HomeMy WebLinkAbout2024-11-06 Utilities Advisory Commission Agenda PacketUTILITIES ADVISORY COMMISSION
Regular Meeting
Wednesday, November 06, 2024
Council Chambers & 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, a n d s t r e a m e d t o M i d p e n M e d i a
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 may be imposed during this section)
2.Utilities Advisory Committee (UAC) Discussion for Director of Utilities Department
Recruitment and Input of Candidate’s Key Characteristics (ACTION 6:45 PM – 7:15 PM)
Staff: Ed Shikada and Kiely Nose
3.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 7:15 PM – 8:00 PM) Guest Speaker: Nicole Sandkulla, Chief
Executive officer/General Manager
4.Discussion with San Francisco Public Utilities Commission’s Assistant General Manager
of the Water Enterprise: Operations, Drought Planning, and Alternative Water Supply
Planning (DISCUSSION 8:00 PM – 8:45 PM) Guest Speaker: Steve Ritchie, Assistant
General Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale Customer
Liaison
5.Discussion of Utilities Annual Report for Fiscal Year 2024 (FY24)
FUTURE TOPICS FOR UPCOMMING MEETING
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 November 06, 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 COMMISSIONRegular MeetingWednesday, November 06, 2024Council Chambers & 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, a n d s t r e a m e d t o M i d p e n M e d i aCenter 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 may be imposed during this section)
2.Utilities Advisory Committee (UAC) Discussion for Director of Utilities Department
Recruitment and Input of Candidate’s Key Characteristics (ACTION 6:45 PM – 7:15 PM)
Staff: Ed Shikada and Kiely Nose
3.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 7:15 PM – 8:00 PM) Guest Speaker: Nicole Sandkulla, Chief
Executive officer/General Manager
4.Discussion with San Francisco Public Utilities Commission’s Assistant General Manager
of the Water Enterprise: Operations, Drought Planning, and Alternative Water Supply
Planning (DISCUSSION 8:00 PM – 8:45 PM) Guest Speaker: Steve Ritchie, Assistant
General Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale Customer
Liaison
5.Discussion of Utilities Annual Report for Fiscal Year 2024 (FY24)
FUTURE TOPICS FOR UPCOMMING MEETING
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 November 06, 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 COMMISSIONRegular MeetingWednesday, November 06, 2024Council Chambers & 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, a n d s t r e a m e d t o M i d p e n M e d i aCenter 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 pmThe 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 may be imposed during this section)2.Utilities Advisory Committee (UAC) Discussion for Director of Utilities DepartmentRecruitment and Input of Candidate’s Key Characteristics (ACTION 6:45 PM – 7:15 PM)Staff: Ed Shikada and Kiely Nose3.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 7:15 PM – 8:00 PM) Guest Speaker: Nicole Sandkulla, ChiefExecutive officer/General Manager4.Discussion with San Francisco Public Utilities Commission’s Assistant General Managerof the Water Enterprise: Operations, Drought Planning, and Alternative Water SupplyPlanning (DISCUSSION 8:00 PM – 8:45 PM) Guest Speaker: Steve Ritchie, AssistantGeneral Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale CustomerLiaison5.Discussion of Utilities Annual Report for Fiscal Year 2024 (FY24)FUTURE TOPICS FOR UPCOMMING MEETING
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. 3 Regular Meeting November 06, 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 COMMISSIONRegular MeetingWednesday, November 06, 2024Council Chambers & 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, a n d s t r e a m e d t o M i d p e n M e d i aCenter 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 pmThe 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 may be imposed during this section)2.Utilities Advisory Committee (UAC) Discussion for Director of Utilities DepartmentRecruitment and Input of Candidate’s Key Characteristics (ACTION 6:45 PM – 7:15 PM)Staff: Ed Shikada and Kiely Nose3.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 7:15 PM – 8:00 PM) Guest Speaker: Nicole Sandkulla, ChiefExecutive officer/General Manager4.Discussion with San Francisco Public Utilities Commission’s Assistant General Managerof the Water Enterprise: Operations, Drought Planning, and Alternative Water SupplyPlanning (DISCUSSION 8:00 PM – 8:45 PM) Guest Speaker: Steve Ritchie, AssistantGeneral Manager/Water Enterprise, and Alison Kastama, BAWSCA/Wholesale CustomerLiaison5.Discussion of Utilities Annual Report for Fiscal Year 2024 (FY24)FUTURE TOPICS FOR UPCOMMING MEETINGCOMMISSIONER 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 November 06, 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: November 6, 2024
Report #: 2410-3645
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.
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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.
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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.
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.
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
NEW BUSINESS
ITEM 2: DISCUSSION: City of Palo Alto’s Electrical Connection to California Transmission Grid
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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.
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Utilities Advisory Commission Minutes Approved on: Page 5 of 10
Commissioner Metz questioned the main barrier to making progress on this.
ACTION: None
ITEM 3: DISCUSSION: Overview of Council-Adopted “One Margin” Energy Reach Code
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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.
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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.
ACTION: None
ITEM 4: DISCUSSION: Implementing Reliability and Resiliency Strategic Plan – Review of Consulting Scope
of Work to Scope Projects to Enhance Resiliency
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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.
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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.
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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 COMMENTS and REPORTS from MEETINGS/EVENTS
ADJOURNMENT
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Item No. 2. 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
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Item No. 2. 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.
(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;
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Item No. 2. Page 3 of 4
(10) To recommend capital construction and improvements of all utility systems, and to
administer such programs when approved;
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
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Item No. 2. Page 4 of 4
Attachment C: FY 2025 Adopted Capital Budget Utilities Excerpts
AUTHOR/TITLE:
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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
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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.
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•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.
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• 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
FI AL YEA 2025
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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.
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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.
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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
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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
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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]
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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.
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UTILITIES
450 UTILITIES • CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED OPERATING BUDGET
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Item #2
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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.
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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.
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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.
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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.
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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
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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%
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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.
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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.
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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 #2
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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 #2
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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.
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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.
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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.
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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
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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.
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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.
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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
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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.
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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.
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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.
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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
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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.
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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.
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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.
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• 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
FI AL YEA 2025
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CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 403
ELECTRIC FUND
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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
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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
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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 :
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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
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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
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CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 461
FIBER OPTICS FUND
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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
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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
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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
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CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 481
GAS FUND
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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
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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
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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
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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
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CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 555
WASTEWATER
COLLECTION FUND
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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
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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 #2
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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
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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
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CITY OF PALO ALTO FISCAL YEAR 2025 ADOPTED CAPITAL BUDGET 627
WATER FUND
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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
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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%
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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 #2
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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
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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 #2
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Item No. 3. 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
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Item No. 3. Page 2 of 2
provide background about regional water use and efficiency trends and SFPUC’s water supply
reliability and water quality investments.
ATTACHMENTS
AUTHOR/TITLE:
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“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 #3
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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
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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
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• 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
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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
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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
)
Total Water Use Drought Year Population
6 Source: BAWSCA Annual Surveys
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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
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60
80
100
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7
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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
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C
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a
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o
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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
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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
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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
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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
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•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
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Item No. 4. 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
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1
Overview, Drought Planning &
Alternative Water Supply Plan
Steven R. Ritchie
October 2024
Operated by the San Francisco Public Utilities Commission
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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.
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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
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4
O’Shaughnessy Dam Upstream Face – March 1991
All outlets except for
Canyon Tunnel are dry
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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.
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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.
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Alternative Water Supply Plan for the Regional Water System
7
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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.
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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
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Plan for Obligations, Build for Demands
10
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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
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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
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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
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Financial Update
14
Total dollars spent for the AWS Program between July 2020 and May 2024: $12.4 million
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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.
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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.
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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)
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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
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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%
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 #4
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Questions?
33
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Staff Report: 2311-2209 – Page 1 of 62
Utilities Advisory Commission
Staff Report
From: Dean Batchelor, Director Utilities
Lead Department: Utilities
Meeting Date: November 6, 2024
Staff Report: 2407-3230
TITLE
Discussion of Utilities Annual Report for Fiscal Year 2024 (FY24)
RECOMMENDATION
Staff recommends that the Utilities Advisory Commission review and comment as appropriate.
EXECUTIVE SUMMARY
This report for the Utilities Advisory Commission is an informational update on water, gas, electric, wastewater collection
and fiber utilities, efficiency programs, legislative/regulatory issues, utility-related capital improvement programs,
operations, reliability impact measures and a utility financial summary. This updated report has been prepared to keep
the Utilities Advisory Commission apprised of the major issues that are facing the water, gas, electric, wastewater
collection and fiber utilities. A separate quarterly report on the financial position is prepared consistent with when the
City closes its books.
Items of special interest in this report are summarized below:
Vacancies and Staffing – Appendix B
•The Utilities Department has 37 vacant positions out of 259 authorized positions or a 14% vacancy rate at the end
of June 2024 compared to 49 vacancies or 19% in June 2023.
•Progress has been made in filling vacant Electric Engineering and Operations positions year over year from 27
vacancies in June 2023 to 20 vacancies in June 2024, a decrease of 7 positions and vacancy percentage rate has
decreased from 30% to 22%. In FY24, Utilities has hired a new Electric Engineering Manager, one Principal
Engineer, and two journey level Linesperson.
•Due to HR staffing constraints, Utilities has designated three HR liaisons from Utilities Administration to assist HR
with some of the recruitments. Since then, the number of vacancies has decreased, and the recruitment timeline
has shortened. Due to the success of the HR-Utilities liaison program, the City has rolled out this program to other
departments to acquire new talent.
Electric Utility:
•Improved hydroelectric generation and revenue from Resource Adequacy sales are resulting in a projected net
supply cost of $70.8M for FY 2024, or a 23% decrease compared to budget. (Section 1.1.1)
•A number of construction projects are in progress or have been recently completed. (Section 1.2)
•A summary chart of quarterly electric outages is included in the report. (Section 1.4)
• FY 2024 electric sales volume were 4.3% higher than forecasted. (Section 1.5.1)
Gas Utility:
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Staff Report: 2311-2209 – Page 2 of 62
•Gas prices have been relatively low and stable.
•Council approved a strategy to collect funds to mitigate the impact of a potential future short-term price spike.
(Section 2.1)
•One gas main replacement project is in progress, and one is in the design stage. (Section 2.2)
•Gas sales in FY 2024 were 8.1% lower than forecasted. (Section 2.5.1)
Water Utility:
•The State Board is completing CEQA review of the Tuolumne River Voluntary Agreement and moving forward with
implementation of the Adopted Phase I Bay Delta Plan.
•Work continues on the One Water Plan. (Section 3.1)
•The turnouts project was completed, and two main replacement projects are in progress. (Section 3.2)
•Water sales at the end of FY 2024 were about 2.0% lower than forecasted and water sales revenues were 4.6%
lower than budgeted. (Section 3.5.1)
Wastewater Utility:
•Funding from Valley Water in an amount of $11.8 million will be applied to Palo Alto’s share of approved RWQCP
projects, directly benefitting Palo Alto customers. (Section 4.1)
•A sewer system rehabilitation replacement project (SSR 31) on El Camino and Page Mill is complete. (Section 4.2)
•Actual wastewater sales revenues have been lower than expected due to low water usage in the commercial sector.
(Section 4.4.1)
Fiber Utility:
•Fiber construction start in the pilot areas is dependent on two critical milestones: the installation of the fiber hut
at Colorado power station and completion of pole-make ready work. Staff is finalizing the fiber hut design, working
with the vendors to provide designs for internal building and fire permit review. The hut is anticipated to be
installed by the end of Q1-2025. Electric pole-make ready work such as pole replacements and hanging messenger
wire is in progress and on track to be completed by Q1-2025. Fiber cable may be strung once electric pole-make
ready work is completed.
•The RFP for the operating support system and business support system (OSS/BSS) software is in progress. Existing
fiber construction and IT networking equipment contracts will be leveraged to build the pilot area. New RFPs will
be issued for the remaining area in Phase 1 next year.
•CPAU has filled the role of Outside Plant Manager to oversee planning, construction, and inspection of the FTTP
infrastructure and new fiber backbones. This position will oversee field technicians and coordinate construction,
installation, and repair activities while adhering to quality and customer service standards.
•In conjunction with the City’s wildfire mitigation plan to underground utility poles in the foothills, CPAU
establishing a dark fiber license agreement to provide customers in the foothills area dark fiber to enhance their
home broadband service.
Customer Programs (Section 6):
•In 2023, the City began offering lower pricing for heat pump water heater (HPWH) replacements through a full
service turnkey program as well as rebates offered for customers who use their own contractor. More than 400
HPWHs have been installed as a result of a wide range of marketing approaches for the program. (Section 6)
•In October 2024, the City launched the emergency water heater replacement pilot program. to help our customers
replace broken gas water heaters with clean and efficient heat pump water heaters within 48 hours.
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Staff Report: 2311-2209 – Page 3 of 62
This pilot program is part of the Advanced HPWH Pilot Program in the S/CAP workplan to help meet the City’s
climate goals. So far the program has served two customers, and is expected to expand rapidly as marketing ramps
up.
•23% of all water customers have utilized the City’s new WaterSmart online water management tool, and
preliminary results from the efficiency study show that sending home water reports results in water-savings of
2.1%.
Communications:
•A digest of major outreach efforts is provided in Section 7, with topics including extreme energy prices and high
utilities bills, new EV chargers at Stanford Health Care, and water supply and conservation updates.
Legislative, Regulatory and Industry Activity:
•Major legislative, regulatory and Industry Activity items are summarized in Section 8.
