022 Actuals FY 2023 Actuals FY 2024 Estimate FY 2025 Adopted FY 2026 Projected FY 2027 Projected FY 2028 Projected FY 2029 Projected Item #4     Packet Pg. 101     GAS FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 483 Customer Connections As customers continually change their gas needs due to equipment additions, building expansions, building remodels, and new building occupancy types, the gas system must evolve to meet these needs. The Gas Sys- tem Customer Connections project, which is one of the largest recurring projects within the Gas Fund, is accounted for within this category. This project allows for the completion of work required to meet the needs of customers who have applied for new or upgraded gas service. The Gas Fund pays for a portion of this proj- ect, while remaining costs are supported by reimbursements from customers for connection work performed by the City. Recent Accomplishments •In Fiscal Year 2023, the Utilities Gas Division completed approximately 40 customer service projects at a cost of approximately $0.2 million. 2025-2029 Capital Improvement Program Recurring Projects Recurring projects in this category include the following: •Gas System, Customer Connections (Fiscal Year 2025: $0.7 million; 5-Year CIP: $3.5 million) Gas Main Replacements The Gas Main Replacements (GMR) category accounts for the replacement of inadequately-sized and struc- turally deficient gas mains and services that are subject to corrosion or reaching the end of their expected life. The Utilities Department coordinates with the Public Works Department’s street maintenance projects to min- imize impact to the streets that have recently been paved. In the next five years, it is anticipated that approxi- mately 40,000 linear feet of gas mains, or four percent of the entire system, will be replaced. The 2025-2029 CIP includes $32.7 million in funding for projects within this category. Recent Accomplishments •Started construction on the Gas Main Replacement 24B project (GS-14003) to replace 18,500 linear feet of natural gas mains and approximately 190 natural gas service pipeline made of Polyvinyl Chloride (PVC) and Steel Black Wrap Pipe (BWP). •Completed design work on the Gas Main Replacement 25 (GS-15000) project to replace 25,000 linear feet of natural gas mains, including replacement of approximately 320 natural gas service pipelines made of Natural Gas System Miles of Pipeline by Material MATERIAL TYPE MILES OF MAINS IN SYSTEM NUMBER OF SERVICES IN SYSTEM MILES OF SERVICES IN SYSTEM (AVG 61’ SERVICE) Steel 61.46 2,112 24.4 Plastic, PVC 30.60 669 7.72 Plastic, PE 118.48 14,470 167.17 Plastic, ABS 0.03 12 0.14 Plastic, Other 0.01 4 0.05 Other 0.00 64 0.74 TOTAL 210.58 17,331 200.21 Item #4     Packet Pg. 102     GAS FUND 484 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET PVC, BWP, or undersized Polyetheylene (PE) and the reconnection of 225 natural gas service pipelines. In late FY 2024, this project was awarded a $16.5 million Department of Transportation grant for Natural Gas Distribution Infrastructure Safety and Modernization. The grant funding, expense allocation, and project scope will be adjusted as part of the FY 2026 budget process. 2025-2029 Capital Improvement Program Non-Recurring Projects A total of four Gas Main Replacement projects are included in the 2025-2029 CIP (Fiscal Year 2025: $9.7 mil- lion; 5-Year CIP: $32.7 million). System Improvements To ensure reliable gas services for City of Palo Alto residents and customers, gas infrastructure must be replaced upon reaching the end of its expected life. The System Improvements category includes four projects during the 2025-2029 CIP at a total cost of $7.3 million, with $3.0 million allocated in Fiscal Year 2025. During Fiscal Year 2025, staff intends to commence a planning study to evaluate the preferred approach for downsiz- ing the gas system and potentially begin planning of the first project. For FY 2025, staff is recommending funding ($1.0 million) for the Gas Line Repair at Arastradero Creek (GS-25001). Recent Accomplishments •In calendar year 2023, repaired 101 Grade 1, 2, and 3 leaks throughout the City. •Purchased new electrofusion machine for water, gas, and wastewater polyethylene pipe, new DataLogger 7 for hydraulic butt fusions on polyethylene pipe, and new set of small diameter squeezers to squeeze gas pipe. •Replaced leaking valves and gas service lines, throughout the City, to comply with new utility standards. 