HomeMy WebLinkAbout2022-05-04 Utilities Advisory Commission AgendaMATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
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UTILITIES ADVISORY COMMISSION – SPECIAL MEETING
MAY 4, 2022 – 6:00 PM
CHAMBERS / ZOOM Webinar
NOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
Supporting materials are available online at https://www.cityofpaloalto.org/gov/boards/uac/default.asp on Thursday, 5 days
preceding the meeting.
Join Zoom Webinar Here Meeting ID: 966 9129 7246 Phone: 1 (669) 900-6833
Pursuant to AB 361 Utilities Advisory Commission meetings will be held as “hybrid” meetings with the
option to attend by teleconference or in person. To maximize public safety while still maintaining
transparency and public access, members of the public can choose to participate from home or attend in
person. Members of the public who wish to participate by computer or phone can find the instructions
at the end of this agenda. Masks are strongly encouraged if attending in person. The meeting will be
broadcast on Cable TV Channel 26, live on Midpen Media Center at https://midpenmedia.org, and live
on YouTube at https://www.youtube.com/c/cityofpaloalto. Members of the public who wish to
participate by computer or phone can find the instructions at the end of this agenda.
I. ROLL CALL 6:00 pm – 6:05 pm
II. AGENDA REVIEW AND REVISIONS 6:05 pm – 6:10 pm
III. ORAL COMMUNICATIONS 6:10 pm – 6:25 pm
Members of the public are invited to address the Commission on any subject not on the agenda. A reasonable time
restriction may be imposed at the discretion of the Chair. State law generally precludes the UAC from discussing or acting
upon any topic initially presented during oral communication.
IV. APPROVAL OF THE MINUTES 6:25 pm – 6:30 pm
Approval of the Minutes of the Utilities Advisory Commission Meeting held on April 6, 2022
V. UNFINISHED BUSINESS
VI. UTILITIES DIRECTOR REPORT 6:30 pm – 6:45 pm
VII. NEW BUSINESS
1. Approval of UAC Chair and Vice Chair to Serve a Short Term of May 4, 2022 to March
31, 2023 (Action – 6:45 pm – 6:55 pm)
2. Approval of UAC Budget Subcommittee Members to Serve a Short Term of May 4,
2022 to March 31, 2023 (Action 6:55 – 7:05 pm)
Chairman: Lisa Forssell Vice Chair: Lauren Segal Commissioners: John Bowie, A.C. Johnston, Phil Metz, Greg Scharff, and Loren Smith Council Liaison: Alison Cormack
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the
City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
3.Approval of UAC Fiber Subcommittee Members to Serve a Short Term From May 04,
2022 Through March 31, 2023 (Action – 7:05 pm – 7:15 pm)
4.Adoption of a Resolution Authorizing Use of Teleconferencing for Utilities Advisory
Commission Meetings During Covid-19 State of Emergency (Action – 7:15 pm – 7:25
pm)
5.Staff Recommendation That the Utilities Advisory Commission Recommend the City
Council Adopt the Proposed Operating and Capital Budgets for the Utilities
Department for Fiscal Year 2023 (Action – 7:25 pm – 8:30 pm)
VIII. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
INFORMATIONAL REPORTS
IX. FUTURE TOPICS FOR UPCOMING MEETING June 01, 2022
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
Amended
Presentation
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the
City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
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City of Palo Alto (ID # 14343)
Utilities Advisory Commission Staff Report
Meeting Date: 5/4/2022 Report Type: IV. APPROVAL OF THE MINUTES
City of Palo Alto Page 1
Title: Approval of the Minutes of the Utilities Advisory Commission Meeting
held on April 6, 2022
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Staff recommends that the UAC consider the following motion:
Commissioner ______ moved to approve the draft minutes of the April 6, 2022 meeting
as submitted/Amended.
Commissioner ______ seconded the motion.
Attachments:
• Attachment A: Draft Minutes
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Utilities Advisory Commission Minutes Approved on: Page 1 of 9
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF APRIL 6, 2022 SPECIAL MEETING
CALL TO ORDER
Chair Forssell called the meeting of the Utilities Advisory Commission (UAC) to order at 6:02 p.m.
Present: Chair Forssell, Commissioners Bowie, Johnston, Metz, and Smith
Absent: Vice Chair Segal and Commissioner Scharff
AGENDA REVIEW AND REVISIONS
None.
ORAL COMMUNICATIONS
None.
APPROVAL OF THE MINUTES
Chair Forssell invited comments on the March 2, 2022 UAC draft meeting minutes.
Commissioner Johnston moved to approve the draft minutes of the March 2, 2022 meeting as submitted.
Commissioner Bowie seconded the motion.
The motion carried 5-0 with Chair Forssell, and Commissioners Bowie, Johnston, Metz, and Smith voting yes.
Vice Chair Segal and Commissioner Scharff absent
UNFINISHED BUSINESS
None.
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Director's Report.
Annual Walking and Mobile Gas Leak Survey - The City of Palo Alto Utilities (CPAU) begins its annual gas leak
detection survey of the City this month. This routine inspection of our gas distribution system is conducted
every year to ensure the safety of all who live and work in Palo Alto. Two types of gas leak surveys are
performed; a walking survey of residential areas and a mobile survey of all business districts. Approximately
one-half of the City is covered every year by the walking survey so that the entire gas distribution system can
be reviewed in a two-year period. This year the walking survey will cover the northern section of the City.
Once the surveys are complete, over 200 miles of gas mains and pipelines will be checked through this
thorough review. If any gas leaks are found, they are documented and repaired according to CPAU’s policies.