Utilities at a Glance:
For additional context for the data included in this report, please see:
https://www.cityofpaloalto.org/Departments/Utilities/Customer-Service/Utilities-at-a-Glance
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Staff Report: 2311-2209 – Page 4 of 62
OVERVIEW
Utilities Annual Report
FY 2024
Fiscal Year 2023
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Staff Report: 2311-2209 – Page 5 of 62
1 ELECTRIC UTILITY.....................................................................................................................................................................8
1.1 ELECTRICITY SUPPLY AND TRANSMISSION ...........................................................................................................................................8
1.1.1 Forecasted Supply Costs.......................................................................................................................................................8
1.1.2 Hydroelectric Conditions......................................................................................................................................................9
1.1.3 REC Exchange Program........................................................................................................................................................9
1.1.4 Renewable Energy Procurement..........................................................................................................................................9
1.2 CAPITAL IMPROVEMENT PLAN STATUS ...............................................................................................................................................9
1.3 RATE AND BILL COMPARISONS .......................................................................................................................................................10
1.4 RELIABILITY ................................................................................................................................................................................11
1.5 FINANCIAL HEALTH ......................................................................................................................................................................11
1.5.1 Sales Forecasts vs. Actuals.................................................................................................................................................12
1.5.2 Financial Position...............................................................................................................................................................12
2.1 GAS SUPPLY AND TRANSMISSION ....................................................................................................................................................13
2.1.1 Actual and Forecasted Supply Costs...................................................................................................................................14
2.1.2 Carbon Neutral Gas Program.............................................................................................................................................14
2.1.3 Gas Transmission Line Capacity Valuation.........................................................................................................................15
2.1.4 Gas Prepay Valuation.........................................................................................................................................................15
2.2 CAPITAL IMPROVEMENT PLAN STATUS .............................................................................................................................................16
2.3 RATE AND BILL COMPARISONS .......................................................................................................................................................16
2.4 RELIABILITY ................................................................................................................................................................................16
2.5 FINANCIAL HEALTH ......................................................................................................................................................................17
2.5.1 Sales Forecasts vs. Actuals.................................................................................................................................................17
2.5.2 Financial Position...............................................................................................................................................................18
3.1 WATER SUPPLY AND TRANSMISSION ...............................................................................................................................................19
3.2 CAPITAL IMPROVEMENT PLAN STATUS .............................................................................................................................................21
3.3 RATE AND BILL COMPARISONS .......................................................................................................................................................22
3.4 RELIABILITY ................................................................................................................................................................................22
3.5 FINANCIAL HEALTH ......................................................................................................................................................................22
3.5.1 Sales Forecasts vs. Actuals.................................................................................................................................................22
3.5.2 Financial Position...............................................................................................................................................................23
4.1 WASTEWATER TREATMENT UPDATES AND CAPITAL PLANNING STATUS ..................................................................................................24
4.1.1 Treatment Cost Trends.......................................................................................................................................................24
4.1.2 Regional Water Quality Control Plant Capital Planning Status..........................................................................................25
4.2 COLLECTION SYSTEM CAPITAL IMPROVEMENT PLAN STATUS ................................................................................................................27
4.3 RATE AND BILL COMPARISONS .......................................................................................................................................................27
4.4 FINANCIAL HEALTH ......................................................................................................................................................................27
4.4.1 Sales Forecasts vs. Actuals.................................................................................................................................................27
4.4.2 Financial Position...............................................................................................................................................................28
5.1 FIBER UTILITY STRATEGIC PLANNING ...............................................................................................................................................29
5.2 CAPITAL IMPROVEMENT PLAN STATUS .............................................................................................................................................29
5.3 RELIABILITY ................................................................................................................................................................................30
5.4 FINANCIAL HEALTH ......................................................................................................................................................................30
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Staff Report: 2311-2209 – Page 6 of 62
5.4.1 Fiber Sales..........................................................................................................................................................................30
5.4.2 Financial Position...............................................................................................................................................................30
6 CUSTOMER PROGRAMS (EFFICIENCY AND SUSTAINABILITY)..................................................................................................31
6.1 CUSTOMER PROGRAMS UPDATES ...................................................................................................................................................31
6.1.1 Energy and Water Efficiency..............................................................................................................................................31
6.1.2 Building Electrification .......................................................................................................................................................35
6.2 INNOVATION AND PILOT PROGRAMS ...............................................................................................................................................39
6.2.1 Academic Collaborations....................................................................................................................................................40
6.2.2 Completed Projects ............................................................................................................................................................40
7 COMMUNICATIONS...............................................................................................................................................................41
8 LEGISLATIVE, REGULATORY AND INDUSTRY ACTIVITY............................................................................................................43
8.1 STATE LEGISLATIVE ACTIVITY ..........................................................................................................................................................43
8.2 STATE REGULATORY ACTIVITY ........................................................................................................................................................44
8.2.1 California Air Resources Board (CARB)...............................................................................................................................44
8.2.2 California Energy Commission (CEC) ..................................................................................................................................45
8.2.3 California Public Utilities Commission................................................................................................................................45
8.2.4 State Water Board..............................................................................................................................................................45
9 APPENDIX A: ENERGY RISK MANAGEMENT PROGRAM..........................................................................................................47
9.1 OVERVIEW OF HEDGING PROGRAMS ...............................................................................................................................................47
9.2 OVERVIEW OF ENERGY RISK MANAGEMENT PROGRAM.......................................................................................................................47
9.3 FORWARD DEALS.........................................................................................................................................................................47
9.4 ELECTRIC MARKET EXPOSURE ........................................................................................................................................................48
9.5 TRANSACTION COMPLIANCE ..........................................................................................................................................................48
10 APPENDIX B: STAFFING AND VACANCIES...............................................................................................................................49
11 APPENDIX C: UTILITIES CUSTOMER PROGRAM DESCRIPTIONS...............................................................................................50
11.1 CUSTOMER PROGRAMS OVERVIEW .................................................................................................................................................50
11.1.1 Energy and Water Efficiency..........................................................................................................................................50
11.1.2 Building Electrification...................................................................................................................................................51
11.1.3 Electric Vehicles .............................................................................................................................................................51
11.1.4 Funding Sources for Emissions Reductions ....................................................................................................................53
12 APPENDIX D: WATER UTILITY ANNUAL INFRASTRUCTURE MAINTENANCE AND REPLACEMENT REPORT................................54
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Figures
FIGURE 1: FY 2024 FINANCIAL PLAN SUPPLY COST FORECAST VS. ACTUALS ..............................................................................................................8
FIGURE 2: HYDRO GENERATION: FY 2024 - FY 2026 ACTUALS & PROJECTIONS (GWH).............................................................................................9
FIGURE 3: RESIDENTIAL MONTHLY ELECTRIC BILL COMPARISON (EFFECTIVE 7/1/2024, $/MO.) ................................................................................11
FIGURE 4: ELECTRIC OUTAGE RELIABILITY, FY 2019 TO FY 2022..........................................................................................................................11
FIGURE 5: ELECTRIC OUTAGE RELIABILITY, FY 2023 TO FY 2024..........................................................................................................................11
FIGURE 6: ELECTRIC SALES VOLUME (KWH), UP TO FY 2024-Q4..........................................................................................................................12
FIGURE 7: ELECTRIC SALES REVENUE ($), UP TO FY 2024-Q4 ..............................................................................................................................12
FIGURE 8: PALO ALTO GAS COMMODITY RATES .................................................................................................................................................13
FIGURE 9: GAS SUPPLY COSTS ($), ACTUAL VS BUDGET, UP TO FY2024-Q4...........................................................................................................14
FIGURE 10: OFFSET PORTFOLIO COMPOSITION ...................................................................................................................................................14
FIGURE 11: OFFSET PROJECT DESCRIPTIONS ......................................................................................................................................................15
FIGURE 12: RESIDENTIAL NATURAL GAS BILL COMPARISON ($/MONTH).................................................................................................................16
FIGURE 13: GAS SERVICE INTERRUPTIONS, FY 2023 TO FY 2024..........................................................................................................................17
FIGURE 14: GAS SALES VOLUME (THERMS), UP TO FY2024-Q4...........................................................................................................................17
FIGURE 15: GAS SALES REVENUE ($), UP TO FY 2024-Q4...................................................................................................................................18
FIGURE 16: REGIONAL WATER SYSTEM STORAGE ...............................................................................................................................................20
FIGURE 17: SFPUC WATER DELIVERIES ............................................................................................................................................................21
FIGURE 18: RESIDENTIAL WATER BILL COMPARISON ($/MONTH)..........................................................................................................................22
FIGURE 19: WATER SERVICE INTERRUPTIONS, FY 2023 TO FY 2024.....................................................................................................................22
FIGURE 20: WATER SALES VOLUME (CCF), UP TO FY 2024-Q4...........................................................................................................................23
FIGURE 21: WATER SALES REVENUE ($), UP TO FY 2024-Q4...............................................................................................................................23
FIGURE 22: PALO ALTO’S SHARE OF ESTIMATED WASTEWATER TREATMENT EXPENSES (PROJECTION AND PLANNED CIP)................................................25
FIGURE 23: CURRENT RWQCP CAPITAL WORK IN-PROGRESS (BASED ON MARCH 2024 PARTNERS MEETING)..............................................................26
FIGURE 24: RESIDENTIAL WASTEWATER BILL COMPARISON ($/MONTH).................................................................................................................27
FIGURE 25: WASTEWATER SALES REVENUE ($), UP TO FY 2024-Q4.....................................................................................................................28
FIGURE 26: ENERGY EFFICIENCY PROGRAM ENERGY SAVINGS – COMPLETED FY 2024 IN YELLOW ..............................................................................33
FIGURE 27: ENERGY EFFICIENCY PROGRAM ENERGY SAVINGS – AWAITING ASSESSMENTS OR INSTALL ..........................................................................34
FIGURE 29: STATUS TO DATE OF ALL APPLICATIONS TO THE PROGRAM FOR EMERGING TECHNOLOGIES ..........................................................................40
FIGURE 27: GAS DEALS ..................................................................................................................................................................................47
FIGURE 28: ELECTRIC ENERGY DEALS ................................................................................................................................................................48
FIGURE 29: ELECTRIC RESOURCE ADEQUACY DEALS.............................................................................................................................................48
FIGURE 30: ELECTRIC LOAD RESOURCE BALANCE, FY 2024 - 2026.......................................................................................................................48
FIGURE 31: UTILITIES VACANCIES AND RECRUITMENTS BY DIVISION, AS OF YEAR-END FY 2024..................................................................................49
FIGURE 32: POTENTIAL EMISSIONS REDUCTION FUNDING SOURCES .......................................................................................................................53
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1 Electric Utility
The City’s electric utility serves all residential and non-residential electric demands in Palo Alto at a lower cost than PG&E
in surrounding communities. Its electric supply portfolio is 100% carbon neutral. The City maintains and operates an
electric distribution system but does not operate any transmission lines or any generating capacity on its own. Instead,
the City belongs to Northern California Power Agency (NCPA) which operates its Calaveras hydroelectric generating plant
and provides power scheduling services for its other generating resources. This carbon free power is supplied through
power purchase agreements with various generation operators.
1.1 Electricity Supply and Transmission
Below is an update on electricity supply and transmission services.
1.1.1 Forecasted Supply Costs
With hydroelectric generation conditions improving significantly and market prices coming down over the past year, the
electric net supply cost for FY 2024 is currently projected to be $70.8M, which represents a 23% decrease from the
Adopted Budget level of $91.7M. The cost decrease is primarily driven by the aforementioned improvement in hydro
generation projections, as well as greater than projected revenues from resource adequacy (RA) capacity sales. For FY
2025, electric net supply cost is projected to increase slightly to $77.7M.
Figure 1: FY 2024 Financial Plan Supply Cost Forecast vs. Actuals
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1.1.2 Hydroelectric Conditions
The City receives power from two hydroelectric projects, the Calaveras project and the Western Base Resource contract
for federal hydropower from the Central Valley Project.1 The watershed for Western hydropower is primarily in the
northern end of California, while the watershed for the Calaveras project is in the Central Sierras.
Following the extremely wet water year of 2022 to 2023, reservoir levels across the state began this water year at above
average levels. With the majority of the rainy months behind us, water year 2023 to 2024 was roughly average from a
precipitation and snowpack perspective, which has resulted in reservoir levels being above average for this time of year.
As of August 26, precipitation in central and northern California is about 10-15% below average for that time of year.
Snowpack levels are as expected for this time. As a result of these relatively favorable conditions, hydro generation levels
are projected to be slightly above average this year and next year, with total output of about 113% of the long-term
average level for FY 2024 through FY 2026.
Figure 2: Hydro Generation: FY 2024 - FY 2026 Actuals & Projections (GWh)
Under the Renewable Energy Credits (REC) Exchange Program, which was approved by Council in August 2020 (Staff
Report #115562), staff has contracted to sell 230 GWh worth of in-state RECs (for $16.5M) and purchased 155 GWh worth
of out-of-state RECs (for $0.7M) in FY 2024, resulting in a net revenue of $15.7M. The price spread between in-state versus
out-of-state RECs has widened significantly since the start of 2023, due to the strong demand for in-state products.
As noted in the previous quarterly report, NCPA recently issued a Request for Proposals (RFP) for new renewable energy
and storage projects to meet NCPA members’ procurement needs which yielded a total of 29 proposals – nine for
standalone solar projects, nine for standalone battery energy storage systems (BESS), and 11 for solar-plus-storage
projects. Utilities staff has evaluated all of these proposals (for total value to the City and ability to meet the City’s
procurement needs) and provided feedback to NCPA on which proposals to pursue further, and NCPA staff has recently
reached out to the proposers of the shortlisted projects to discuss commencing contract negotiations.
1.2 Capital Improvement Plan Status
The following capital projects are currently in progress or have been recently completed:
1 The Calaveras project is a hydropower project located in Calaveras County that is maintained and operated by the Northern California Power Agency
on behalf of the City and other project participants. The City is also one of several public entities with contracts with the Western Area Power
Administration for “Base Resource” electricity, which is the hydroelectric power available from the federal government’s Central Valley Project
(operated by the Bureau of Reclamation) after accounting for power used for Central Valley Project operations and power delivered to certain
“preference” customers.
2 Staff Report #11556: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-
archive/2020/id-11556.pdf
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EL-17001 (East Meadow Circles 4/12kV Conversion)
•This project is scheduled to be completed in several phases. Phase 1 is completed. Phase 2 engineering design is
in progress and to be completed by December 2024. Phase 2 construction will be completed June 2025.