2025-2029 Capital Improvement Program Recurring Projects There are three recurring projects in the System Improvements category in the 2025-2029 CIP: •Gas Distribution System Improvements (Fiscal Year 2025: $1.2 million; 5-Year CIP: $3.2 million) •Gas Equipment and Tools (Fiscal Year 2025: $0.1 million; 5-Year CIP: $0.5 million) •Gas Meters and Regulators (Fiscal Year 2025: $0.7 million; 5-Year CIP: $2.7 million) Non-Recurring Projects There is one non-recurring project in the System Improvements category in the 2025-2029 CIP: •Gas Line Repair at Arastradero Creek (Fiscal Year 2025: $1.0 million) Please refer to the City of Palo Alto Utilities webpage to confirm project details: https://www.cityof- paloalto.org/Departments/Utilities/Utilities-Services-Safety/Utilities-Projects Item #4     Packet Pg. 103     GAS FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 485 Gas Fund Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total SOURCE OF FUNDS Other GS-80017 Gas System, Customer Connections 500,000 500,000 500,000 500,000 500,000 500,000 500,000 2,500,000 Other Total $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $2,500,000 Transfer from Water Fund GS-14003 Gas Main Replacement - Project 24 171,590 171,590 0 0 0 0 0 0 Transfer from Water Fund Total $171,590 $171,590 $0 $0 $0 $0 $0 $0 Total Sources $671,590 $671,590 $500,000 $500,000 $500,000 $500,000 $500,000 $2,500,000 USE OF FUNDS Customer Connections GS-80017 Gas System, Customer Connections 887,698 520,801 700,000 700,000 700,000 700,000 700,000 3,500,000 Customer Connections Total $887,698 $520,801 $700,000 $700,000 $700,000 $700,000 $700,000 $3,500,000 Main Replacements GS-13001 Gas Main Replacement - Project 23 63,265 63,265 0 0 0 0 0 0 GS-14003 Gas Main Replacement - Project 24 9,776,974 8,795,364 981,610 0 0 0 0 981,610 GS-15000 Gas Main Replacement - Project 25 3,703,849 0 8,743,849 0 0 0 0 8,743,849 GS-16000 Gas Main Replacement - Project 26 0 0 0 4,216,000 6,665,496 0 0 10,881,496 GS-20000 Gas Main Replacement - Project 27 0 0 0 0 0 4,683,622 7,404,806 12,088,428 Main Replacements Total $13,544,088 $8,858,629 $9,725,459 $4,216,000 $6,665,496 $4,683,622 $7,404,806 $32,695,383 System Improvements GS-11002 Gas Distribution System Improvements 1,282,546 615,823 1,166,723 500,000 500,000 500,000 500,000 3,166,723 GS-13002 Gas Equipment and Tools 118,967 118,967 100,000 100,000 100,000 100,000 100,000 500,000 GS-25001 Gas Line Repair at Arastradero Creek 0 0 1,000,000 0 0 0 0 1,000,000 GS-80019 Gas Meters and Regulators 532,482 343,937 688,545 500,000 500,000 500,000 500,000 2,688,545 System Improvements Total $1,933,995 $1,078,727 $2,955,268 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $7,355,268 Total Uses $16,365,781 $10,458,157 $13,380,727 $6,016,000 $8,465,496 $6,483,622 $9,204,806 $43,550,651 Item #4     Packet Pg. 104     CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 555 WASTEWATER COLLECTION FUND Item #4     Packet Pg. 105     WASTEWATER COLLECTION FUND 556 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET Overview The City of Palo Alto offers a full array of utility services to its citizens and businesses. The municipal Wastewa- ter Collection System began operation in 1898 and continues to provide safe, reliable, and cost-effective ser- vices to residents and customers of Palo Alto. For the 2025-2029 Capital Improvement Program (CIP), approximately $26.6 million ($26.3 million in projects) is projected, with $2.6 million allocated in Fiscal Year 2025. Overall, a total of seven projects are programmed for the 5-year CIP. Wastewater Collection Fund Expenditures Major projects funded in the 2025-2029 CIP include Wastewater Collection System Rehabilitation/Augmenta- tion projects (cumulative total of $18.1 million), Sewer Lateral/Manhole Rehabilitation and Replacement ($4.6 million), and Sewer System, Customer Connections ($2.3 million). The budget for the Wastewater Collection Fund CIP is categorized into three types of projects: Customer Connections, System Improvements, and Sys- tem Rehabilitation/Augmentation. In order to balance the Wastewater Collection Fund reserves and keep rate increases low, the wastewater main replacement (Collection System Rehabilitation/Augmentation) projects have been reduced from