Find details and survey area map at cityofpaloalto.org/safeutility
DRAFT
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Utilities Advisory Commission Minutes Approved on: Page 2 of 9
Drought Update - Statewide drought conditions persist; reservoir storage in the Regional Water System is at
72.7% (normal is 81%) and the San Francisco Public Utilities Commission (SFPUC) expects to fill Hetch Hetchy
Reservoir. There is still uncertainty associated with the State Board’s curtailments in terms of how much
runoff SFPUC can store. Palo Alto reduced water usage 3% from July 1, 2021 to March 31, 2022 relative to FY
2020 levels. However, with the driest January through March on record so far this calendar year, cumulative
water usage in Palo Alto is 11% higher than the same months in FY 2020. In March, City Council approved
water use restrictions in Stage I of Palo Alto’s Water Shortage Contingency Plan for cutbacks up to 10%. Latest
at cityofpaloalto.org/water
Electric Hydro Rate Adjuster – CPAU purchases electricity from several sources and in an average year, about
50% of the City’s electric supply comes from hydroelectric power plants. The last three years of drought have
severely impacted our hydroelectric resources, which means we must purchase power from other, higher-
cost supply sources. In 2018, City Council adopted a hydro rate adjustment mechanism; a common tool used
by utilities to increase or discount a utility’s electric rates in response to hydroelectric conditions. The intent
is to avoid dramatic swings in customer rates and maintain sufficient financial reserves. This temporary hydro
rate adjuster was enacted for the first time by Council in March and went into effect April 1. CPAU customers
will see a line item charge on their utility bill for 1.3 cents per kilowatt hour, which is an approximate increase
of $5.89 per month for the average single family. This charge is expected to remain necessary until
hydroelectric generation levels improve. Council will review the hydro rate adjuster again this June, as part
of the City’s annual budget and rate adoption process, and on an as-needed basis in response to changes in
hydroelectric generation. We are sharing information publicly and more information can be found at
cityofpaloalto.org/ratesoverview
Electric Vehicle Events - In March, CPAU partnered with Acterra and Ride and Drive Clean to host three EV
events, including a financial incentives workshop, EV 101 webinar, and neighborhood EV expo. The goal of
these events is to raise awareness about electric vehicles, e-Bikes, and other electric modes of transportation.
The climate crisis and record high gas prices are compelling many to switch to electric to drive and ride clean,
save money, improve health, and take advantage of financial assistance and grants such as Clean Cars for All,
Drive Clean Assistance, and county-specific programs in the Bay Area. Event attendees can receive guidance
on identifying programs for which they qualify.
Upcoming Events – details and registration at cityofpaloalto.org/workshops
• Sunday, April 10, 3-5pm: EV 101 Workshop and EV Showcase, Mitchell Park Community Center.
Wednesday, April 20, 5-6 pm: EV 101 Class, online.
• Saturday, April 23, 10-noon: e-Bike Workshop and Test Rides, Mitchell Park Community Center.
• Saturday, June 18: Municipal Services Center (MSC) Open House - Back by popular demand! Join us
for a behind-the-scenes look at the City services that keep our community running. The MSC will be
open to the public from 10am to 2pm, with project demonstrations, displays, and fun activities
from Utilities, Public Works, Facilities, Police, Fire, and Community Services.
NEW BUSINESS
ITEM 1: ACTION: Adoption of a Resolution Authoring the use of Teleconference for Utilities Advisory
Commission Meetings During Covid-19 State of Emergency.
In answer to Commissioner Metz’s query regarding the State of Emergency, Tabatha Boatwright, Utilities
Administrative Assistant, explained the City was in a hybrid mode which required City Boards and
Commissions to maintain the resolution to allow Commissioners to attend the meeting virtually.
ACTION: Commissioner Smith moved Staff recommendation that the Utilities Advisory Commission (UAC)
Adopt a Resolution (Attachment A) authorizing the use of teleconferencing under Government Code
Section 54953(e) for meetings of the Utilities Advisory Commission (UAC) and its committees due to the
Covid-19 declared state of emergency.
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Utilities Advisory Commission Minutes Approved on: Page 3 of 9
Seconded by Commissioner Johnston
Motion carries 5-0 with Chair Forssell, and Commissioners Bowie, Johnston, Metz, and Smith voting yes.
Vice Chair Segal and Commissioner Scharff absent
ITEM 2: DISCUSSION: Discussion of Status Update and Preliminary Financial Business Models for Palo Alto
Fiber
Dave Yuan, Strategic Business Manager, commented Staff presented two business models for fiber-to-the-
premise (FTTP). Those two models were either a City-owned internet service provider (ISP) or a partnership
model where the City would partner with an ISP provider. The advantage of having a City-owned ISP model
was the City would have full control of the service offering. The disadvantage was the City would be
responsible for the full construction cost, Staff resources and maintenance of the network. The advantage of
having a partnership model, a partner may contribute to construction costs and would provide Staff to fulfill
the core functions. The disadvantage was the City would have to relinquish control of the service offering
and would have to share revenues with the partner. After discussion, the UAC recommended Staff explore
the ISP model. Staff proposed two ISP models for UAC to consider. One was a 100 percent in-house Staffing
and the second ISP model was a combination of insourcing and outsourcing key functions.
John Honker, Magellan Representative, shared that the engineering design for the fiber backbone and fiber-
to-the-home (FTTH) was 60 percent complete. On the business planning side, 75 percent was completed and
engagement and outreach were 50 percent completed.
In reply to Chair Forssell’s question regarding if Magellan does the engineering design, Honker answered all
the work was done in-house.
Honker continued to business planning and stated Magellan’s analized how many of the core functions for
the fiber network could be managed by the City and then identified the internal resources or potentially
outsourcing for those functions. Included in the analysis compared Palo Alto's existing salary bands and labor
overheads to outsourcing options in pro formas. The analysis identified that vendors could fulfill a role for a
lower cost. Magellan continued to explore regulatory reviews the City would have to abide by to become an
ISP. The next step was to analyze the governance modal for broadband and determine what management
tier Palo Alto Fiber would be. Palo Alto Fiber has to be flexible to compete in a competitive environment. The
first draft of the preliminary pro forma financial plan was completed but was subject to change based on
further analysis. Magellan identified financing and accounting, general management, billing, customer
service and legal were areas within the City that had existing resources. The City would still have to hire
roughly 24 full-time equivalents (FTE) positions for sales and marketing, operation management, field service,
service quality control over 5-years and increase the existing customer service Staff count.