•This project is in the design phase and scheduled to be completed in Dec 2024. Construction will be completed by
summer 2025.
•This engineering design for this project is currently in progress and is expected to be completed in Dec 2024.
Construction will be completed by summer 2025.
•This project funds the purchase and replacement of both 60kV and 12kV substation circuit breakers that are
reaching the end of their useful life expectancy. In this past quarter, Council approved the purchase request for
the sixteen 12KV circuit breakers. A purchase order has been issued and the breakers are scheduled to be received
in late August 2024. The installation of the breakers will be completed in FY 2025. The project to purchase the
seven 60KV breakers was approved by City Council on May 20, 2024. The engineering design and installation of
the above breakers will occur in FY 2025.
•This project will rebuild the approximately 11 miles of overhead line in Foothills Park, as necessary to mitigate the
possibility of wildfire due to overhead electric lines. Staff has completed 7,000 feet of substructure work and
design which will eliminate the corresponding 26 poles. Substructure for Phase 1 was completed in Spring 2022
and the substructure for Phase 2 was completed in June 2023. Phase 3 substructure installation is currently in
progress and Phase 4 construction is in progress.
•The project scope includes on-going maintenance/technical support of the existing GIS system and
implementation of the new GIS platform, ESRI.
•Engineering design and construction is in progress. 39 (56%) poles out of the 69 targeted for replacement have
been replaced in the Grid Modernization Pilot area, with the remaining 30 poles slated for replacement before
year end 2024. Additionally, 184 (14%) of the 1,290 homes in the Pilot area are ready for electrification, with
another 334 homes inline to be connected to the upgraded infrastructure by the end of August, and the remaining
772 homes to be connected by year end 2024.
1.3 Rate and Bill Comparisons
3 as two wildfire and energy resource
recovery charges expired in June 2024. Santa Clara typically only changes their rates in January and has not adjusted rates
since their 10% increase in January 2024. Figure 3 shows an updated bill comparison based on these updated rates. Staff
estimates that based on these rates the average monthly bill (a full year’s worth of bills divided by 12) for the median
3 PG&E Decreased Residential Rate https://www.pge.com/assets/pge/docs/account/rate-plans/electric-rate-advisory-0724.pdf
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residential customer is approximately half of what it would be in PG&E territory and about 24% above what it would be
in Silicon Valley Power (City of Santa Clara) territory.
Figure 3: Residential Monthly Electric Bill Comparison (Effective 7/1/2024, $/mo.)
1.4 Reliability
Figure 4: Electric Outage Reliability, FY 2019 to FY 2022
Outage Reliability FY18 FY19 FY20 FY21 FY22
4
5
6
Figure 5: Electric Outage Reliability, FY 2023 to FY 2024
FY 2023
Q1 Q2 Q3 Q4 Annual
4
5
6
FY 2024Outage Reliability Q1 Q2 Q3 Q4 Annual
4
5
6
*Note: Annual data only reflects Q2-Q4 2024 results. Q1 data is currently not available.
1.5 Financial Health
4 System Average Interruption Duration Index (SAIDI) - Measure of the total duration of an interruption for the average customer during a given time
frame. SAIDI = (Sum of Customer Minutes Interrupted) / (Total Customers Served)
5 System Average Interruption Frequency Index (SAIFI) - the average number of times a customer will experience an interruption during a given time
frame. SAIFI = (Total Customers Interrupted) / (Total Customers Served)
6 Customer Average Interruption Duration Index (CAIDI) - the average time to restore service. CAIDI = (Sum of Customer Minutes Interrupted) / (Total
Customers Interrupted)
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1.5.1 Sales Forecasts vs. Actuals
Since the beginning of FY 2024, actual electric sales volumes exceeded forecasts by 4.3%. The increase in sales volume is
attributable to new data center load, in addition to and increasing sales to other medium commercial customers
recovering from the pandemic.
Figure 6: Electric Sales Volume (kWh), up to FY 2024-Q4
Figure 7: Electric Sales Revenue ($), up to FY 2024-Q4
The Electric Operations Reserves ended Q4 FY 2024 at $32.3 million, below the target of $45 million, but above the
minimum guideline of $32 million. At the end of FY 2024, $17 million of funds were transferred into the hydro stabilization
reserve, which will enhance the utility's ability to manage supply cost volatility in the future and prevent drastic rate
changes as experienced after the Covid-19 pandemic and the drought from 2020-2022.
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2 Gas Utility
The City’s gas utility serves all residential and non-residential gas demand in Palo Alto. The City maintains and operates a
system of low-pressure gas lines for delivering gas but does not operate any transmission lines. Costs for the gas utility
are split approximately two thirds for the operation, maintenance, and capital improvement and one third for the cost of
the gas commodity, PG&E gas transmission, compliance with the State’s Cap and Trade Program and the City’s Carbon
Neutral Gas Program.
2.1 Gas Supply and Transmission
After experiencing a notable price spike during winter 2022-2023, natural gas prices have seen a significant decline,
returning to more typical ranges. This shift can be attributed to several factors, including milder temperatures and above
average gas storage levels nationwide. The combination of these factors has put downward pressure on natural gas prices,
and we do not expect an extreme price spike to occur in the near future. The chart below shows Palo Alto’s gas commodity
rates from July 2021 to June 2024.
Figure 8: Palo Alto Gas Commodity Rates
Long Term Gas Hedging Policy
At its August 19, 2024 meeting, Council adopted a new gas hedging policy effective November 2024 as an alternative to
the capped-price premium which was adopted by Council last year and ends at the end of October 2024. This new policy
includes a tony hinchclife
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5.5 cents per therm adder in the gas commodity charge for a period of 3 years, aiming to accumulate about $4.5M in a
reserve to mitigate potential short-term price spikes, such as the one experienced in January 2023. This policy also includes
lowering the maximum gas commodity charge from $4 per therm to $3 per therm after 3 years after the reserve is built
up. Based on Council’s adoption of the new policy, the 5.5 cents per therm adder will be included in the Commodity Charge
beginning November 2024.
2.1.1 Actual and Forecasted Supply Costs
Figure 9: Gas Supply Costs ($), Actual vs Budget, up to FY2024-Q4
2.1.2
2.1.32.1.2 Carbon Neutral Gas Program
7 maintaining the Carbon Neutral Natural Gas Plan to achieve carbon
neutrality for the gas supply portfolio using high-quality carbon offsets with a cost cap of $19 per ton CO2e.
Figure 9: Offset Portfolio Composition
7 Resolution #9930 https://www.cityofpaloalto.org/files/assets/public/v/1/city-clerk/resolutions/resolutions-1909-to-present/2020/reso-9930.pdf
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The following table provides a description of the projects.
Figure 10: Offset Project Descriptions
2.1.42.1.3 Gas Transmission Line Capacity Valuation
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2.1.52.1.4 Gas Prepay Valuation
On September 15, 2014, Council adopted Resolution #94518, authorizing the City’s participation in a natural gas purchase
from Municipal Gas Acquisition and Supply Corporation (MuniGas) for the City’s entire retail gas load for a period of at
least 10 years. The MuniGas transaction includes a mechanism for municipal utilities to utilize their tax-exempt status to
achieve a discount on the market price of gas. The program reduced gas commodity costs by about $805K in FY 2024.
2.2 Capital Improvement Plan Status
The following capital projects are currently in progress:
GS-14003 – GMR 24B (Gas Main Replacement 24B)
•The GMR 24B project construction has started. Gas pipelines on University from Webster to Hwy 101 and
surrounding streets, as well as Geng Rd and Town & Country Village, are scheduled to be replaced. Construction
is completed on University from Chaucer Street to Woodland Avenue, Geng Rd area, and Town & Country Village.
Construction is anticipated to be completed in March 2025. The project was not selected to receive a federal grant
award, although the project was “Highly Recommended” and funding was provided to other “Highly
Recommended” projects. The funding source will be the remaining available budget under GS-14003.
GS-15000 – GMR 25 (Gas Main Replacement 25)
•The GMR 25 design drawings are being finalized and will include the replacement of pipes on Ross Road from
Colorado Avenue to East Meadow Drive and surrounding streets, as well as North and Southampton Drive and
surrounding streets, and Walter Hays Drive and surrounding streets. The project is expected to replace
approximately 26,000 linear feet of gas mains as full federal funding was approved. Construction is anticipated to
begin in FY26 due to federal grant funding requirements.
2.3 Rate and Bill Comparisons
The figure below compares the gas bills for residential customers in Palo Alto and PG&E in FY 2024, at various usage levels.
The PG&E bills are based on their Climate Zone X, which includes Menlo Park, Redwood City, Mountain View, Los Altos
and Santa Clara. For the summer season, Palo Alto's median residential bill is estimated to be about 77% more than that
of PG&E. Conversely, during the winter, Palo Alto's median bill drops to about 21% less than PG&E's. On an annual basis,
during FY 2024, the median residential bill for Palo Alto residents was around 1% less than PG&E customers.
8 Resolution #9451 https://www.cityofpaloalto.org/files/assets/public/v/1/city-clerk/resolutions/reso-9451.pdf
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Figure 11: Residential Natural Gas Bill Comparison ($/month)
Season Usage (Therms)Palo Alto PG&E Zone X*% Difference
10 $ 28.21 $ 7.15 294%
(Median) 17 38.14 21.55 77%
30 66.78 52.13 28% Summer
45 103.97 87.41 19%
30 $ 62.98 $ 71.23 (12%)
(Median) 51 97.26 122.77 (21%)
80 164.94 201.98 (18%)Winter
150 353.40 397.56 (11%)
Annual (Median) 31 $ 62.77 $ 63.73 (1%)
*PG&E’s bill estimates include an $85 annual Climate Credit
2.4 Reliability
The City of Palo Alto tracks all gas service interruptions. A summary chart of these interruptions can be found below. Gas
service interruptions are usually due to repairs of broken or damaged gas services and mains. This kind of damage is often
caused by excavation by outside parties digging in the City.
FY 2023 FY 2024
Gas Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Number of Breaks 9 4 3 7 5 1 5 6
Total Minutes 643 330 240 1560 540 120 570 270
Customers Affected 20 5 7 60 51 1 41 14
2.5 Financial Health
Below is a summary of the financial position for the gas utility.
2.5.1 Sales Forecasts vs. Actuals
Actual gas sales volumes in FY 2024 were about 8.1% lower than forecasted, while actual sales revenues were about 12.9%
lower than budgeted in the FY 2024 Financial Plan. After reaching historic highs in 2023, natural gas benchmark prices
sharply declined this year, nearing historic lows. This decline was driven by increased natural gas production, reduced
consumption, and higher inventory levels. Additionally, the unusually mild winter across much of the U.S., which saw the
warmest winter on record according to NOAA, further contributed to the downward pressure on prices.
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Figure 13: Gas Sales Volume (Therms), up to FY2024-Q4
2.5.2 Financial Position
The FY 2024 ending Operations Reserve balance for the Gas Utility was $4.2 million, below the minimum of $10 million.
Based on the proposed FY 2025 Financial Plan, the Operations Reserve balance dropped below the minimum guideline
level at the end of FY 2024, due to one-time expense items deferred from FY 2023 to FY 2024, such as carbon offset
purchases and Cap and Trade revenue transfer, and due to the effects on reserves of the unprecedented gas price spike
of FY 2023.The FY 2024 ending Operations Reserve balance for the Gas Utility was $4.2 million, which is below the
minimum threshold of $10 million. According to the proposed FY 2025 Financial Plan, the Operations Reserve balance fell
below the minimum guideline at the end of FY 2024 due to one-time expense items deferred from FY 2023 to FY 2024,
such as carbon offset purchases and Cap and Trade revenue transfers, as well as the impact on reserves from the
unprecedented gas price spike in FY 2023. In June 2024, Council approved the FY 2025 Gas Utility Financial Plan9 that
included a 12.5% increase in gas rates to gradually restore reserves to within guideline levels and cover rising costs. Sales
9 Staff Report 2404-2842, Attachment C, Exhibit 1: https://www.cityofpaloalto.org/files/assets/public/v/2/agendas-minutes-reports/reports/city-
manager-reports-cmrs/attachments/2024-rates/gas-financial-plan-fy25.pdf
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revenues in FY 2024 were lower by approximately 12.9% or $7.5 million from last year's projections, attributed to sales
volume reductions of 8.1% lower than last year’s projection as well as lower commodity prices.
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3 Water Utility
The Water Utility serves water to virtually all Palo Alto residential and non-residential customers. All potable water in the
City is from the San Francisco Public Utilities Commission (SFPUC) Hetch Hetchy Water System. This system delivers high
quality water from the Sierra Nevada and uses no pumping to deliver water to the City. Palo Alto uses a small amount of
recycled water for irrigation of the Municipal Golf Course and a few other sites near the Regional Water Quality Control
Plant. The City also maintains a system of reservoirs and wells that enable Palo Alto to serve water during an interruption
of the Hetch Hetchy system. Costs for the Water Utility are split approximately half for the operation, maintenance and
periodic replacement of Palo Alto’s water system and half for the costs of the water purchased.
3.1 Water Supply and Transmission
On November 10, 2022, Governor Newsom’s senior Water-Policy Officials, the San Francisco Public Utilities Commission
(SFPUC), and the Modesto and Turlock Irrigation Districts reached agreement on a Memorandum of Understanding for
proposed Voluntary Agreements to provide greater water flows and increased habitat for the Tuolumne River. The State
Board has initiated its evaluation of the proposed Tuolumne River Voluntary Agreement as an amendment to the adopted
Bay Delta Plan. The State Board is completing CEQA review of the Tuolumne River Voluntary Agreement. The SWRCB’s
schedule indicates development of the draft Supplemental Scientific Basis Report for the Tuolumne River Voluntary
Agreement in Fall 2024 and response to comments on the draft Scientific Basis Report, including peer review comments,
by late 2024.
Concurrently, the State Board is moving forward with implementation of the Adopted Phase I Bay Delta Plan including
preparing the draft Environmental Impact Report and regulation to implement the updates the State Board adopted in
2018. The Court in the State Board Cases on the litigation on the Adopted Phase I Plan ruled in the State Water Board’s
favor on all 116 claims by the 12 petitioners.