annually to biennially to keep expenditures in line with expected revenue. Infrastructure Inventory CLASSIFICATION QUANTITY Total miles of sanitary sewer lines 206.64 Total number of sanitary laterals 17,830 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 FY 2021 Actuals FY 2022 Actuals FY 2023 Actuals FY 2024 Estimate FY 2025 Adopted FY 2026 Projected FY 2027 Projected FY 2028 Projected FY 2029 Projected Item #4     Packet Pg. 106     WASTEWATER COLLECTION FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 557 Customer Connections As customers continually change their wastewater needs due to equipment additions, new construction, build- ing expansions, building remodels, teardowns and rebuilds, and new building occupancy types, the Wastewa- ter Collection System must evolve to meet these needs. The Sewer System Customer Connections project is the only project within this category and includes work required to meet the needs of customers who have applied for new sewer laterals or are required to upgrade the laterals. The Wastewater Collection Fund pays for a portion of this project while remaining costs are supported by reimbursements from customers for project work performed by the City. Recent Accomplishments •In Fiscal Year 2023, the Utilities Wastewater Division completed approximately 43 customer service projects at a cost of $0.3 million. 2025-2029 Capital Improvement Program Recurring Projects There is one recurring project in Customer Connections in the 2025-2029 CIP: Sewer System, Customer Con- nections (Fiscal Year 2024: $0.5 million; 5-Year CIP: $2.3 million). This project funds changes to customer con- nections and costs are partially offset by reimbursements from customers requesting the service. System Improvements To ensure reliable wastewater collection services for City of Palo Alto residents and customers, sanitary sewer infrastructure must be replaced upon reaching the end of its expected life. The System Improvements cate- gory includes three projects during the 2025-2029 CIP at a total cost of $5.9 million, with $1.2 million allocated in Fiscal Year 2025. 2025-2029 Capital Improvement Program Recurring Projects A total of $5.9 million is programmed for System Improvement recurring projects in the 2025-2029 CIP, with $1.2 million allocated in Fiscal Year 2025. Recurring projects in this category include the following: •Wastewater System Improvements (Fiscal Year 2025: $0.2 million; 5-Year CIP: $1.0 million) •Wastewater General Equipment and Tools (Fiscal Year: 2025: $0.1 million; 5-Year CIP: $0.3 million) •Sewer Lateral/Manhole Rehabilitation and Replacement (Fiscal Year 2025: $0.9 million; 5-Year CIP: $4.6 million) System Rehabilitation /Augmentation To ensure reliable wastewater services for the City of Palo Alto residents and customers, infrastructure must be replaced upon reaching the end of its useful life. The infrastructure replacement program includes projects that will rehabilitate or replace deteriorated pipelines. In the next five years, it is estimated that approximately 30,200 linear feet of wastewater mains will be replaced. The System Rehabilitation category includes three projects during the 2025-2029 CIP at a total cost of $18.1 million, with $1.0 million allocated in Fiscal Year 2025. Item #4     Packet Pg. 107     WASTEWATER COLLECTION FUND 558 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET Recent Accomplishments •Completed design of Sanitary Sewer Replacement Project 31 (SSR 31) in Fiscal Year 2023 and construction to be completed by the end of August 2024. This project included the replacement and rehabilitation of 10,924 linear feet of sanitary sewer main, sewer laterals, and manholes on El Camino Real between Page Mill Road and Cesano Court, as well as Page Mill Road between Ash Street and Ramos Way. The existing clay pipe mains will be replaced with High Density Polyethylene pipe. 2025-2029 Capital Improvement Program Non-Recurring Projects The majority of funding within this category is allocated towards Wastewater Collection System Rehabilita- tion/Augmentation Projects (cumulative total of $18.1 million). The program is prioritized to replace pipes with structural damage to minimize sewer overflows and to replace pipes with condition defects to reduce inflow of rainfall and groundwater into the collection system. The Utilities Department coordinates