In response to Chair Forssell’s inquiry regarding the difference between what was existing in the City and the
new commercial account manager position, Honker remarked the existing commercial sales account
manager could be used for both residential and commercial.
Honker moved to strategic vendors and provided commodity services. Those groups included tech support,
overnight customer service, network design, construction and construction management, and inspection.
The benefit of outsourcing the work was lower cost. The negative of outsourcing was having a lower service
level based on the vendor’s ability to service and manage the account. To mitigate the negative impacts, the
contracts with the vendors would include a strong service level agreement with penalties for non-
performance and incentives for high performance.
In answer to Commissioner Johnston’s question about whether the pros and cons of outsourcing the work
considered the speed to start the system, Honker answered yes. Many cities will use vendors during the
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Utilities Advisory Commission Minutes Approved on: Page 4 of 9
implementation phase and then move the work in-house over time. Commissioner Johnston agreed it made
sense to outsource the work during implementation. He stated it was critical to have a high-quality service
from the beginning.
Honker mentioned the FTEs could be adjusted down to 17 if operational functions were outsourced.
In reply to Commissioner Smith’s query regarding the removal of the customer service supervisor in the
outsourcing model, Honker understood the customer service supervisor for the Electric Utility would manage
the outsourced customer service firm.
Honk remarked the hardest part of business planning was assessing the overall Staffing cost in the different
models. First Magellan compared an existing City salary band to a similar position for a broadband employee
and then loaded the overhead into the model. On an annual basis starting in 2023, the annual Staffing cost
for the insourced model was approximately $2 million and then grew to $6.5 million after the first 5-years.
Staffing costs would then grow by 3 to 4 percent after the first 5-years. For the outsourcing model, staffing
costs were reduced by 15 to 20 percent. After the first 5-years, the City would save approximately $700,000
and that would grow to a savings approximately $800,000 in perpetuity.
In response to Commissioner Johnston’s question regarding total Staffing outsourced, Honker noted it
included the key functions identified in the outsource ORG chart.
In reply to Chair Forssell’s inquiry regarding the cost of the contractors and vendors, Honker confirmed the
total Staffing outsourced included all of the strategic vendors that covered the identified key functions
identified in the outsource ORG chart.
Honker stated vendors had to be evaluated to determine overall quality levels and to make sure that the
quality was not compromised by outsourcing.
In answer to Chair Forssell’s query regarding what outside city contracts were used to estimate the cost
savings, Honker answered Johnson City, Tennessee and the City of Newport, Tennessee. In response to Chair
Forssell’s query about comparing the City of Palo Alto to Tennessee cities, Honker explained the price per
prescriber was increased by 30 percent to account for the increases in California. He noted there were few
cities in California or on the West Coast that offered city-owned broadband service. Chair Forssell expressed
concern there may be surprises when Palo Alto contracts with a more local vendor. Honker explained vendors
who interact with customers face to face or the infrastructure would be local vendors and the prices reflected
local vendors in the comparing models.
Honker moved to the build schedule for the FTTH network. Magellan estimated a 3- to the 5-year build
schedule. One of the most important goals was to connect as many customers as quickly as possible to help
sustain the financial requirements of the network. The goal was to front-load construction in areas while
equalizing construction across the City as well as focus on aerial constructions versus underground. A goal
was set to connect 26,000 residential customers and 4,000 business customers by the end of the fourth year.
There was estimated to be no take rate in the first year but it would then grow to a 3 percent take rate in the
second year, 10 percent in the third year, 19 percent in the fourth year, 27 percent in the fifth year and 32
percent by the sixth year.
Commissioner Smith understood the preliminary build schedule used assumptions. In answer to his inquiry
regarding conservative assumptions to make the model profitable, Honker confirmed the goal was to use the
bare minimums and see if the model would break even. Commissioner Smith appreciated and agreed that
doing a best case, worst case and the ideal case was the right approach. In answer to his question regarding
the existing fiber network supporting customers now, Honker explained that the goal for the first year was
to connect 6,000 customers. Construction would begin near existing fiber and near existing fiber facilities.
The next phase of engineering would include evaluating how quickly customers could be connected with the
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Utilities Advisory Commission Minutes Approved on: Page 5 of 9
existing infrastructure. Commissioner Smith applauded the effort and encouraged Magellan to identify
customers closer to existing infrastructure but inform them that the service would have bugs. Honker agreed
that the more folks in a neighborhood who are connected to the broadband, the faster word would spread.
Honker presented the financial plan. He acknowledged that the COVID-19 Pandemic had affected the supply
chain and the availability of materials. This had caused the current estimates to increase. If the fiber backbone
and the FTTH were built together, there was a cost savings of $8.7 million. The total current estimate was set
at $128.2 million but those were fluid estimates. To fund the projects, the existing Fiber Fund would
contribute $32.5 million and the Electric Utility would contribute $10 million for a total of $42.5 million of
available funding. The remaining funding needed was $83.7 million.
Commissioner Bowie mentioned there had been large influxes of funding from the Federal and State
governments for infrastructure. In answer to his query regarding if those had been considered, Honker stated
Federal and State funding discussions were being tracked daily. The traditional board band funding was based
on access to the technology but it changed to having reliable and consistent service.
Honker reported the next step for the financial plan was to finalize it and then receive UAC input before the
joint study session with the Council in August 2022. The final financial plan will include final cost estimates,
the projection for materials and labor increases for the next 4-years, inflation rates, adjusted construction
contingencies, potential hedging strategies, pro forma income statement, borrowing summary and sensitivity
and business risk analysis.
Commissioner Bowie acknowledged the fiber project was happening at the same time the City was working
towards full electrification and major infrastructure changes. He believed that was an opportunity for
planning and a potential reduction of costs. In answer to his inquiry regarding exploring that opportunity
further, Honker stated the key was coordination with the Electric Utility and would require good synergy.
Dean Batchelor, Utilities Director, confirmed the City was exploring the coordination between electrification
and the fiber network. Staff will be overlaying Magellan’s engineering work over electrification to see where
there is synergy and will use that synergy when feasible.