In August 2018, Palo Alto’s City Council voted to support the SWRCB’s Bay-Delta Plan to have 40 percent of natural water
in the Central Valley to enter the Delta from February to June and associated Southern Delta salinity objectives; and send
a letter expressing this policy position to the Bay Area Water Supply and Conservation Agency (BAWSCA), California State
Water Resources Control Board, SFPUC, and other stakeholders.
In order to plan for future reductions to existing water supply from climate change and regulatory uncertainties, the SFPUC
undertook the Alternative Water Supply Plan. This plan is a roadmap to guide water supply planning to help address
projected supply shortfalls through 2045. The SFPUC Commission approved the plan in February 2024 and expects to
update the plan in Fiscal Year 2027.
BAWSCA is a special district created by legislative action (AB 2058) in 2002 to protect the water supply and conservation
interests of wholesale water customers, including Palo Alto. BAWSCA’s goal is to ensure a reliable supply of high-quality
water at a fair price. BAWSCA’s Board approved the contracting and funding to initiate the development of BAWSCA’s
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Long-Term Reliable Water Supply Strategy 2050. This planning document will enable BAWSCA to identify the highest
priority water supply management activities to achieve its goal.
Figure 15: Regional Water System Storage
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Figure 16: SFPUC Water Deliveries
Palo Alto staff is continuing to focus on education and outreach and providing resources to eliminate water waste and
achieve efficient water use. Palo Alto continued work on the WaterSmart Customer Portal and Residential Home Water
Report Program and also continued to work with Waterfluence software to target water efficiency for large landscape
customers. Staff continues to promote water conservation rebate programs and resources through online outreach, bill
inserts, and newsletters.
Palo Alto continued its work on the One Water Plan with the goal of Council adoption of a One Water supply plan which
will identify alternatives for meeting the community’s water needs in the future. In June 2022 the City Council approved
a contract for this work with Carollo Engineers, Inc. In September and December 2022, staff conducted stakeholder
engagement meetings with community members and City staff focusing on One Water community needs and priorities
and water supply and conservation options and draft evaluation criteria. The UAC received a status update in February
2023 (Staff Report #1497410) and initial results in June 2024 (Staff Report #2404-296811). Staff plans to return to the UAC
and go to City Council at the beginning of 2025 to provide the final One Water Plan. The One Water Plan will be adaptable
and staff can use the One Water excel-based tool to evaluate and prioritize water supply and conservation portfolios now
and as future uncertainties are resolved.
3.2 Capital Improvement Plan Status
The following capital projects are currently in progress:
WS-07000 – California Avenue and Page Mill Road Turnouts
•The California Avenue and Page Mill Turnouts project was completed in June 2024. The project upgraded the
California Avenue Turnout and added seismic restraints to the pressure reducing valve at Page Mill Road Turnout.
10 Staff Report #14974 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=61414
11 Staff Report #2404-2968 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=61720
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WS-15002 – WMR 29 (Water Main Replacement 29)
•The WMR 29 project will replace approximately 8,000 linear feet of water main on Park Boulevard from Mariposa
Avenue to Lambert Avenue, on College Avenue from Park Boulevard to El Camino Real, and on Birch Street from
College Avenue to Sherman Avenue. The project started in November 2023 and was substantially completed in
August 2024.
•The WMR 30 project is currently in the design phase and will replace approximately 7,000 linear feet of water main
on Towle Way, on Stanford Avenue and Lambert Avenue from El Camino Real to Park Boulevard, and on Christine
Drive. The anticipated project construction start date is in August 2025.
3.3 Rate and Bill Comparisons
The figure below shows the water bills for single-family residential customers compared to what they would be under
surrounding communities’ rate schedules as of August 2024. CPAU is among the highest monthly bills of the group. Palo
Alto’s water bills at 9 CCF per month are 25% higher than the comparison group average.
Figure 17: Residential Water Bill Comparison ($/month)
4 $58.26 $51.78 $64.16 $52.06 $35.60 $45.17
(Winter median) 7 $88.21 $68.13 $86.27 $68.13 $62.30 $69.59
(Annual median) 9 $113.47 $88.72 $112.31 $88.72 $80.10 $85.87
(Summer median) 14 $176.62 $140.21 $180.22 $140.21 $124.60 $135.87
25 $315.55 $263.76 $340.49 $287.41 $222.50 $245.87
* Indicates city received 100% of water supply from Hetch Hetchy
3.4 Reliability
The City of Palo Alto tracks all water service interruptions. A summary chart of these interruptions can be found below.
Water service interruptions are usually due to repairs of broken or damaged water services and mains.
Figure 18: Water Service Interruptions, FY 2023 to FY 2024
Number of Breaks 10 12 6 2 8 9 8 6
Combined Minutes 1007 1050 690 100 1086 880 1230 475
Customers Affected 46 249 63 19 147 96 164 75
3.5 Financial Health
Below is a summary of the financial position for the water utility.
3.5.1 Sales Forecasts vs. Actuals
Actual water sales volumes in FY 2024 were about 2.0% lower than forecasted, and actual water sales revenues were
about 4.6% lower than budgeted in the FY 2024 Financial Plan, which aligns with the anticipated recovery in water usage
following periods of drought.
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Figure 19: Water Sales Volume (CCF), up to FY 2024-Q4
3.5.2 Financial Position
At the end of FY 2023, the Water Operations Reserve was stood at $7.9 million, which is within the guideline range, but
below the target of $10.8 million. In June 2024, Council approved the FY 2025 Water Utility Financial Plan,12 including
which includes a transfer of up to $2.07 million in FY 2024 from the Rate Stabilization Reserve to the Operations Reserve
in FY 2024, as well as a 9.5% rate increase to pay for rising costs and cover offset the decreased sales revenues. Based
upon on the proposed FY 2025 Financial Plan, the Operations Reserve is projected to end FY 2024 at $9.2 million. The FY
2025 Financial Plan forecasts additional water rate increases will be needed over the next five years to maintain the
Operations Reserve within the guideline range during each of the next 5 years. Final FY 2024 reserve balances will not be
available until in Fall 2024.
12 Staff Report 2404-2842, Attachment B, Exhibit 1: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-
manager-reports-cmrs/attachments/2024-rates/water-financial-plan-fy25.pdf
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4 Wastewater Utility
The Wastewater Utility includes the system of sewer pipes that collect and transport wastewater to the Regional Water
Quality Control Plant (RWQCP) operated by the City of Palo Alto under a partnership agreement with several surrounding
communities, as well as Palo Alto’s share of the cost of operating the RWQCP. The RWQCP provides treatment and disposal
of wastewater for Palo Alto. Costs for the Wastewater Utility are split approximately half for the operation, maintenance
and periodic replacement of Palo Alto’s sewer collection system and half for the costs of wastewater treatment at the
RWQCP.
4.1 Wastewater Treatment Updates and Capital Planning Status
The RWQCP is operated by Palo Alto’s Public Works Department and provides wastewater treatment to Palo Alto,
Mountain View, Stanford, Los Altos, East Palo Alto and Los Altos Hills. The Palo Alto Wastewater Collection Utility pays its
share (approximately 32% projected in FY 2025) of the costs for wastewater treatment and disposal. Capital costs for
wastewater treatment are a major driver for cost increases for the Wastewater Treatment Utility and by extension for the
Wastewater Collection Utility. The RWQCP is facing the need for major upgrades in coming years, due to aging equipment
and changing environmental regulations. Rehabilitation and replacement of plant equipment that has been in use for over
40 years is necessary to ensure the City can continue to conduct wastewater treatment operations safely and in
compliance with regulatory requirements for the discharge of treated wastewater 24 hours a day.
4.1.1 Treatment Cost Trends
RWQCP staff project treatment costs paid for by Palo Alto’s Wastewater utility to increase by approximately 5.6% annually
on average from FY 2025 through FY 2034. A key driver of the increases are capital projects, parts, materials and debt. The
treatment capital expenses, including debt service costs, are increasing at an average of about 10% per year from FY 2025
through FY 2034 to keep up with ongoing replacement of aging equipment and complete major upgrades. Larger increases
to capital expenses are expected to begin in FY 2029 in the form of new debt service for major projects to implement the
Plant’s capital program. The figure below shows Palo Alto’s share of each component of estimated treatment costs. Major
upcoming capital projects and estimated years for debt service or other capital cost payments to begin are reflected in
the “Planned Debt Service” bar in the figure below and include:
•Joint Interceptor Sewer Rehabilitation (FY 2024)
•Building Purchase (FY 2025)
•Primary Sedimentation Tank Rehabilitation and Equipment Room Electrical Upgrade (FY 2025)
•Outfall Line Construction (FY 2027)
•Headworks Facility (FY 2029)
•Secondary Treatment Upgrades (FY 2030)
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Figure 21: Palo Alto’s Share of Estimated Wastewater Treatment Expenses (Projection and Planned CIP)
The figure above shows the ongoing annual CIP reinvestment (“Recurring/Minor CIP” and “Existing Debt Service”), one
pay-as-you-go project, the Joint Intercepting Sewer in FY 2025, and treatment operations costs. Operations costs make
up the majority of the treatment costs but are not growing as quickly as the planned debt service. Additional factors not
yet included in the budget estimate could increase costs further such as debt expense for cash flow issues associated with
slow State Revolving Fund loan reimbursement, and property expenses for an acquired property. Factors that are
contributing to cost increases for treatment operations are rising salary and benefits costs, sludge hauling services unit
price increases, commodity increases to operate the facility, and Palo Alto’s cost share increased in FY 23 from 32% to
35% based on updated data. RWQCP is updating the Long Range Facilities Plan which includes cost of service analysis and
capital project cost allocation methodology.
In June, the Council approved a Cost-Sharing Agreement with Santa Clara Valley Water District for Guiding Principle 5
grant program funding for future projects at the RWQCP.13 This grant program awards funds to communities like Palo Alto
where property taxpayers pay State Water Project property taxes but receive on average 85% of their water supply from
sources other than Valley Water managed supplies. Guiding Principle 5 awards grants to each community for certain
purposes including wastewater treatment environmental upgrades. In FY 2025, staff will incorporate the estimated grant
funding of $11.8 million into the treatment costs expected for Palo Alto. This funding will be applied to Palo Alto’s share
of approved RWQCP projects which will directly benefit Palo Alto customers. Four of the upcoming projects are eligible
for Guiding Principal 5 program funding:
•Outfall Line Construction
•Headworks Facility Replacement
•12kV Electrical Power Distribution Loop Improvements
•Joint Intercepting Sewer Rehabilitationn
•
4.1.2 Regional Water Quality Control Plant Capital Planning Status
The Long-Range Facilities Plan, completed in 2012, guides the capital plans for the RWQCP. The RWQCP is currently
soliciting consultant proposals to begin an update to the Long-Range Facilities Plan in 2024. The findings from the Long-
13 Staff Report 2404-2877, June 3, 2024 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82864
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Range Facilities Plan update will direct additional/future CIP. The RWQCP’s current capital work in-progress includes an
estimated $418 – $515 million in projects. The following table summarizes these ongoing projects and provides their status
and costs.
Figure 22: Current RWQCP Capital Work In-Progress (based on March 2024 Partners Meeting)
Project Status Planned Expense
(million $)
Potential Expense
(million $)
Primary Sedimentation Tanks
Rehabilitation and Equipment Room
Electrical Upgrade
12kV Electrical Loop Upgrades
New Outfall Pipeline
Secondary Treatment Upgrades
Advanced Water Purification System
Headworks Facility Replacement
Joint Interceptor Sewer Rehabilitation
Staff Buildings
Long Range Facility Plan Update
Valley Water Purified Drinking Water
Regional Plant at Former Los Altos
Treatment Plant
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Reclamation’s WaterSMART program, which allocates Title XVI Program funding under the Water Infrastructure
Improvements for the Nation (WIIN) Act, and the City of Mountain View will pay for the remainder of the capital cost.
4.2 Collection System Capital Improvement Plan Status
WC-19001 - SSR 31 (Sanitary Sewer Replacement 31)
•The SSR 31 project was completed in May 2024, earlier than anticipated, to allow Caltrans to start their street
improvement/paving project on El Camino Real within Palo Alto. SSR 31 replaced approximately 11,000 linear feet
of wastewater main, sewer laterals, and manholes on El Camino Real and Page Mill Road.
WC-15002 – Sewer Master Plan Study
•The Master Plan Study will evaluate the City’s existing wastewater collection system, flows, and flow patterns to
determine the adequacy of the system’s hydraulic capacity to meet current and anticipated future wastewater flow
demands. The project kicked off in December 2023 and is anticipated to be completed in March 2025.
WC-20000 - SSR 32 (Sanitary Sewer Replacement 32)
•The WMR 32 project is currently in the design phase and will replace sewer mains, laterals, and manholes on
Middlefield Road and Webster Street between Seale and Oregon Ave. The anticipated project construction start
date is in FY’26.
4.3 Rate and Bill Comparisons
Figure 23: Residential Wastewater Bill Comparison ($/month)
Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward
4.4 Financial Health
4.4.1 Sales Forecasts vs. Actuals
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Figure 24: Wastewater Sales Revenue ($), up to FY 2024-Q4
4.4.2 Financial Position
The Wastewater Collection Operations Reserve dropped below guideline range and below zero to negative $0.7 million at
the end of FY 2023. There were several reasons for this including costs higher than forecasted and revenues lower than
forecasted. Additionally, Palo Alto began Sanitary Sewer Replacement project 31 with an increased budget and earlier
start date in FY 2023 instead of FY 2024. Completing this sewer replacement earlier than previously anticipated was
necessary in order to coordinate with Caltrans to limit or avoid digging into newly-paved street on El Camino Real. In June
2024, Council approved the FY 2025 Wastewater Collection Financial Plan14 that included a 15% rate increase in FY 2025
and a short-term loan up to $3 million from the Fiber Optics Fund Reserve for FY 2024 to cover the potential shortfall of
cash in the Wastewater Collection Utility. The Wastewater Collection utility will repay any such loan in FY 2026 (or sooner)
at a rate equal to the City’s portfolio rate plus 0.25%. Staff estimates with the proposed revenues and expense estimates
the Wastewater Collection Utility will be able to cover rising costs, restore the Operations Reserve to within the guideline
range by the end of FY 2026, and accelerate the rate of main replacement by FY 2028. Final FY 2024 reserve balances will
not be available until Fall 2024.