with the Public Works Department’s street maintenance projects to minimize impact to the streets that have been recently paved when replacing sewer mains. Linear footage and locations are subject to change, please refer to the City of Palo Alto Utilities webpage to confirm project details: https://www.cityofpaloalto.org/Departments/Utilities/Utilities-Services-Safety/Utili- ties-Projects. Wastewater Collection Fund Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total SOURCE OF FUNDS Other WC-80020 Sewer System, Customer Connections 450,000 450,000 250,000 250,000 250,000 250,000 250,000 1,250,000 Other Total $450,000 $450,000 $250,000 $250,000 $250,000 $250,000 $250,000 $1,250,000 Total Sources $450,000 $450,000 $250,000 $250,000 $250,000 $250,000 $250,000 $1,250,000 USE OF FUNDS Customer Connections WC-80020 Sewer System, Customer Connections 466,142 302,066 450,000 450,000 450,000 450,000 450,000 2,250,000 Customer Connections Total $466,142 $302,066 $450,000 $450,000 $450,000 $450,000 $450,000 $2,250,000 System Improvements WC-99013 Sewer Lateral/Manhole Rehabilitation and Replacement 1,018,829 959,729 875,500 900,000 927,000 955,000 975,000 4,632,500 WC-13002 Wastewater General Equipment and Tools 118,480 54,218 90,000 50,000 50,000 50,000 50,000 290,000 WC-15002 Wastewater System Improvements 804,002 503,366 200,000 200,000 200,000 200,000 200,000 1,000,000 System Improvements Total $1,941,311 $1,517,313 $1,165,500 $1,150,000 $1,177,000 $1,205,000 $1,225,000 $5,922,500 System Rehabilitation Item #4     Packet Pg. 108     WASTEWATER COLLECTION FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 559 WC-17001 Wastewater Collection System Rehabilitation/Augmentation Project 30 622,363 408,898 0 0 0 0 0 0 WC-19001 Wastewater Collection System Rehabilitation/Augmentation Project 31 8,436,225 8,436,225 0 0 0 0 0 0 WC-20000 Wastewater Collection System Rehabilitation/Augmentation Project 32 0 0 1,000,000 2,000,000 0 0 0 3,000,000 WC-21000 Wastewater Collection System Rehabilitation/Augmentation Project 33 0 0 0 0 3,000,000 8,600,000 0 11,600,000 WC-26000 Wastewater Collection System Rehabilitation/Augmentation Project 34 0 0 0 0 0 0 3,512,716 3,512,716 System Rehabilitation Total $9,058,588 $8,845,123 $1,000,000 $2,000,000 $3,000,000 $8,600,000 $3,512,716 $18,112,716 Total Uses $11,466,041 $10,664,502 $2,615,500 $3,600,000 $4,627,000 $10,255,000 $5,187,716 $26,285,216 Wastewater Collection Fund (Continued) Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total Item #4     Packet Pg. 109     CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 627 WATER FUND Item #4     Packet Pg. 110     WATER FUND 628 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET Overview The City of Palo Alto offers a full array of utility services to its citizens and businesses. The municipal Water Distribution System began operation in 1896 and continues to provide safe, reliable, and cost-effective water service to residents and customers of Palo Alto. For the 2025-2029 Capital Improvement Program (CIP), approximately $62.5 million ($62.3 million in projects) is projected, with $12.5 million allocated in Fiscal Year 2025. Overall, a total of 13 projects are planned for the 5-year CIP. Water Fund Expenditures Major projects funded in the 2025-2029 CIP include Water Main Replacements (cumulative total of $24.9 mil- lion), Water Tank Seismic Upgrade and Rehabilitation ($16.9 million), Water System Customer Connections ($5.2 million), Water Meters ($1.9 million) and Water, Gas, and Wastewater Utility GIS Data ($2.8 million). The budget for the Water Fund CIP is categorized into three types of projects: Customer Connections, System Improvements, and Water Main Replacements. spacer (will print white) Infrastructure Inventory CLASSIFICATION QUANTITY Miles of water main 231.17 Number of wells 1 active standby and 7 emergency standby Number of reservoirs 3 steel and 4 reinforced concrete $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 FY 2021 Actuals FY 2022 Actuals FY 2023 Actuals FY 2024 Estimate FY 2025 Adopted FY 2026 Projected FY 2027 Projected FY 2028 Projected FY 2029 Projected Item #4     Packet Pg. 111     WATER FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 629 Customer Connections As customers continually change their water needs due to equipment additions, new construction, building expansions, building remodels, teardowns and rebuilds, and new building occupancy types, the water system must evolve to meet these needs. The Water System Customer Connections is the only project in this category and includes work required to meet the needs of customers who have applied for new or upgraded water ser- vice. The Water Fund pays for a portion of this project, while remaining costs are supported by reimburse- ments from customers for project work performed by the City. Recent Accomplishments •In Fiscal Year 2023 the Water Utility completed approximately 21 water service projects at a cost of $0.4 million. 