In response to Commissioner Smith’s request for an update on how many folks have signed up on the fiber
hub, Yuan noted he would provide an update soon to the UAC.
Commissioner Metz expressed his top concern was the risk of retaliation by incumbent broadband service
providers as well as new broadband technologies coming online. Those two components were not touched
on in the business plan. Regarding market assessment, his main concern was the take rate of 32 percent and
felt it was too aggressive. He requested more data on what services customers want and what they’ll pay for
them. He expressed concern about not including a technology assessment that addressed technology
becoming obsolete. He shared 5G wireless could be a financially and functionally strong competitor because
it allowed folks to connect their internet to the cellular network. He expected all those concerns to be
included in the financial pro forma and wanted the business plan to address competition, market details and
technology. Honker confirmed they would be included in the final plan. Regarding competition and market
details, those will be presented after the survey has been completed. The survey data will include existing
providers, their services and what market share each provider has in the different speed tiers. The City will
then set its speed and rates to capture as much market share as possible. He noted as Palo Alto builds out
fiber, the latest technology will be used and that will be included in the business plan. Yuan mentioned the
City has been contacted by local ISP providers who are interested in partnering with the City.
Commissioner Bowie mentioned the way the data is handled may be of interest to Palo Alto residents. Yuan
agreed and added there are questions in the survey regarding that matter.
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Utilities Advisory Commission Minutes Approved on: Page 6 of 9
Chair Forssell shared Commissioner Metz’s concern regarding the take rate and she wanted to see more data
on existing providers. She supported the concept of taking refundable deposits from folks who are interested
in Palo Alto Fiber and the hybrid outsourcing model.
Council Member Cormack recalled the reason to pursue fiber was to have customer service be a differentiator
and not just cheaper. In answer to her question regarding the decision to outsource, Yuan answered it will
be discussed at the governance level first and then brought to Council for approval. Staff will be meeting
with the City’s legal, human resources and finance departments to discuss governance. Council Member
Cormack mentioned when the item comes to Council, Staff should break down the costs and potential
savings. In reply to her query regarding addressing the $86 million funding gap, Yuan mentioned Staff will be
exploring all funding opportunities.
ACTION: None.
The UAC recessed at 7:40 p.m. and resumed at 7:50 p.m.
ITEM 3: DISCUSSION: Discussion of Wastewater CIP and Update on Utilities Quarterly Programs Report for
Q2 of FY2022
Dean Batchelor, Director of Utilities, stated typically there is no discussion for quarterly updates. However,
Staff requested UAC discuss the future of Wastewater Capital Improvement Project (CIP).
Tabatha Boatwright, Administrative Assistant, remarked two Commissioners provided questions to Staff
about the quarterly report.
Silvia Santos, Water Gas Wastewater Engineering Manager, shared that the answers to the questions were
included in the presentation. She reported the City’s sewer was built in 1898 which included 216 miles of
sewer mains. In the year 1990, the Council adopted a CIP/infrastructure program to invest in utility
infrastructure. For wastewater, 78 miles or 36 percent, had been replaced or rehabilitated with 138 miles of
sewer mains still needing to be replaced or rehabilitated. Since the implementation of the program in 1990,
the average replacement rate was 2.5 miles per year. It recently was reduced to 1 mile per year due to
increase in construction cost and utility rate stabilization. Staff recommended UAC reevaluate the
replacement rate to address the remaining 138 miles of piping. Pipe assessment was done by a Closed Circuit
Television (CCTV) inspection which rated each defect inside the pipe. Staff used defect scoring and
wastewater operations to prioritize replacement projects. Defects were placed into two categories, one being
operation and maintenance defects and the other structural defects. Many of the pipes were clay pipes that
have been joined together with cement mortar. The mortar deteriorated over time and causes defects.
Operation and maintenance defects included root intrusion, cracks and grease and those defects could be
mitigated with regular maintenance. Recently, Council approved a new 3-year contract to outsource routine
maintenance activities. Structural damage included broken pipe or missing sections of pipe which required
replacement of the pipe. Staff believed the ongoing sanitary sewer replacement project and routine
maintenance program were effective due to the decreasing number of sanitary overflows incidents. The 138
miles of existing pipe were installed between 1950 and 1970. If the City continued on a path of replacing 1
mile of pipe per year, the pipes will be 190 years old before the City can replace them. Based on experience,
Staff determined clay pipes in Palo Alto had a useful lifespan of 100 years. Staff proposed the City resume its
replacement program at 2.5 miles per year. Plastic pipes had a lifespan of more than 100 years and Staff
suggested focusing on replacing the clay pipes first. Staff will be presenting a rate analysis to the UAC in the
fall of 2022.
Commissioner Johnston recalled the reason why the City reduced the rate of replacement of the sewer lines
was to address budget constraints when the COVID-19 Pandemic began. He strongly supported increasing
the CIP allowance to facilitate a 2.5 mile per year replacement rate.
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Utilities Advisory Commission Minutes Approved on: Page 7 of 9
In answer to Commissioner Smith’s query regarding how many years will it take to replace the remaining clay
pipes, Santos answered it will take 55 years to replace the remaining 138 miles at the proposed 2.5 miles per
year rate. In response to Commissioner Smith’s inquiry regarding the benefits of replacing more than 2.5
miles per year, Santos noted the more miles the City has to replace, the longer it takes to complete the
project. She stated that 2.5 miles per year was a manageable goal.
In response to Commissioner Metz’s query regarding Staff’s recommendation for lateral maintenance and
main replacement, Santos explained operation Staff was removed from maintenance work because they took
on the replacement of the lateral pipes. New tools have been implemented to balance the workload more
efficiently. Batchelor clarified the Fiscal Year (FY) 2023 Budget did not include a rate adjustment to resume
the 2.5 miles per year replacement. Staff will be seeking funding options for the FY 2024 Budget to resume
the 2.5 miles per year replacement program.