14 Staff Report 2404-2842, Attachment A, Exhibit 1: https://www.cityofpaloalto.org/files/assets/public/v/2/agendas-
minutes-reports/reports/city-manager-reports-cmrs/attachments/2024-rates/wastewater-financial-plan-fy25.pdf
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5 Fiber Utility
The City offers a "Dark" fiber service providing a fiber connection from Palo Alto businesses to the downtown Internet
Exchange. At the exchange, businesses select an internet service provider (ISP) for bandwidth and connection speed.
5.1 Fiber Utility Strategic Planning
Below are highlights and status updates of the Fiber-to-the-Premises (FTTP) Project:
•Staff is reviewing the final design of the fiber hut and backup generator. The fiber hut is a pre-cast concrete building
(11’ x 20’) which will house the networking equipment including electrical system, cable entry, HVAC, lighting, fire
suppression system, alarms, and racks. After the design is finalized, it will take approximately 90-120 days for
construction and delivery.
•Electric pole-make ready work such as pole replacements and hanging messenger wire is in progress and on track to
be completed by Q1-2025. Fiber cable may be strung and lashed after electric pole-make ready work is completed.
•City is evaluating the RFP responses for the operating support system and business support system (OSS/BSS)
software. OSS supports infrastructure and network management by monitoring operations and provisioning service.
BSS supports customer-facing activities such as billing, scheduling, and customer experience.
•CPAU has filled the role of Outside Plant Manager to oversee planning, construction, and inspection of the FTTP
infrastructure and new fiber backbones. This position will oversee field technicians and coordinate design changes,
construction, and installation.
5.2 Capital Improvement Plan Status
The following capital projects are currently in progress:
•FO-16000 – Fiber Optic System Rebuild
o The new fiber backbone will be built in segments in alignment with the phased FTTP. CPAU does not have
resources to construct an entire new fiber backbone along with FTTP. In addition to aligning with FTTP,
CPAU will install new aerial ducts or substructure (conduit and boxes) and fiber backbone cables to
increase capacity in areas that are at or near capacity to meet customer connection requests.
•FO-24000 – Fiber-to-the-Premises
o The pilot area has been identified, which is bounded by Embarcadero Road, Louis Road, Colorado Avenue,
Greer Road and West Bayshore Road, to determine the best approach at integrating FTTP and grid
modernization. Some criteria that will be used to analyze alignment include impact costs, reductions to
community disruptions, internal staffing, and project timelines. Construction of the FTTP pilot is scheduled
to be completed by March 2025.
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5.3 Reliability
There were no unplanned fiber outages or events to report in Q4 of FY 2024.
Below is a summary of the financial position for the fiber utility.
5.4.1 Fiber Sales
Actual dark fiber licensing sales in FY 2024 were $3.8M and $0.2M or 5% above the revenue forecast. Fiber expenses
were $4.7M and $0.3M or 6% below forecast due to vacancy savings. The Fiber Fund added four new positions in FY 2024
to support FTTP. CPAU recently filled the Outside Plant Manager role and is recruiting for the Product Services and
Marketing Manager. The Assistant Director for Fiber and Senior Network Architect positions are currently on hold as staff
and consultants are collectively performing the work that staff in those roles would perform at this time. As the pilot
progresses, the City will reassess whether these positions will need to be filled in FY 2025 or FY 2026.
5.4.2 Financial Position
The ending FY 2024 Fiber Optic Utility Rate Stabilization Reserve is $8 million and an additional $25.5 million of CIP
commitments and reappropriations. In addition, the Fiber Fund loaned the Wastewater Collection Fund $3 million in FY
2024. The Wastewater Collection utility will repay the short-term loan in FY 2026 (or sooner) at a rate equal to the City’s
portfolio rate plus 0.25%.
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6 Customer Programs (Efficiency and Sustainability)
The City’s Utilities Department maintains a number of programs to help customers save money, use energy and water
efficiently, and reduce carbon emissions. These programs are funded through a variety of funding sources, some of which
are summarized below.
6.1 Customer Programs Updates
Below is a summary of the City’s energy and water efficiency programs, as well as programs to encourage building
electrification and adoption of electric vehicles. Summary descriptions of Utilities Customer Program are provided in
Appendix D.
6.1.1 Energy and Water Efficiency
Water Efficiency Workshops
The City, in partnership with the Bay Area Water Supply and Conservation Agency (BAWSCA), offers landscape education
classes throughout the year to introduce residents to the concepts of water-efficient and sustainable landscaping.
Workshop topics include rain gardens, how to water trees, steps to take to convert lawns into drought-tolerant
landscapes, and available rebates. Workshops are held in the Spring and Fall every year. During FY 2024, the City held 7
water efficiency workshops on turf conversion, native plants, and laundry graywater systems.
Please visit the BAWSCA website for a complete list of available classes and events at:
https://bawsca.org/conserve/programs/classes. All past Landscape Class Videos are available online at:
https://bawsca.org/conserve/landscaping/videos/. For updates on future events and workshops, please visit
http://www.cityofpaloalto.org/workshops
Residential Energy Efficiency Programs
The Home Efficiency Genie program continues to provide residents with professional advice and information to improve
their home’s efficiency and comfort and lower their energy and water usage and evaluate the need for electric panel
upgrade to accommodate future electrification projects. In addition to phone and email-based advising service, the Home
Efficiency Genie program also offers both in-home and virtual efficiency assessments of energy equipment and the
building envelope (attic, windows, walls), and evaluation of the electric panel to plan for future electrification upgrades.
During FY 2024, the Genie performed 44 comprehensive in-home assessments, and performed 6 virtual assessments.
CPAU’s Residential Energy Assistance Program (REAP) for income-qualified customers continues to reach our most
vulnerable population offering energy and water efficiency improvements at no cost to the customer. In FY 2024, 30
customers participated in the REAP program. Additionally, 7 REAP customers received a heat pump water heater at no
cost, and 27 additional REAP customers completed a site assessment and are awaiting a HPWH installation.
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Water Conservation Programs for Residents and Businesses
CPAU partners with Valley Water to offer a robust portfolio of water conservation programs and rebates15 for residents
and businesses. On June 25, 2023, the City entered into a new cost-sharing agreement with Valley Water which includes
$1.4M over 7 years to help the City deploy Advanced Water Metering Infrastructure and home water conservation reports.
FY 2024 rebate data is not yet available; the City receives program results once a year from Valley Water in October.
The WaterSmart customer portal, an online water management tool, launched in November 2022. Through this program,
home water reports are sent to around 11,000 single-family customers on a monthly basis. A control group of around
4,000 single-family customers currently do not get the reports. The average open rate of home water report emails is 74%.
As of August 6, 2024, 24% of all single-family customers have accessed the portal which provides information about their
water consumption and personalized water conservation recommendations. Preliminary results from the efficiency study
show that sending home water reports results in water-savings of 2.1%. To date, the City has saved 13.2 MG through the
WaterSmart program. As water supply conditions have improved, CPAU is focusing outreach on water conservation being
a way of life and reducing water waste and continues to encourage participation in rebates and resources.
For the eighth year, the City of Palo Alto is an outreach partner for Bay Area SunShares, a solar and battery storage group-
buy program administered by Business Council on Climate Change (BC3). Palo Alto’s participation as an outreach partner
helps CPAU customers receive information and discounted prices from two prescreened contractors – SolarUnion and
Solar Technologies. As of January 15th 2024, the program is closed for registration. The Bay Area SunShares program will
launch for the next cycle in the Fall of 2024, and CPAU is participating in the evaluation committee for the first time and
will participate as an outreach partner for the ninth time.
As of June 30, 2024, Veolia Sustainable Buildings West Inc., (formally Enovity Inc.) has 22 managed projects for the prior
12-month rolling period (July 2023 – June 2024). During this period, 3 projects were completed. Total savings were
526,055 kWh and 64,000 therms. Additionally, 10 projects are currently in the installation phase. When completed, these
projects are forecasted to realize savings of 887,710 kWh and 36,407 therms. There are nine projects currently in the
assessment stage, expected to identify potential energy conservation measures and generate additional savings. Since
August 2021, the CIEEP program has saved 2,256,891 kWh deriving from completed 14 projects. Staff expects this program
to continue generating energy efficiency and reductions in greenhouse gas emissions.
Key Account Representatives continue to proactively engage customers through email correspondence, phone calls, site
visits, tabling events, and face-to-face meetings. In fiscal year 2024, the Utility Program Services (UPS) Commercial team
hosted two Facility Manager Meetings, with a combination of webinars and in-person meetings. Both events garnered
significant interest with 39 attendees for the November 2023 online webinar and 28 in-person attendees for the April
2024 event. The meetings served as a professional platform to promote CPAU’s commercial energy efficiency programs,
while educating the audiences on a variety of topics, including utility rates, water conservation legislation, AMI meters,
dark fiber services, and electrification case studies. These informational meetings served as a connector to industry leaders
and promotion of the City’s commercial resources, business rebates, and pilot incentive programs.
In addition, the Commercial Team facilitated customer outreach by tabling at sites like VMware, Hewlett Packard, SAP,
and Stanford Research Park. These opportunities provide a platform for staff to engage with sustainability advocates and
showcase the City’s energy efficiency and electrification programs. They also encourage additional interaction with
15 Rebates https://valleywater.dropletportal.com/overview/
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customers, which aids in the development of potential partnerships. Staff continues to employ account support strategies
to enable corporate sustainability initiatives.
Figure 25: Energy Efficiency Program Energy Savings – Completed FY 2024 in Yellow
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Figure 27: Energy Efficiency Program Energy Savings – Awaiting Assessments or Install
Business Energy Advisor
This last year was the most successful since the inception of the Business Energy Advisor (BEA) program for small to
medium sized businesses, which was launched in June 2022. Over the last 12 months, 49 site assessments have been
completed. Staff have tried a variety of new outreach and marketing strategies to drive participation, which have proven
to be successful. From January through May 2024, staff ran a limited-time boosted incentive campaign and increased
efficiency rebates by 20% for customers who complete projects by the end of August 2024. Spurred by this initiative, we
more than doubled the number of completed site assessments (36) in the first half of 2024, compared to the 13
assessments completed in the second half of 2023. The number of installations also increased significantly from years
past. Outlined in Figure 28 are the efficiency projects that have been completed through this program and the total rebate
amounts we have paid customers.
Customer Project Type Rebate Amount kWh Savings
Unitarian Universalist
Church of Palo Alto
LED Lighting $568.78 10,342
MidPen Community Media
Center
LED Lighting $65 2,085
The Sobrato Foundation LED Lighting $43.20 654
Unitarian Universalist
Church of Palo Alto
LED Lighting $481.01 9,714
Unitarian Universalist
Church of Palo Alto
Fridge/Freezer
Replacement
$281 355
Calmar Laser LED Lighting $319.29 15,983
Dinah’s Garden Hotel HVAC Replacement $26,154 26,418
United Methodist Church LED Lighting 249.43 9,028
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Total N/A $28,161.71 74,579
Staff has continued aggressive marketing efforts including bill inserts, direct emails, e-newsletters, call campaigns, flyers,
and in-person outreach. Over the past year, the BEA team has consistently engaged in in-person outreach, visiting
businesses a minimum of one-day per week. Their dedication and effort have resulted in visiting almost 300 businesses
between January through June 2024. Additionally, the team experimented with social media ads through Meta platforms,
which resulted in 1,118 clicks on our program webpage. However, we concluded that most customers learned of our
programs through other channels rather than social media ads. Moving forward, we will continue to prioritize outreach
efforts, especially through in-person visits, webinars, direct email and call campaigns.
In late April, staff hosted its first Commercial Energy Efficiency Webinar attracting 21 participants. The majority of
customers represented small to medium businesses in Palo Alto, but staff also saw attendance from some of our Key
Accounts, including two large property management companies. The presentations, led by industry experts and engineers
from CLEAResult, discussed cutting-edge strategies for making commercial buildings more energy-efficient, particularly
through HVAC and lighting advancements. In July 2024, staff hosted the second commercial webinar focusing on HVAC
efficiency, electrification, and heat pumps. This webinar was well attended with 25 participants. We have received great
feedback from the community regarding commercial webinars and plan to continue offering this service to our businesses
throughout the next year to educate them on energy efficiency and electrification.
6.1.2 Building Electrification
Full-Service Heat Pump Water Heater Program
CPAU launched the Full-Service Heat Pump Water Heater (HPWH) Program in March 2023 that provides an end-to-end
advisory and installation service to homeowners to switch from a gas water heater to a HPWH at a discounted price. The
program also offers an on-bill financing option with 0% interest to lower the upfront cost to customers. The Home
Efficiency Genie team at CLEAResult has been serving as the program concierge, while Synergy is the installer that provides
the project cost estimate and completes the installation. The City has also run traditional and digital marketing campaigns
to drive program leads. As of August 14, 2024, the program has completed the installation of 312 HPWH units ; this
includes 12 units installed through the Residential Energy Assistance Program at no cost to income-qualified households.
80 projects have applied for on-bill financing. With the current pace of new signups, the City currently is on track to do
around 200 installations per year, equivalent to about 20% of the water heaters replaced each year.
On April 15, 2024, City Council approved new pricing for the program after the statewide HPWH incentives through the
TECH Clean program came to an end. This new pricing sets the baseline installation cost for a 65 gallon heat pump water
heater at $2,300. This is the cost for a standard installation, however, most homes will require some additional work like
installing a space saver breaker, penetrating an exterior wall to install electrical conduit, or installing a condensate pump.