2025-2029 Capital Improvement Program Recurring Projects The Water System Customer Connections is the only project within this category. Over the course of the 2025- 2029 CIP, $5.2 million is programmed, with $1.0 million allocated in Fiscal Year 2025. System Improvements To ensure reliable water services for the City of Palo Alto’s residents and customers, infrastructure must be replaced at the end of its expected life. The System Improvements category includes seven projects as part of the 2025-2029 CIP at a total cost of $32.2 million, with $7.6 million allocated in Fiscal Year 2025. Recent Accomplishments •Completed two Turnouts (a.k.a. water receiving stations) within Project (WS-07000) in April 2024. The work at California Avenue turnout included a seismic retrofit of the facility, replacement of all piping, electrical and SCADA upgrades, added roof access from street, drainage improvements, and lead paint removal. Page Mill turnout included work to restrain a valve to remove an unsafe condition to operators working in the vault. Water Distribution System Main Materials MATERIAL TIME TOTAL LENGTH PERCENT Asbestos Cement Pipe 127.33 mi 55.1% Concrete Cylinder Pipe 16.79 mi 7.3% Cast Iron Pipe 17.87 mi 7.7% Copper Pipe 0.28 mi 0.12% Ductile Iron Pipe 4.63 mi 2.00% Polyethylene 22.25 mi 9.6% Polyvinyl Chloride 40.87 mi 17.7% Steel 0.73 mi 0.3% Unknown Material 0.40 mi 0.2% Total: 231.17 mi 100% Item #4     Packet Pg. 112     WATER FUND 630 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 2025-2029 Capital Improvement Program Recurring Projects A total of $15.2 million is programmed for System Improvement recurring projects during the 2025-2029 CIP, with $6.6 million allocated in Fiscal Year 2025. Recurring projects in this category include the following: •Water Distribution System Improvements (Fiscal Year 2025: $1.0 million; 5-Year CIP: $2.3 million) •Water General Equipment/Tools (Fiscal Year 2025: $0.05 million; 5-Year CIP: $0.3 million) •Water, Gas, Wastewater Utility GIS Data (Fiscal Year 2025: $0.6 million; 5-Year CIP: $2.9 million) •Water Meters (Fiscal Year 2025: $0.4 million; 5-Year CIP: $1.9 million) •Water Service Hydrant Replacement (Fiscal Year 2025: $0.4 million; 5-Year CIP: $2.2 million) •Water System Supply Improvements (Fiscal Year 2025: $4.1 million; 5-Year CIP: $5.7 million) Non-Recurring Projects There is one non-recurring project in this category: •Water Tank Seismic Water System Upgrades (Fiscal Year 2025: $1.0 million; 5-Year CIP: $16.9 million) Water Main Replacements The Water Main Replacements category accounts for the replacement of inadequately sized and structurally deficient water mains. In the next five years, it is estimated that approximately 3 miles of water mains will be replaced. Work is scheduled based on the replacement schedule of water and wastewater construction every even year and gas construction every odd year to reduce the amount of construction when prices are high and allow staff to draft and prepare plans for construction in subsequent years. A recent study indicated that the City has already replaced many of the most leak-prone and deteriorated pipes through the past water main replacement projects 1 through 26. This study identified 11.6 miles of mains that are deteriorating or are in liquefaction zones, which will be addressed through future replacement proj- ects. Upcoming water main replacement projects will continue to target replacement of deteriorating and seis- mically vulnerable pipes. Recent Accomplishments •Completed construction of Water Main Replacement Project 28 (WS-14001) and replaced approximately 13,700 linear feet of water main pipelines in various locations throughout the City. •Completed design of Water Main Replacement Project 29 (WS-15002) to replace approximately 8,000 linear feet of water main pipelines in Evergreen Park and Ventura neighborhoods, as well as in the California Business District. The construction of this project started in November 2023 and the anticipated completion is in August 2024. •Completed construction of the Water Regulation Station Improvement Project (WS-07000) and completed the seismic rehabilitation of two underground vaults. This concludes the Water Regulations Station Improvement project, which improved a total of 14 underground vaults and two above-ground water regulation facility locations. 