Chair Forssell agreed the City should resume the previous rate of replacement. She echoed Commissioner
Smith’s comment about increasing the proposed replacement rate. Santos restated 2.5 miles per year was
the right pace because some pipes do last for 100-years. Staff continued to evaluate pipes and prioritized
pipes that were deteriorating faster. Chair Forssell recalled for every other year 5 miles are replaced and
Santos confirmed that was correct. Santos explained if the budget is increased in FY 2024, Staff has several
pipes that have already been designed and are waiting for funding.
ACTION: None
ITEM 4: DISCUSSION: Discussion of UAC Recruitment and Term Changes Resulting From the City Council’s
Adoption of Ordinance 5529, Establishing Term Limits and Consolidating Appointments to March of Each Year
Chair Forssell explained the Council has decided that all of the UAC’s terms, which should end in May 2022,
have been extended to March of 2023. Typically, the Chair and Vice Chair are selected in June but the
proposal was to make the selections in May 2022. Following May 2022, the next selection of Chair and Vice
Chair would be in April 2023. Also, Staff proposed the budget subcommittee be selected at the May 04, 2022
UAC meeting as well as select members for the fiber subcommittee.
Commissioner Smith supported the proposed plan. He strongly supported selecting the budget
subcommittee earlier to help members digest the material and provide comments. The fiber subcommittee
should be made up of UAC Members.
Commissioner Johnston seconded Commissioner Smith’s comments.
Commissioner Bowie agreed and felt it made sense considering UAC’s involvement in the Sustainability and
Climate Action Plan (S/CAP).
In answer to Commissioner Metz’s query regarding which Commissioner’s terms will end on March 2023,
Chair Forssell clarified the word term applied to the terms for members on the subcommittees and officer.
Commissioner Johnston noted some of the UAC Member’s terms have been extended because of the change
in the schedule for appointing new members.
Chair Forssell remarked all the subcommittees and the officers will be 1-year and will align with the
Commissioner terms.
ACTION: None.
ITEM 5: DISCUSSION: Indication of Interest Among UAC Commissioners to Serve on S/CAP Working Groups,
Including: Finance, Engagement, Technology and/or Community Scaling
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Utilities Advisory Commission Minutes Approved on: Page 8 of 9
Chair Forssell announced there are four different teams established to discuss the goals and implementation
of the S/CAP. The four teams were exploring finance, technology, engagement and community scaling. She
invited Commissioners to indicate if they have an interest in being involved in one of the S/CAP teams.
Commissioners on a team will report back to the UAC during Commissioner comments and reports from
meetings and events.
Council Member Cormack clarified Mayor Burt, Council Member DuBois and herself make up the Ad Hoc
Committee for the S/CAP. There was also a working group that did not include members from the UAC. UAC
Members were being asked to express interest in the teams, not the working group. The teams will include
a Council Member from the Ad Hoc Committee, a lead Staff member, members from the working group and
Members from the UAC. Each team will have a different meeting schedule.
In answer to Commissioner Smith’s inquiries, Council Member Cormack confirmed there are four teams but
community scaling did not have an established team currently. UAC Members could join the finance,
community engagement and technology team.
Commissioner Smith indicated interest in volunteering to be on the Finance S/CAP Team.
Commissioner Johnston indicated interest in volunteering to be on the Technology and/or Finance S/CAP
Team(s).
Commissioner Bowie indicated interest in volunteering to be on the Engagement and Technology S/CAP
Team(s).
Commissioner Metz indicated interest in volunteering to be on the Technology S/CAP Team.
Chair Forssell indicated interest in Community Scaling and Technology S/CAP Teams.
ACTION: None.
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
None.
FUTURE TOPICS FOR UPCOMING MEETINGS: May 04, 2022
In reply to Commissioner Johnston’s question regarding the date for the joint UAC/Council study session,
Dean Batchelor, Director of Utilities, answered the joint session will be held on August 8, 2022. He requested
an update regarding the modernization of the grid project. Batchelor explained Staff was in discussions with
a contractor regarding the scope of work and establishing a timeline. When the scope of work has been
established, Staff will be working on a roadmap of the electrical grid. Commissioner Johnston suggested Staff
provide periodic reports on the progress.
Commissioner Smith requested regular informational updates concerning the counts on the fiber hub. Dave
Yuan, Strategic Business Manager, shared that the current count was 239 on the fiber hub. Commissioner
Smith noted if the counts increase, then the community was being reached. If there was a plateau, then that
should be discussed. Batchelor remarked he will include the information in his Director Report.
Chair Forssell requested a quarterly update on electrical vehicle charger deployment. Batchelor believed it
was included in the quarterly report already. Chair Forssell wanted a follow-up regarding water quality and
total suspended solids as opposed to total dissolved solids. She noticed the calendar included a 5-year water,
wastewater, gas and electric project review, but believed it use to be a 10-year review. Batchelor explained
Staff only had data on the past 5-years of projects and Staff will present that material at the May 2022 UAC
meeting. In answer to Chair Forssell’s prediction that projects were not being completed, Batchelor
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Utilities Advisory Commission Minutes Approved on: Page 9 of 9
confirmed that some of the projects did fall off and Staff will discuss those with the UAC at the May 2022
meeting.
Batchelor inquired if there was a desire to take June, July, or August off for a summer break. Chair Forssell
stated typically UAC breaks for July or August. Council Member Cormack remarked the Council take its break
in July and encouraged UAC to align its break with Council. Commissioner Smith preferred July.
Chair Forssell concluded the suggested plan was to cancel the July UAC meeting.
NEXT SCHEDULED MEETING: May 04, 2022
Commissioner Smith moved to adjourn. Commissioner Johnston seconded the motion. The motion carried
5-0 with Chair Forssell, and Commissioners Bowie, Johnston, Metz, and Smith voting yes.
Vice Chair Segal and Commissioner Scharff absent
Meeting adjourned at 8:42 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
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City of Palo Alto (ID # 14214)
Utilities Advisory Commission Staff Report
Meeting Date: 5/4/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Approval of UAC Chair and Vice Chair to Serve a Short Term of May 4,
2022 to March 31, 2023
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Commissioner ____ moved to approve Commissioner ____ as Chair.