The new pricing also includes up to $1000 of subsidy for this type of site preparation work . Several postcard outreach
campaigns to Palo Alto residents in April and July have brought in over 100 new customers signing up and we are confident
that strong participation in the program will continue.
In addition to providing a prescreened contractor to install HPWHs, CPAU also offers the option for customers to choose
their own contractor and apply for a HPWH rebate if the equipment meets the program criteria and has been permitted.
The recent City Council approved new pricing for the Full Service HPWH Program also included an increase of the rebate
from $2,300 to a graduated rebated of 55% of total project cost up to $3,500. During FY 2024, CPAU processed 51 HPWH
rebates. By comparison, the number of HPWH rebates processed in FY 2023 and FY 2022 were 42 and 21.
We are in the process of expanding our HPWH program to include an Emergency Water Heater Replacement Pilot to
support the swift replacement of failed gas water heaters with heat pumps. After completing a formal RFP in Spring 2023,
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we selected and signed a contract with Larratt Bros Plumbing to meet our goal to restore 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. Because most households wait until their water heater fails to replace it, this
pilot program will fill a major gap in our current service. We expect to launch this program in Q1 FY 2025.
th for an electrification expert to support home electrification providing
assistance to customers constructing new homes, and potentially also supporting customers who opt to full electrify their
homes. The expert will also provide assistance to HPWH Program customers that have been disqualified from the program
due to challenging site constraints. In addition to expert guidance, this pilot program will create Home Electrification Plan
templates that can benefit homeowners beyond the initial pilot. We are currently in contract negotiations with a vendor
selected through the RFP process. The pilot is slated to begin before the end of the year.
Business Electrification Technical Assistance Program (BE TAP)
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There are many reasons we are seeing longer-than-usual project timelines to complete commercial electrification
installations. Some challenges include customers receiving unexpectedly high bids, challenging City permitting
requirements, and insufficient rebate incentives to cover higher than expected project costs. Over the next year staff will
work to address these concerns with a limited-time boosted incentive campaign for the replacement of rooftop gas packs
to heat pump HVAC systems. The intent will be to collect detailed information from each participating customer to help
staff better understand the costs and barriers to transitioning from gas equipment. Staff is also looking into potential
financing options for commercial customers.
Electric Vehicle Programs
Palo Alto continues to facilitate the installation of EV charging infrastructure throughout the City to support mass EV
adoption, with equitable access for multifamily and income-qualified residents, as well as workplaces, public parking lots
and retail areas. Of the 11,000 multifamily households in Palo Alto, 4% currently have access to EV charging. The goal is
to reach 10% of these households with EV charger installations by the end of 2024. CPAU's current programs provide
technical assistance, incentives, and customer education and engagement to support electric vehicle adoption and on-site
charging infrastructure, especially for residents of multifamily properties. In addition to the current program offerings as
detailed below, CPAU is beginning to explore efforts to support EV fast charging mobility hubs and curbside charging
stations that would benefit multifamily residents who do not have access to EV charging on-site.
EV Technical Assistance Program (EVTAP)
The Electric Vehicle Technical Assistance Program (EVTAP) was launched in 2019 with the goal of offering technical
assistance to multifamily properties, nonprofits, schools, and small medium businesses to support the installation of
electric vehicle charging stations. Implemented by CLEAResult, EVTAP is a high touch program that includes a site visit and
assessment, technical evaluation, engineering review, site design, hardware selection support, cost estimates, contractor
bid requests, building permit submission, incentive application assistance, and installation project management. Below is
a diagram of the EVTAP process:
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To date, CLEAResult has prepared and presented Charging Evaluation Reports (“CER”) to a total of 101 sites. Fifteen of
these sites have already completed EV charging installations (5 multifamily properties, 2 mixed-use properties, 2
nonprofits, 2 faith-based organizations, and 4 schools) totaling 113 charging ports, and an additional 34 sites remain active
(bidding, vendor selection, permitting, and installation phases). In order to support existing EVTAP customers to complete
their projects, CPAU extended its contract with CLEAResult with the goal of having a total of 30 sites operational by the
end of April 2027. Based on the current project pipeline, CPAU estimates that at least 6 EVTAP sites will complete installed
by the end of 2024, leading to the installation of an additional 104 charging ports.
EV Charger Rebate Program
The EV Charger Rebate Program was launched in 2017 to incentivize the installation of EV chargers at nonprofits, schools,
and multifamily properties. Current incentive amounts are $4,000 per Level 1 charging port and $8,000 per Level 2
charging port to a maximum of $80,000. Since the launch of this program, CPAU has facilitated the installation of 323 new
EV charging ports/connectors across 12 multifamily properties (representing 453 residential units) and 19 non-profits
(including 8 schools and 5 medical facilities). The average cost of each port has been $9,100 and projects have averaged
14 months to complete. An additional 19 projects totaling 408 additional charging ports are currently within the
installation process, including 15 multifamily sites (representing 1,021 residential units). Staff predicts that a minimum of
30 multifamily properties will complete installations within the next three years.
California Electric Vehicle Infrastructure Project (CALeVIP)
The City of Palo Alto participated in the California Energy Commission (CEC) run California Electric Vehicle Infrastructure
Project (CALeVIP), providing $1 million to match the $1 million in funding from the CEC to facilitate and incentivize the
installation of EV chargers at commercial sites. During FY24, a total of $1.63M (out of $2M) was reserved by 10 site owners
through CALeVIP, five of which were completed, resulting in an additional 72 Level 2 EV charging ports in Palo Alto.
Program is scheduled to have all funds-reserved projects completed by April 2025 with program close out and remaining
funds returned in September 2025.
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EV Awareness and Outreach
CPAU’s EV education and outreach efforts are designed to raise awareness about electric modes of transportation.
Utilizing the Support Services Program offered by the Northern California Power Agency (NCPA) and funding from the Low
Carbon Fuel Standard (LCFS) Program, CPAU contracted with Acterra16, EVucation17 and Cool the Earth18 to offer 25 EV
educational events, such as in-person workshop classes, EV expos, webinars, and limited-time EV and eBike Discount
Campaigns. The webinars, workshops and EV expos attracted approximately 2,750 attendees and participants of the EV
Discount Campaigns were able to purchase and save up to $15,500 on a new EV or PHEV and pay below market price on
used EVs through the Pre-owned EV Discount Campaign. .
Qmerit is an online tool for Palo Alto homeowners to receive free online estimates from local, vetted contractors for EV
charger installations. Qmerit also assists with raising customer awareness of embracing grid-friendly options, such as Level
1 and low-voltage Level 2 charging options. Utilizing NCPA’s Support Services Program and LCFS funding, CPAU is
contracted with D+R International to provide reliable installers through the Qmerit19 platform. During FY24, 98 project
estimate requests were submitted, of which 11 projects were completed. CPAU anticipates an increase in program interest
and participation with growing EV adoption and will increase outreach efforts of this program for interested EV owners of
single-family homes.
As of the end of FY24, there are 131 city-owned EV charging ports. Of those, 10 are dedicated to staff and City vehicles,
and 121 are accessible to the public. The chart below displays the increase in utilization (blue line) of the publicly-accessible
EV charging stations by quarter from 2017 through the end of 2023. While there was a dip in utilization of the EV charging
stations during the beginning of the COVID epidemic, utilization has been steadily increasing each quarter since mid-2020.
As more EV chargers have been added to the City (red line), utilization has increased accordingly. Note: one station may
have only one port or may have dual ports.
16 Acterra https://acterra.org/
17 EVucation https://www.evucation.com/
18 Cool the Earth https://cooltheearth.org/
19 Qmerit: https://qmerit.com/utility/cityofpaloalto/
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Many older properties in Palo Alto, especially multifamily buildings, have limited electric capacity to accommodate EV
chargers and building electrification. The Electric Service Connection Fee Incentive helps to defray the cost of utility
distribution system upgrades, triggered by EV applications, by providing $10,000 per EV charging port, up to a maximum
of $100,000. Currently staff are working with the Kingsley Park HOA to complete their EV charger installation, which
involves a transformer upgrade. This will be the first site to receive an upgrade, and it is anticipated that the chargers will
come online in early fall 2024. While this project has taken a few years to complete, it represents a milestone for CPAU
and has created opportunities for Utilities Engineering, Underground Services, and Urban Forestry to partner together to
design a joint schematic for the EV chargers and improve customer service for the applicant. CPAU estimates that an
additional 12-15 sites in the current EV project pipeline will require new transformers and could benefit from the Electric
Service Connection Fee Incentive.
6.2 Innovation and Pilot Programs
6.2.1 Academic Collaborations
6.2.2 Completed Projects
Figure 26: Status to date of all applications to the Program for Emerging Technologies
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TOTAL 109 0 80 0 29
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7 Communications
This section summarizes communications highlights, updates on major campaigns and noteworthy events. Copies of ads
bill inserts, and brochures are available online at www.cityofpaloalto.org/UTLbillinsert
Smart Energy Provider Award: In July 2024, CPAU was awarded the Smart Energy Provider (SEP) designation from the
American Public Power Association (APPA). The SEP designation recognizes public power utilities for demonstrating
leading practices in four key disciplines: smart energy program structure; energy efficiency and distributed energy
programs; environmental and sustainability initiatives; and the customer experience. CPAU will be honored and presented
with the award the at APPA annual Customer Connections conference in October 2024.
System Operational Achievement Recognition (SOAR) Award: In April 2024, CPAU won an award from the American
Public Gas Association (APGA) for excellence in operating our city’s natural gas utility. APGA presented CPAU with the
prestigious System Operational Achievement Recognition (SOAR) award, which was highlighted at the APGA annual
conference in July 2024. Out of approximately 750 APGA members, CPAU was selected for SOAR level Silver by its peers
on the APGA Operations and Safety Committee. The selection was based on demonstrated excellence in the four areas of
system integrity, system improvement, employee safety, and workforce development.
Residential Electric and Water Customer Satisfaction Surveys: In fall 2023, CPAU participated as a member of the
California Municipal Utilities Association (CMUA) in customer satisfaction surveys for residential electric and water utility
customers. CMUA’s contractor, GreatBlue Research, completed a statewide survey of municipal and investor-owned
utilities customers as a method of benchmarking trends of customer satisfaction and program awareness across the state.
CPAU opted to also participate in an “oversample” survey of Palo Alto residents so we can gain greater insight into some
specific areas of interest for Palo Alto residents. CPAU received significantly higher ratings than municipal and investor-
owned utilities in northern California and the State of California for providing consistent and reliable service to customers,
being committed to green, renewable, or carbon free energy, and restoring power in a reasonable amount of time after
an outage. When asked how frequently the City of Palo Alto Utilities meets their expectations, over four-fifths of
customers reported their expectations are met "all" or "most of the time,” ranking higher than other utilities in the State.
Staff presented the key study findings and considerations to the UAC in February 2024 and provided an informational
report to City Council in May 2024.
Customer Notifications for Enhanced Outage Communication: CPAU’s new power Outage Management System now
provides mobile text messaging and phone call notifications to customers about power outages and d status updates. The
online power outage map now also shows neighborhood boundaries of where outages occur. We encourage utility
customers to log into their MyCPAU account20 or contact Customer Service directly to ensure we have current contact
information on file to effectively communicate in the event of an unplanned or planned utilities service disruption. Find
information on outages and notifications at www.cityofpaloalto.org/outages
Advanced Metering Infrastructure (AMI) Project: CPAU continued its deployment of Advanced Metering Infrastructure
(AMI) throughout 2023 and into 2024 and reached the 50 percent installation milestone in July 2024. Full deployment of
AMI for residential customers is estimated to be complete by the end of 2024. Commercial AMI meters are also being
installed in phases for testing assurance and data validation. CPAU is communicating directly with customers who will
20 MyCPAU Account https://mycpau.cityofpaloalto.org/portal/
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receive the meters to share resources and help with any questions or concerns, and developed a video about AMI to
provide an overview of the benefits to customers and the utility. www.cityofpaloalto.org/ami
Program and Event Support: CPAU communications staff provide ongoing annual, monthly, and daily support for outreach
to residential and non-residential customers about programs for regular operations, maintenance, and capital
improvement projects, sustainability, energy and water efficiency, solar, electric vehicles and eBikes, beneficial
electrification, events and workshops, and more. Comprehensive communication campaigns include website, utility bill
inserts, email newsletters, social media, videos print and digital advertisements, community outreach events, media
relations and public correspondence.
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8 Legislative, Regulatory and Industry Activity
8.1 State Legislative Activity
During FY 2024, many relevant bills were introduced or chaptered by the California Legislature. Despite the August 31st
deadline to pass bills being only a few weeks away at the time of this writing, a number of impactful bills are going through
the legislative process and are listed below. CPAU worked with several outside groups, including the Northern California
Power Agency (NCPA) and the California Municipal Utilities Association (CMUA), to actively support or oppose bills.
Chaptered Bills
•AB 541 (Wood) | California Safe Drinking Water Act: wildfire aftermath: benzene testing. Requires public water
systems that have experienced wildfire events to test for benzene and take specified actions if it is detected.
•AB 755 (Papan) | Water: public entity: water usage demand analysis. Requires a city or urban water supplier to
conduct a water usage demand analysis, prior to or as part of a cost-of-service-analysis, that identifies the costs
of water service for the highest users and the average annual volume of water delivered to high water users. This
information must be made publicly available in the cost-of-service analysis.
•AB 1373 (Garcia) | Energy. Requires the California Energy Commission (CEC) to assess a capacity payment on each
local publicly owned utility that failed to meet its minimum planning reserve margin for each month that resources
procured through the Electricity Supply Strategic Reliability Reserve Program (ESSRRP) are used.
•AB 1572 (Friedman) | Potable water: nonfunctional turf. Prohibits the use of potable water to irrigate
nonfunctional turf located on commercial, industrial, and institutional properties. Requires public water systems
to revise their ordinances and inform their customers by January 1, 2027.
•AB 1594 (Garcia) | Medium- and heavy-duty zero-emission vehicles: public agency utilities. Provides to public
agency utilities exemptions to the Advanced Clean Fleets regulation to ensure continued reliable service.