2025-2029 Capital Improvement Program Non-Recurring Projects The 2025-2029 CIP includes $24.9 million in funding for the four projects within this category, all water main replacements, with $3.9 million appropriated for Fiscal Year 2025 and a total of $24.9 million programmed for Item #4     Packet Pg. 113     WATER FUND • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 631 the 2025-2029 CIP. The Utilities Department coordinates with the Public Works Department’s street mainte- nance projects to minimize impact to the streets that have been recently paved when replacing water mains. Water Fund Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total SOURCE OF FUNDS Other WS-80013 Water System Customer Connections 1,100,000 1,100,000 1,128,500 1,140,100 1,152,000 1,118,000 1,118,000 5,656,600 Other Total $1,100,000 $1,100,000 $1,128,500 $1,140,100 $1,152,000 $1,118,000 $1,118,000 $5,656,600 Transfer from Gas Fund WS-02014 Water, Gas, Wastewater Utility GIS Data 171,100 171,100 176,300 181,000 186,400 194,000 200,000 937,700 Transfer from Gas Fund Total $171,100 $171,100 $176,300 $181,000 $186,400 $194,000 $200,000 $937,700 Transfer from Wastewater Collection Fund WS-02014 Water, Gas, Wastewater Utility GIS Data 171,100 171,100 176,300 181,000 186,400 194,000 200,000 937,700 Transfer from Wastewater Collection Fund Total $171,100 $171,100 $176,300 $181,000 $186,400 $194,000 $200,000 $937,700 Total Sources $1,442,200 $1,442,200 $1,481,100 $1,502,100 $1,524,800 $1,506,000 $1,518,000 $7,532,000 USE OF FUNDS Customer Connections WS-80013 Water System Customer Connections 1,072,157 1,072,157 960,500 989,000 1,018,700 1,100,000 1,100,000 5,168,200 Customer Connections Total $1,072,157 $1,072,157 $960,500 $989,000 $1,018,700 $1,100,000 $1,100,000 $5,168,200 Main Replacements WS-14001 Water Main Replacement - Project 28 1,792,989 1,792,989 0 0 0 0 0 0 WS-15002 Water Main Replacement - Project 29 9,105,861 6,016,759 3,089,102 0 0 0 0 3,089,102 WS-16001 Water Main Replacement - Project 30 425,000 10,000 840,000 8,959,000 0 0 0 9,799,000 WS-19001 Water Main Replacement - Project 31 0 0 0 447,950 472,140 9,952,696 0 10,872,786 WS-20000 Water Main Replacement - Project 32 0 0 0 0 0 485,035 682,207 1,167,242 Main Replacements Total $11,323,850 $7,819,748 $3,929,102 $9,406,950 $472,140 $10,437,731 $682,207 $24,928,130 System Improvements WS-11003 Water Distribution System Improvements 769,768 99,380 975,388 314,000 323,000 335,000 345,000 2,292,388 WS-13002 Water General Equipment/Tools 50,000 0 100,000 50,000 50,000 50,000 50,000 300,000 WS-80015 Water Meters 2,100,340 1,988,729 367,440 342,270 407,130 404,930 427,630 1,949,400 WS-07001 Water Recycling Facilities 391,000 0 0 0 0 0 0 0 Item #4     Packet Pg. 114     WATER FUND 632 • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET WS-07000 Water Regulation Station Improvements 1,257,059 1,238,540 18,519 0 0 0 0 18,519 WS-80014 Water Service and Hydrant Replacement 400,000 369,421 412,000 424,000 437,000 450,000 464,000 2,187,000 WS-11004 Water System Supply Improvements 3,616,440 197,734 4,133,706 366,000 377,000 390,000 402,000 5,668,706 WS-09000 Water Tank Seismic Upgrade and Rehabilitation 8,019,938 462,167 1,037,832 7,000,000 7,000,000 900,000 1,000,000 16,937,832 WS-02014 Water, Gas, Wastewater Utility GIS Data 1,021,055 971,055 578,800 544,000 560,000 583,000 600,000 2,865,800 System Improvements Total $17,625,600 $5,327,026 $7,623,685 $9,040,270 $9,154,130 $3,112,930 $3,288,630 $32,219,645 Total Uses $30,021,607 $14,218,931 $12,513,287 $19,436,220 $10,644,970 $14,650,661 $5,070,837 $62,315,975 Water Fund (Continued) Project Number Project Title FY 2024 Budget FY 2024 Estimate FY 2025 Adopted FY 2026 FY 2027 FY 2028 FY 2029 5-Year Total Item #4     Packet Pg. 115