Motion seconded by Commissioner ___.
Commissioner ___ moved to approve Commissioner ___ as Vice Chair.
Motion seconded by Commissioner ___.
Executive Summary
Annually the Chair and Vice Chair are selected at the beginning of the new recruitment term for
a period of one year, from the first meeting in June through May of the following year. On June
21, 2021 the City Council adopted an ordinance (Linked Document) establishing Board and
Commission term limits and consolidating appointments to March of each year. Effective
January 1, 2022, UAC commissioner terms of office now begin on March 15 of each year, rather
than June.
This matter is agendized so Commissioners can appoint a Chair and Vice Chair for terms from
May 4, 2022 through March 31, 2023.
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City of Palo Alto (ID # 14196)
Utilities Advisory Commission Staff Report
Meeting Date: 5/4/2022 Report Type:
City of Palo Alto Page 1
Title: Approval of UAC Budget Subcommittee Members to Serve a Short Term
of May 4, 2022 to March 31, 2023
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Commissioner ___, Commissioner ___ and Commissioner ___ volunteered to be on the Budget
Subcommittee for a short term of May 04, 2022 to March 31, 2023 .
Executive Summary
Historically, two or three Commissioners serve on a UAC Budget Subcommittee and will meet
with Utilities Staff outside of the regular UAC monthly meetings to learn about and review the
Utilities budget. The budget item(s) will come to the full UAC for additional discussion and
action. This matter is agendized so the UAC can approve member appointments to the UAC’s
Budget Subcommittee.
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City of Palo Alto (ID # 14197)
Utilities Advisory Commission Staff Report
Meeting Date: 5/4/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Approval of UAC Fiber Subcommittee Members to Serve a Short Term
From May 04, 2022 Through March 31, 2023
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Commissioner XXX, Commissioner XXX and Commissioner XXX volunteered to be on the Fiber
Subcommittee, for a 10-month term from May 4, 2022 through March 31, 2023.
Executive Summary
Two or three Commissioners may serve on an ad-hoc UAC Fiber Subcommittee and will meet
with the Fiber team outside of the regular UAC monthly meetings to have more in-depth
discussions and review of the Utilities Fiber expansion project with staff. The fiber update(s) will
come to the full UAC for additional discussion and any action.
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City of Palo Alto (ID # 14269)
Utilities Advisory Commission Staff Report
Meeting Date: 5/4/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Adoption of a Resolution Authorizing Use of Teleconferencing for
Utilities Advisory Commission Meetings During Covid -19 State of Emergency
From: Director of Utilities
Lead Department: Utilities
Recommendation
Adopt a Resolution (Attachment A) authorizing the use of teleconferencing under Government
Code Section 54953(e) for meetings of the Utilities Advisory Commission (UAC) and its
committees due to the Covid-19 declared state of emergency.
Background
In February and March 2020, the state and the County declared a state of emergency due to
the Covid-19 pandemic. Both emergency declarations remain in effect.
On September 16, 2021, the Governor signed AB 361, a bill that amends the Brown Act,
effective October 1, 2021, to allow local policy bodies to continue to meet by
teleconferencing during a state of emergency without complying with restrictions in State
law that would otherwise apply, provided that the policy bodies make certain findings at
least once every 30 days.
AB 361, codified at California Government Code Section 54953(e), empowers local policy bodies
to convene by teleconferencing technology during a proclaimed state of emergency under the
State Emergency Services Act in any of the following circumstances:
(A) The legislative body holds a meeting during a proclaimed state of emergency, and
state or local officials have imposed or recommended measures to promote social
distancing.
(B) The legislative body holds a meeting during a proclaimed state of emergency for the
purpose of determining, by majority vote, whether as a result of the emergency,
meeting in person would present imminent risks to the health or safety of
attendees.
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City of Palo Alto Page 2
(C) The legislative body holds a meeting during a proclaimed state of emergency and has
determined, by majority vote, pursuant to subparagraph (B) (B), that, as a result of
the emergency, meeting in person would present imminent risks to the health or
safety of attendees. (Gov. Code § 54953(e)(1).)
In addition, Section 54953(e)(3) requires that policy bodies using teleconferencing reconsider
the state of emergency within 30 days of the first teleconferenced meeting after October 1,
2021, and at least every 30 days thereafter, and find that one of the following circumstances
exists:
1. The state of emergency continues to directly impact the ability of the
members to meet safely in person.
2. State or local officials continue to impose or recommend measures to
promote social distancing.
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City of Palo Alto Page 3
Discussion
At this time, the circumstances in Section 54953(e)( 1)(A) exist. The Santa Clara County Health
Officer continues to recommend measures to promote outdoor activ ity, physical distancing and
other social distancing measures, such as masking, in certain contexts. (See August 2, 2021
Order.) In addition, the California Department of Industrial Relations Division of Occupational
Safety and Health (Cal/OSHA) has promulgated Section 3205 of Title 8 of the California Code of
Regulations, which requires most employers in California, including in the City, t o train and
instruct employees about measures that can decrease the spread of COVID -19, including
physical distancing and other social distancing measures.
Accordingly, Section 54953(e)(1)(A) authorizes the City to continue using teleconferencing for
public meetings of its policy bodies, provided that any and all members of the public who wish
to address the body or its committees have an opportunity to do so, and that the statutory and
constitutional rights of parties and the members of the public attend ing the meeting via
teleconferencing are protected.
To comply with public health directives and promote public safety, Palo Alto policy bodies
have been meeting via teleconference since March 2020. On September 27, 2021, the City
Council considered the format for future Council, committee, and Board and Commission
meetings. Council determined that beginning November 1, 2021, Council meetings would be
conducted using a hybrid format that allows Council Members and the public to decide
whether to attend in person, following masking and distancing protocols, or participate via
teleconference. Council directed that Council standing and ad-hoc committees and Boards
and Commissions would continue meeting via teleconference through March 2022.