•SB 659 (Ashby) | California Water Supply Solutions Act of 2023. Requires future updates of the California Water
Plan to provide actionable recommendations to increase groundwater recharge in both the near and long term.
•SB 745 (Cortese) | The Drought-Resistance Buildings Act. Requires the Department of General Services to research
and propose updates to the California Building Standards Code to reduce potable water usage and consider water
reuse standards in new buildings.
•SB 867 (Allen) | Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024.
Puts a $10 billion water, wildfire, resilience, biodiversity, agriculture, and clean air bond on the ballot for the
November 5, 2024 election.
Active Bills
•AB 990 (Grayson) | Water quality: waste discharge requirements: infill housing projects. Requires the San
Francisco Bay regional water board to update the California Regional Water Quality Control Board San Francisco
Bay Region Municipal Regional Stormwater National Pollutant Discharge Elimination System (NPDES) in
consultation with the Association of Bay Area Governments.
•AB 1834 (Garcia) | Resource adequacy: Electricity Supply Strategic Reliability Reserve Program. Requires the CEC
to consider mitigating factors when determining capacity payments.
•AB 2037 (Papan) | Weights and measures: electric vehicle chargers. Authorizes county sealers to test and verify
as correct any electric vehicle charger operated by a public agency or local publicly owned electric utility. Exempts
electric vehicle chargers that are tested every six months to specified requirements.
•AB 2427 (McCarty) | Electric vehicle charging stations: permitting: curbside charging. Requires local agencies to
develop a comprehensive permitting checklist for electric vehicle charging stations within the public right-of-way.
The City of Palo Alto would have to comply by January 1, 2029.
•AB 2557 (Ortega) | Local agencies: contracts for special services and temporary help: performance reports.
Requires local agencies to post online contracts for special services and temporary help and also requires the
board of supervisors to give reasonable written notice to the affected employee representative before beginning
the procurement process for the contract.
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• AB 2561 (McKinnor) | Local public employees: vacant positions. Requires public agencies with high vacancy rates
of 15% for more than 180 days to meet with the appropriate union, at the request of the union, to come up with
strategies to fill the vacancies.
•AB 2729 (Patterson) | Development projects: permits and other entitlements: fees and charges. Would limit the
utility service fees authorized to be collected at the time of application for utility service to capacity charge
connections.
•SB 366 (Caballero) | The California Water Plan: long-term supply targets. A CMUA-sponsored bill that revises the
California Water Plan to establish a stakeholder advisory committee to coordinate with various California water
agencies in the development of a long-term water supply plan.
•SB 1210 (Skinner) | New housing construction: electrical, gas, sewer, and water service: service connection
information. Requires a utility to post online the estimate fee schedule and timeframes for completion for typical
service connections for new housing constructions.
•SB 1251 (Stern) | Mosquito abatement inspections. Requires an electrical utility to enter a vector control
agreement with a vector control district, upon their request, to allow access to electrical vaults for mosquito
abatement.
•SB 1255 (Durazo) | Public water systems: needs analysis: water rate assistance program. Requires water suppliers
to provide water rate assistance to eligible users and provide an opportunity to other users to voluntary contribute
to the rate assistance program.
8.2 State Regulatory Activity
Much of the relevant state regulatory activity in FY24 has focused on accelerating emissions reductions or improved
emissions reporting. Both the Cap and Trade and Low Carbon Fuel Standard programs are undergoing major overhauls to
hit mandated emissions reduction targets while the Power Content Label program will be moving to hourly, rather than
annual, reporting. Landmark water conservation regulation was also established in the Conservation as a California Way
of Life framework. CPAU has been actively involved in these proceedings, and others, and has weighed-in when prudent.
8.2.1 California Air Resources Board (CARB)
Cap and Trade
As a result of SB 32 and AB 1279 setting stricter emission-reduction targets of 40% by 2030 and 85% by 2045, both relative
to 1990 emission levels, CARB initiated rulemaking to accelerate emissions reduction under Cap and Trade. One proposed,
and likely, method to achieve Cap and Trade goals is to significantly reduce free allowances given to gas utilities, including
CPAU. Additionally, more stringent RPS requirements and updated electricity consumption forecasts will reduce CPAU’s
electric utility free allowances. Depending on how allowance market prices are impacted by the changes, CPAU’s auction
revenue, the proceeds of which go towards emission-reducing programs like the Heat Pump Water Heater program, may
be impacted. CPAU has worked with the Gas Utility Group (GUG) to provide comments regarding CARB’s proposed
methodology for updating the gas allowance allocation. CPAU will continue to closely follow Cap and Trade developments.
Low Carbon Fuel Standard (LCFS)
Similar to Cap and Trade, CARB is in the midst of rulemaking to update the LCFS to accelerate emissions reduction to meet
state goals. The key updates for CPAU are the proposed reductions in the carbon intensity benchmarks and the addition
of an automatic acceleration mechanism, which will trigger additional benchmark reductions if too many credits are
generated. While these changes will reduce the number of credits generated by CPAU, they should also increase the credit
price, which has dropped significantly in recent years. Thus, the financial impact of these changes is unknown. Proceeds
from the credit sales go towards improving EV infrastructure and is CPAU’s the main source funding for EV programs.
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8.2.2 California Energy Commission (CEC)
SB 1158-related updates to the Power Source Disclosure program
In May 2024, the CEC provided express terms that lay out significant updates to the Power Source Disclosure (PSD)
program. These changes include factoring in transmission and distribution losses by displaying loss-adjusted load and
reporting of hourly data. Reporting hourly data will be an administrative burden but is not required until June 1, 2028.
Regulatory language is not final and CPAU staff will continue to participate in rulemaking.
AB 1373 and Electricity Supply Strategic Reliability Reserve Program (ESSRRP) capacity payments
In May 2024, the CEC held a workshop to discuss how capacity payments would be assessed on publicly owned utilities
(POUs) in the case resources are procured by the ESSRRP to cover electricity shortages in extreme events. POUs would
only have to pay if they are found to be capacity deficient in the month that resources are procured. Several questions
about how payments will be calculated so CPAU staff will follow and engage in all developments.
General Order (GO) 174 update
In July 2024, the CPUC adopted changes to GO 174, which establishes and regulates the Substation Inspection Program.
These changes expanded the scope of the order to include transmission-level substations, which were previously excluded
because they are subject to robust audits from various agencies. CPAU’s transmission-level substations will be subject to
audits and inspections by the CPUC’s Safety Enforcement Division.
Conservation as a California Way of Life
In July 2024, the State Water Board finalized regulations that established permanent water efficiency goals that become
stricter over time, known as Conservation as a California Way of Life. Applying to urban water retailers, the regulation
combines statutory mandates from AB 1668, SB 606, and SB 1157, which require calculation of an urban water retailer’s
water use objective based on residential indoor use, water loss, residential outdoor use, and commercial, industrial, and
institutional (CII) landscapes as well as factoring in population, climate, and agricultural activity. CPAU staff are working to
ensure effective compliance with the regulation.
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Appendices
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9 Appendix A: Energy Risk Management Program
This appendix provides a quarterly update on the City’s Energy Risk Management Program.
9.1 Overview of Hedging Programs
The City’s Utilities Department maintains a hedging program for its Electric and Gas Utilities. In the Gas Utility the program
protects against short-term (intra-month) price spikes caused by weather or major incidents on the Western gas system.
However, the City does not hedge its gas supply more than one month in advance, choosing instead to protect the Gas
Utility’s financial position by passing gas supply costs through to customers via a charge that varies monthly based on gas
market prices. As a result, the Gas Utility’s only market exposure is the amount by which gas demand deviates from
forecasts within the month. This exposure is relatively small and can be managed using Gas Utility Operating Reserves. A
risk assessment is performed each year as part of the Gas Utility financial planning process to ensure adequate reserves
to cover all risks. The most recent Gas Utility Financial Plan was adopted June 21, 2021 (Staff Report #1224021).
The City has entered into long-term contracts for its Electric Utility to ensure that the City has carbon free electricity
supplies equal to 100% of Palo Alto’s annual electric demand. However, the output from these generating sources does
not match Palo Alto’s electric load. In the summer, the City has a surplus of carbon free energy and it has a deficit in the
winter. This exposes the City to market risk, and staff maintains a hedging program to protect against this risk. In addition,
hydroelectric generators make up approximately half the City’s energy supply. During dry years these resources do not
generate as much energy, creating an additional market exposure that must be hedged. Unlike the gas hedging program,
which is operated by City staff, the electric hedging program is operated by the Northern California Power Agency (NCPA),
a joint powers agency the City formed in partnership with several other California publicly owned electric utilities, with
oversight by City staff.
9.2 Overview of Energy Risk Management Program
The hedging programs described above are conducted in accordance with the City’s Energy Risk Management Program,
which includes a set of Program Policies adopted by the City Council, Guidelines adopted by the City’s Utilities Risk
Oversight Coordinating Committee (UROCC), and Procedures approved by the Utilities Director. In addition, for the electric
hedging program, NCPA maintains its own Risk Management Program. The City is able to provide policy level oversight of
this program through its seat on the NCPA Risk Oversight Committee, which is held by the City’s Risk Manager.
Per the Energy Risk Management Policies, the City Council must receive quarterly reports on the City’s forward contract
purchases, market exposure, credit exposure, counterparty credit ratings, transaction compliance, and other relevant
data.
9.3 Forward Deals
Palo Alto executed the following Electric and Gas transaction in Q4 of FY 2024.
Figure 27: Gas Deals
Delivery Month Deal Type Total Energy
(MMBtu)
Price ($/MMBtu)
May’24-Oct’24 Purchase 856,100 Malin Bidweek + Adder
May’24-Oct’24 Purchase 243,484 2.30
21 Staff Report #12240 https://www.cityofpaloalto.org/files/assets/public/v/3/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-
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May’24-Oct’24 Sale 243,484 3.15
Figure 288: Electric Energy Deals
Delivery Month Deal Type Total Energy
(MWh)
Price ($/MWh)
Jun’24-Jul’24 Sale 32,640 37.85
Aug’24 Sale 4,320 67.25
Oct’24 Purchase 7,800 53.00
Nov’24-Jan’25 Purchase 55,225 83.95
Figure 299: Electric Resource Adequacy Deals
Delivery Month Deal Type Avg RA
(MW-mo)
Price ($/kW-mo)
Aug’24 Sale 9.5 14.00
Aug’24 Sale 13 41.00
9.4 Electric Market Exposure
The chart below shows the City’s electric supply market exposure and committed purchases and sales to cover exposed
positions. Additional purchases and sales will be executed for FY 2025 and FY 2026 in the coming months.
Figure 30: Electric Load Resource Balance, FY 2024 - 2026
9.5 Transaction Compliance
There are no transaction exceptions or violations to report.
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10 Appendix B: Staffing and Vacancies
As of year-end FY 2024, the Utilities Department has 37 vacant positions out of 259 authorized positions or a 14% vacancy
rate. Below is a breakdown of the vacancies by division. Utilities has designated three HR liaisons from Utilities
Administration to assist HR with some of the recruitments. With the three HR liaisons, CPAU will be able to post positions,
schedule interviews, and make job offers at a faster pace after they are fully trained. CPAU have been attending
engineering career fairs at Sacramento State University, Cal Poly San Luis Obispo, and San Jose State University. Since the
inception of the HR liaison program, Utilities has made steady progress in reducing the number of vacancies from 49 in
Q4 2023 or a 24% decrease.
Figure 31: Utilities Vacancies and Recruitments by Division, as of Year-End FY 2024
A
D
A
F
V
F
A
R V
A 2 1 1 5
C 1 2 3 0 1
F 2 6 6 3 1
R 2 0 0 0
E 6 1 1 2
E 2 4 4 1
W 7 5 5 7
W 2 2 2 8
T 2 3 2 1
1
2
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11 Appendix C: Utilities Customer Program Descriptions
The City’s Utilities Department maintains a number of programs to help customers save money, use energy and water
efficiently, and reduce carbon emissions. These programs are funded through a variety of funding sources, some of which
are summarized below.
11.1 Customer Programs Overview
Below is a summary of the City’s energy and water efficiency programs, as well as programs to encourage building
electrification and adoption of electric vehicles.
11.1.1 Energy and Water Efficiency
Residential Energy Efficiency and Water Conservation Programs
The Home Efficiency Genie program provides residents with professional advice and information to improve their home’s
efficiency and comfort, lower their energy and water usage and get guidance on home electrification options. Even with
the Genie returning to in-home comprehensive and diagnostic assessments in the fall of 2021, the virtual option developed
during COVID continues to be a service that residents are interested in. Both the in-home and virtual versions continue to
help residents evaluate their homes for home electrification upgrades based on their existing electric panel and provide
actionable next steps.
CPAU’s Residential Energy Assistance Program (REAP) for income-qualified customers continues to reach our most
vulnerable population offering energy and water efficiency improvements at no cost to the customer. Residents who are
newly qualified for CPAU’s Rate Assistance Program (RAP) are notified each month of their eligibility for free upgrades
including building envelope improvements, lighting upgrades, replacement of gas water heater with heat pump water
heater, replacement of gas furnace with air source heat pumps, and high-efficiency toilets. These upgrades are installed
by CPAU’s vendor Synergy.
For our multifamily (MF) property owners, CPAU continues to offer the Multi Family Plus (MF+) program which offers free
energy efficiency upgrades installed by our vendor Synergy. These upgrades include lighting upgrades to LEDs and whole
building envelope upgrades. Recently a new measure for high-efficiency toilets (HETs) was added.
CPAU partners with Valley Water to offer a robust portfolio of water conservation programs and rebates22 ranging from
landscape conversion and irrigation controller to rainwater capture projects for residents and businesses.
The WaterSmart customer portal, an online water management tool, provides customers with information about water
consumption and personalized water conservation recommendations. Through WaterSmart home water reports are sent
to single-family customers on a monthly basis.