Adoption of the Resolution at Attachment A will make the findings required by Section
54953(e)(3) to allow the continued use of teleconferencing for meetings of the Utilities
Advisory Commission (UAC) and its committees.
Attachments:
• Attachment A: Resolution
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NOT YET APPROVED
Resolution No. ____
Resolution Making Findings to Allow Teleconferenced Meetings Under California Government
Code Section 54953(e)
R E C I T A L S
A. California Government Code Section 54953(e) empowers local policy bodies to convene by
teleconferencing technology during a proclaimed state of emergency under the State Emergency
Services Act so long as certain conditions are met; and
B. In March 2020, the Governor of the State of California proclaimed a state of emergency
in California in connection with the Coronavirus Disease 2019 (“COVID-19”) pandemic, and that state
of emergency remains in effect; and
C. In February 2020, the Santa Clara County Director of Emergency Services and the
Santa Clara County Health Officer declared a local emergency, which declarations were
subsequently ratified and extended by the Santa Clara County Board of Supervisors, and those
declarations also remain in effect; and
D. On September 16, 2021, the Governor signed AB 361, a bill that amends the Brown Act
to allow local policy bodies to continue to meet by teleconferencing during a state of emergency
without complying with restrictions in State law that would otherwise apply, provided that the
policy bodies make certain findings at least once every 30 days; and
E. While federal, State, and local health officials emphasize the critical importance of
vaccination and consistent mask-wearing to prevent the spread of COVID-19, the Santa Clara County
Health Officer has issued at least one order, on August 2, 2021 (available online at here), that continues
to recommend measures to promote outdoor activity, physical distancing and other social distancing
measures, such as masking, in certain contexts; and
F. The California Department of Industrial Relations Division of Occupational Safety and
Health (“Cal/OSHA”) has promulgated Section 3205 of Title 8 of the California Code of Regulations,
which requires most employers in California, including in the City, to train and instruct employees
about measures that can decrease the spread of COVID-19, including physical distancing and other
social distancing measures; and
G. The Utilities Advisory Commission has met remotely during the COVID-19 pandemic and
can continue to do so in a manner that allows public participation and transparency while minimizing
health risks to members, staff, and the public that would be present with in-person meetings while
this emergency continues; now, therefore,
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The Utilities Advisory Commission RESOLVES as follows:
1. As described above, the State of California remains in a state of emergency due to the
COVID-19 pandemic. At this meeting, the Utilities Advisory Commission has considered the
circumstances of the state of emergency.
2. As described above, State and County officials continue to recommend measures
to promote physical distancing and other social distancing measures, in some
settings.
AND BE IT FURTHER RESOLVED, That for at least the next 30 days, meetings of the Utilities Advisory
Commission and its committees will occur using teleconferencing technology. Such meetings of the
Utilities Advisory Commission and its committees that occur using teleconferencing technology will
provide an opportunity for any and all members of the public who wish to address the body and its
committees and will otherwise occur in a manner that protects the statutory and constitutional rights
of parties and the members of the public attending the meeting via teleconferencing; and, be it
FURTHER RESOLVED, That the Utilities Advisory Commission staff liaison is directed to place a resolution
substantially similar to this resolution on the agenda of a future meeting of the Utilities Advisory
Commission within the next 30 days. If the Utilities Advisory Commission does not meet within the next
30 days, the staff liaison is directed to place a such resolution on the agenda of the immediately following
meeting of the Utilities Advisory Commission.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
Staff Liaison Chair of Utilities Advisory Commission
APPROVED AS TO FORM: APPROVED:
City Attorney Department Head
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City of Palo Alto (ID # 14268)
Utilities Advisory Commission Staff Report
Meeting Date: 5/4/2022 Report Type: VII. NEW BUSINESS
City of Palo Alto Page 1
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend the City Council Adopt the Proposed Operating and Capital
Budgets for the Utilities Department for Fiscal Year 2023
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Staff recommends the Utilities Advisory Commission recommend the City Council adopt the
Proposed Operating and Capital Budgets for the Utilities Department for Fiscal Year 2023.
Discussion
Attached are the FY 2023 Proposed Operating and Capital budgets for the Utilities Department.
Due to the number of pages of the CIP budget, staff only printed the CIP overview and five year
forecast of each utility for FY 2023– FY 2027.
The entire Utilities CIP budget for FY 2023 – FY 2027 with the individual project pages can be
downloaded and viewed in full from the link:
Preliminary Proposed Utilities Capital Budgets for FY 2023 - FY 2027
Preliminary Proposed Utilities Operating Budgets for FY 2023 – FY 2027
City Council will not be receiving their copies of the Operating and Capital Budgets until
Thursday, April 28, 2022. Please refrain from discussing the proposed budget materials with
Council or the public until Monday, May 2, 2022.
Attachments:
• Attachment: Presentation
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MAY 4, 2022 www.cityofpaloalto.org