Commercial Energy Efficiency and Water Conservation Programs
Commercial Energy Efficiency and Water Conservation Programs
The Commercial and Industrial Energy Efficiency Program (CIEEP) offers free energy audits to businesses. These audits help
businesses identify areas where they can save energy, such as improving lighting, controls, occupancy sensors,
refrigeration systems, HVAC systems, and other equipment. Furthermore, CIEEP’s can help provide technical assistance to
22 Rebates https://www.cityofpaloalto.org/waystosave
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businesses to help them implement energy efficiency measures. This can include suggestions that help customers develop
energy efficiency plans, provide information on energy-efficient technologies, and connecting businesses with contractors.
11.1.2 Building Electrification
Full-Service Heat Pump Water Heater Program
Business Electrification Technical Assistance Program (BE TAP)
11.1.3 Electric Vehicles
Summary of All EV Programs for Multi-family (MF) Properties and Workplaces
•Mission: The EV team’s mission is to facilitate the installation of EV chargers to support increased EV adoption with a
priority on MF properties. To reach 80 by 30 S/CAP goals, it is imperative that there is enough charging infrastructure
for residents, commuters and visitors. For residents, the priority is to close the MF EV access gap, as only 15% of EVs
in Palo Alto are registered at MF buildings, while MF makes up 42% of households.
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•Goal of EV Programs: Expand EV charging accessibility to 10% of MF households (about 1,100 homes) by 2025.
•Why: Based on data from the 2022 American Community Survey, CPAU estimates that 35% of Palo Alto’s 28,000
households earn below 400% FPL and therefore require the support of equity programs to help transition off of fossil
fuel vehicles. There are approximately 28,000 households in Palo Alto, approximately 11,000 of which are in
multifamily properties. Most middle-income and low to moderate-income residents in Palo Alto live in MF housing.
EVs provide significant lifetime household savings, and yet those who most need those savings have the hardest time
gaining EV charging access due to the challenges associated with installing chargers at MF properties. Private industry
is not adequately serving this market, whereas the City is well-positioned to support this hard to reach and slower to
move customer segment, making meaningful use of available City funding sources for EV promotion.
•Target Customer Segment: MF property owners, Homeowners Associations (HOAs), nonprofits, owners of small
medium businesses and buildings, as well large C&I customers.
•What CPAU can provide:
o Trusted, neutral advisory services (rather than vendor sales services) with a direct connection to internal City
staff to facilitate problems.
o Technical assistance (site evaluation, including electrical capacity, business case development, project design,
obtaining bids, preparing permit packages)
o Incentives (both for charging equipment and distribution upgrades)
•Strategy: Facilitate development of Level 1 and Level 2 chargers, as well as “make-ready” EV infrastructure, in multi-
family buildings. Size electrical infrastructure to enable the building owner to add more EV charging ports in the future.
Encourage sites to consider either the installation of Level 1 or low-power Level 2 chargers when appropriate as a grid-
friendly strategy to increase EV charging options for as many EVs as possible, reducing the need for costly electric
service upgrades as well as preserving electric service capacity for future building electrification efforts.
EV Technical Assistance Program (EVTAP)
•Goal: Facilitate the installation of 180-360 ports @ 60-90 sites (By 2027)
•Offer technical assistance for the installation of EV chargers at Non-Profit and MF properties, involving a series of site
visits, technical evaluations, engineering reviews, and design proposals, culminating in the landlord receiving
contractor bids, followed by assistance submitting a building permit, applying for incentives and project management
of the installation. Completed projects have taken up to 2 years to reach completion.
EV Charger Rebate Program
•Goal: Incentivize the installation of EV chargers at Non-Profits and Multifamily properties. CPAU currently offers up to
$8,000 per Level 2 port / $4,000 per Level 1 port for up to 10 ports ($80,000 maximum incentive).
California Electric Vehicle Infrastructure Project (CALeVIP)
•Goal: Facilitate and incentivize the installation of EV chargers at commercial sites.
EV Awareness and Outreach
•Goal: Raise awareness, answer questions and encourage residents to consider transitioning to electrified modes of
transportation, including electric cars, e-Bikes and other modes of clean transportation.
Qmerit
Goal: Assist residential customers in receiving receive free online estimates from local, vetted contractors for EV
charger installations.
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City-Owned EV Chargers
•Goal: Install EV Charging Infrastructure for the public as well as City fleet vehicles.
Electrical Service Connection Fee Incentive Program
•Goal: Provide discounts to defray the cost of utility distribution system upgrades triggered by EV
applications―costs that would otherwise be borne by the customers. Offers up to $100K for MF & non-profits
($10K per EV charging port) and up to $10K for Single Family Homes for any in front of the meter customer costs
related to transformer upgrades.
11.1.4 Funding Sources for Emissions Reductions
Energy efficiency and water efficiency programs have traditionally been funded by electric, gas, and water rate revenues.
To fund emissions reduction programs, the City has developed multiple alternative funding sources:
•Low Carbon Fuel Standard (LCFS) Program: The City participates in the California Air Resources Board (CARB) LCFS
program, receiving credits for the provision of low-carbon fuels (such as clean electricity and compressed natural
gas) and must use the revenues from the sale of these credits for programs and other efforts promoting low-
carbon vehicle adoption.
•Cap and Trade Program: The City’s electric and gas utilities are required to participate in the State’s cap and trade
program, but these utilities receive some of the revenue from the auction of allowances for the program. The
revenue must be used for emissions-reducing activities.
•Public Benefits Funds: Locally owned municipal utilities must collect a surcharge from their electric utility
customers under section 385 of the Public Utilities Code (there is a similar requirement for gas utilities) to be used
on cost-effective energy efficiency and conservation, low-income programs, renewable energy, and research and
development.
The amount of revenue currently held in reserve for each revenue source and the projections for future revenue are
shown below.
Figure 302: Potential Emissions Reduction Funding Sources
Projected Revenues
Funding Source
FY 2023 Year-End
Reserves FY2024 FY2025 FY2026
Low Carbon Fuel Standard $6,712 $1,100 $1,120 $1,232
Gas Cap & Trade 6,731 3,163 3,327 $3,612
Public Benefits 5,673 4,779 4,655 4,584
Electric REC Exchange Revenue
(Electric Cap & Trade)
2,231 1,700 1,200 1,100
TOTAL 21,346 10,742 10,302 10,528
Expenditures for each revenue source are as follows:
•LCFS revenues have been used primarily to facilitate the installation of EV chargers in multi-family buildings and
are expected to be used that way in the future unless the City’s priorities shift. Some has been used for general
promotion of EVs.
•Cap and Trade revenues have been used to purchase renewable energy and for the Advanced Heat Pump Water
Heater pilot. More use of these revenues for electrification programs is expected in the future, though no specific
approvals have been sought yet.
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Public Benefit funds are used for energy efficiency (including low-income programs) and building electrification.
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12 Appendix D: Water Utility Annual Infrastructure Maintenance and
Replacement Report
Water Utility Overview – Calendar Year 2023
Executive Summary
•The City continues to meet water quality standards and regulatory
requirements
•Water Main Replacement program continues as planned
•Construction of Water Main Replacement Project #28 was
completed
•Construction of Water Main Replacement Project #29 began in
November 2023
•Advanced Metering Infrastructure (AMI) program on-going as
planned
Infrastructure Overview
Key infrastructure replacement efforts in the next five years include:
●Regular mains, services, hydrants, and valve replacement
●Repair and seismic retrofit of Dahl and Park Reservoirs
System Operations and Maintenance
There are 17.2 Total FTE’s working on Water System O&M.
●Water Quality (2.3 FTE):
o *Monitoring: Weekly, monthly, quarterly, annual water quality sampling
o *System Flushing: Regular seasonal flushing of dead end mains in the system to prevent sediment build-up and
disinfection
o Backflow Prevention (BFP) Program: Prevents water from flowing from private water services back into the
How do we achieve those goals?
Perform routine monitoring and
inspections and respond with timely
repairs
Replace or repair assets as they
approach the end of their useful life
Perform hydraulic modeling analysis and
test system performance
Train and implement new techniques,
tools, and procedures to increase
productivity
Water Utility Goals
What are our goals and objectives?
Protect drinking water quality
Minimize system failures
Prevent property damage caused by main
breaks
Protect the health and safety of staff
and the community
Maintain adequate storage for fire flow
and unexpected disruption of water
supply
Meet or exceed Industry Best
Management Practices for maximizing
asset life and minimizing maintenance cost
Meet or exceed regulatory
requirements
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public water system and protects the public water system from contamination
●*System Monitoring (1 FTE): Remote system controls and device of pumps, tanks, and valving. Control of water
flow and distribution throughout the water network
●System Inspections (1.3 FTE): Periodic field inspections of pump stations and other key system components
●Planned Maintenance (6.4 FTE): Test and maintain distribution system equipment required for operations such as
station mechanical equipment, valves, and meters, and non- emergency repair and replacement of degraded or
damaged assets (e.g. hydrants, valves, mains, and services).
●*Unplanned Maintenance (2.4 FTE): Emergency response and infrastructure repairs and replacements requiring
immediate attention.
●New Construction (3.8 FTE): Installation of new water services, valves, and meters for construction projects.
*Priority programs critical to daily operation Maintenance Status:
●Critical maintenance programs running smoothly
●BFP inspection program meets state requirements, needs evaluations as growth continues.
●AMI program being implemented in the field
Table 1: Status of Drinking Water System Operation and Maintenance Programs
System Operation
or Maintenance
Program
Status
Green = good
Yellow = room
for improvement
Comments
Water quality
monitoring
City has a regular testing program to meet all regulatory requirements.
This includes tests of disinfection effectiveness, water quality, and water
physical characteristics.
System flushing Flushing is performed to prevent stagnation of water in rarely used
outlets like hydrants and blowoff valves. This flushing is done on a
regular seasonal schedule. City is maintaining flushing maintenance
practices.
Backflow
prevention
Backflow Prevention Devices (BFDs) protect water quality by preventing
water in a customer’s system from flowing back into the City system.
The City owns about 400 BFDs which are tested annually. Private BFD
owners are required to test annually and submit results to the City. The
City then reports this data to the State Water Resources Board. The City
continues to work with customers to improve compliance and reporting
rates have increased this year. This program continues to grow as more
water services require backflow prevention, and the City has approved
two new positions starting in FY25 to support this program.
System monitoring The City maintains 24-hour SCADA system monitoring. Sufficient staff
have the experience, training, and certifications required to handle this
function and ensure uninterrupted oversight in the event of an
emergency.
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Valve Exercise Valves are being operated on a multi-year cycle and broken valves are
repaired as they are discovered. Currently, valve exercising
records are marked and maintained on physical utility grid map
sheets, and records are submitted and digitally recorded in the office
when all valves on a particular grid have been exercised. WGW
Operations is working to improve ESRI interfaces to facilitate digital
collection of data in the field. This will allow for real- time data and
remove the current lags that can occur in data entry.
Meter
Maintenance
Multiple one-time sampling projects have shown that most meters are
in good shape. There are many meters due for replacement, and the
mass replacement of older, small water meters with new advanced
metering infrastructure (AMI) is in preparation. Meter exchanges for
AMI began in 2023. Meter testing was performed by a third-party
contractor.
Unplanned
Maintenance
There are no backlogs of leaks or assets in need of repair. The City
maintains an emergency on-call program to respond to and control
water leaks or other system emergencies at any hour of the day or night.
Table 2: Condition of Drinking Water System Assets
Asset Class Quantity Maintenance Asset Condition
Water Receiving
Stations
(Turnouts)
5 Meter testing (every 2 years)
Annual Maintenance (calibrate
pressure transducer and
analog gauges, exercise
isolation valves and PRV’s,
clean out cover)
Most receiving stations currently require only
minor and routine maintenance and are in
good condition overall. Some minor
improvement projects may be required in the
next few years. California Ave turnout is
scheduled for pipe replacement and
rehabilitation in CY24. Page Mill Turnout valve
restraint work completed in CY23, which has
allowed the completion of some annual
maintenance items that have been deferred
for two years, due to safety concerns.
Booster Stations
/ Pressure
Reducing Stations
7 / 6 Annual maintenance
(calibrate upstream /
downstream pressure
transducer, analog gauges,
check pressure switches,
exercise isolation valves and
PRV’s, cleaning).
Mayfield and El Camino PS have
VFD’s which are maintained by
Tesco.
Weekly monitoring
Most booster stations and pressure reduction
stations require only minor and routine
maintenance and are in good condition
overall. Minor improvement projects may be
required in the next few years.
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Reservoirs 7 Annual maintenance (climb
tank, take physical reading of
water level, check altitude
valve, check screens, calibrate
tank pressure transducer,
analog gauges)
Dahl and Park Reservoirs are scheduled for
repair and seismic retrofit in CY 2027-2028.
Water quality monitoring
Emergency Wells 8 Annual maintenance,
inspection, and testing of wells
by Tesco, third party
contractor. Routine inspection
and water quality monitoring
and monthly maintenance of
systems performed by staff.
City wells were rehabilitated in 2013, but some
maintenance is needed. Services for a pump
rebuild at El Camino Park Well was solicited in
CY2023.
Water Valves ~6,500
valves
Operate every valve at least
once every five years (1200
valves per year), repair /
replace as needed
Operate 120 critical valves in
foothills annually
Valves are replaced on failure, or proactively
when water mains in the area are replaced.
Water Mains and
Services
~230
miles of
main,
~20,000
services
Repair leaks as identified
Monitor water quality
Water Main Replacement program continues
as planned, prioritizing leaky pipes and
seismically vulnerable pipes. Asbestos-Cement
Pipe testing program is underway to help
update replacement program as needed.
Water Meters ~20,000
small
meters,
380 large
meters
Sample test small meters, test
/ repair large meters annually
Replacement of oldest small water meters
continues, informed by small meter testing.
Large meter testing began in CY2023. Which
helped estimate meter accuracy. AMI meter
upgrade project is currently under way in 2022
to replace many older small water meters.
Fire Hydrants ~2000
public
hydrants
Maintenance Hydrants are replaced upon failure.
APPROVED By:
Dean Batchelor, Director of Utilities
Staff: Tim Denterlein, Resource Planner
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