Utilities Advisory Commission
Proposed FY 2023 Utilities
Operating and Capital Budgets
Staff: Dave Yuan, Alex Harris, Anna Vuong
Attachment G
•
CITY OF
PALO ALTO
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CHANGE REQUEST PROCESS
2
Submits
Request
DEPT HR OMB CMO UAC FC
Approves
Request
Council
Preliminary Requests Recommended Requests
General review process for staffing, budget, and project changes
~CITY OF
~PALO ALTO
• -■ •
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PROPOSED NEW PROJECTS
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•Technology projects
•Outage management system $350k -$500k
•Fiber management system $250k -$350k
•Master plan studies
•Electric distribution system $500k -$1,000k
•Wastewater Collection system $400k -$550k
~CITY OF
~PALO ALTO
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Recommended FY 2023 RATES
4
1 Gas rate changes shown with commodity rates held constant. Actual gas commodity rates vary monthly.
2 Storm Drain fees and increases by CPI annually per approved 2017 ballot measure
3 Fiber EDF-1 rates increase by CPI, which is 4.2% for FY 2023
4 Based on FY 2022 monthly bill of $332.75.
FY 2022
(Took effect
July 1, 2021)
FY 2023
(Proposed for
July 1, 2022)FY 2024 FY 2025 FY 2026 FY 2027
$0.00 $2.87 $3.61 $3.83 $4.06 $4.30
0.0% 5.0% 6.0% 6.0% 6.0% 6.0%
$1.60 $2.62 $2.73 $2.84 $2.95 $2.30
3.0% 4.0% 4.0% 4.0% 4.0% 3.0%
$2.00 $1.30 $2.23 $2.34 $2.46 $2.58
3.0% 3.0% 5.0% 5.0% 5.0% 5.0%
$0.00 $8.05 $6.70 $2.42 $2.47 $0.00
0.0% 8.9% 6.8% 2.3% 2.3% 0.0%
$0.00 $0.00 $1.50 $1.55 $1.59 $1.64
0.0% 0.0% 3.0% 3.0% 3.0% 3.0%
$0.30 $0.64 $0.48 $0.49 $0.51 $0.52
2.5% 4.2% 3.0% 3.0% 3.0% 3.0%
$3.90 $15.48 $17.25 $13.47 $14.05 $11.35
1.2% 4.7% 4.9% 3.7% 3.7% 2.9%Monthly Bill Change 4
Electric Utility
Gas Utility 1
Wastewater
Water Utility
Refuse
Storm Drain 2, 3
~CITY OF
~PALO ALTO
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Recommended FY 2023 RATES –RESIDENTIAL BILL IMPACT
5
Utility
Adjusted
FY2022
Bill
FY2023 Bill Bill Change
($)
Rate Change
(%)
Electric 57.31 60.17 2.87 5.0%
Gas 65.62 68.24 2.62 4.0%
Wastewater 43.32 44.62 1.30 3.0%
Water 90.42 98.47 8.05 8.9%
Refuse 50.07 50.07 - 0.0%
Storm Drain 15.34 15.98 0.64 4.2%
User Tax 1 10.67 11.34 0.68 6.3%
Total Monthly
Bill 332.75 348.90 16.16 4.9%
1 User Tax is additional 5 percent of electric, gas, and water bill
~CITY OF
~PALO ALTO
5.a
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ELECTRIC
MAY 4, 2022 www.cityofpaloalto.org
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ELECTRIC OPERATING PRELIMINARY PROPOSED EXPENSES
7
Allocated Charges
$10.64 M
5%
CIP
$26.14 M
12%
Contract Services
$12.82 M
6%
Equity Transfer
$14.64 M
7%
Other Expenses
$6.97 M
3%
Rent & Debt
Service
$15.65 M
8%
Salary & Benefits
$23.22 M
11%
Utility Purchase
$101.74 M
48%
ELECTRIC FUND PRELIMINARY PROPOSED BUDGET
~CITY OF
~PALO ALTO
5.a
Packet Pg. 29
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ELECTRIC OPERATING EXPENSES FY22 BUDGET TO ACTUALS
8
GL Type Budget Group Adjusted Budget YTD Actuals Q3 FY22 Remaining Budget % of total
Revenues Net Sales $ 158,134,394 $ 112,855,755 $ 45,278,639 71.4%
Other Revenues $ 14,338,925 $ 7,667,259 $ 6,671,666 53.5%
Revenues Total $ 172,473,319 $ 120,523,014 $ 51,950,306 69.9%
Expenses Salary & Benefits $ 26,106,768 $ 17,533,478 $ 8,573,290 67.2%
Utility Purchase $ 105,329,457 $ 67,358,494 $ 37,970,963 64.0%
CIP/Contract Services $ 42,947,975 $ 6,428,286 $ 36,519,689 15.0%
Other Expenses $ 6,859,909 $ 3,073,950 $ 3,785,958 44.8%
Rent & Debt Service $ 14,579,750 $ 10,169,122 $ 4,410,628 69.7%
Allocated Charges $ 10,633,595 $ 5,922,461 $ 4,711,133 55.7%
Equity Transfer $ 14,138,000 $ 10,723,500 $ 3,414,500 75.8%
Expenses Total $ 220,595,453 $ 121,209,292 $ 99,386,161 54.9%
~CITY OF
~PALO ALTO
5.a
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ELECTRIC 5-YR CIP 2023-27
9
$0.0M
$5.0M
$10.0M
$15.0M
$20.0M
$25.0M
$30.0M
$35.0M
$40.0M
2022 Estimated 2023 Proposed 2024 Forecast 2025 Forecast 2026 Forecast 2027 Forecast
523 - Electric Fund - Substation Improvements
523 - Electric Fund - 4/12 Conversion
523 - Electric Fund - UG Rebuild
523 - Electric Fund - Undergrounding Projects
523 - Electric Fund - Customer Connections
523 - Electric Fund - System Improvements
~CITY OF
~PALO ALTO
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ELECTRIC HISTORICAL PROJECT ACTUALS
10
Proj. No.Project Title (No.) Start
Year
Original
Budget
FY15
ACTUALS
FY16
ACTUALS
FY17
ACTUALS
FY18
ACTUALS
FY19
ACTUALS
FY20
ACTUALS
FY21
ACTUALS
EL-06001 115 kV Electric Intertie (EL-06001)2013 50,000 46,155 1,008 745 508 - - -
EL-11006 Rebuild Underground District 18 (EL-11006)2013 475,000 49,413 364,384 -
EL-14005 Reconfigure Quarry Feeders (EL-14005)2013 400,000 69,169 129,887 169,279 - 101,121 9,681 40,649
EL-13006 Sand Hill / Quarry 12kV Tie (EL-13006)2013 157,259 4,374 1,023 82,982 -
EL-11010 UG District 47-Middlefield, Homer, Webster, Addison (EL-11010)2013 2,598,525 195,283 2,142,918 632,835 31,960 25,365 46,938 5,886
EL-14004 Maybell 1 & 2 4/12kV Conversion (EL-14004)2014 185,372 255,478 3,277 172 - 52,417
EL-15001 Electric Substation Battery Replacement (EL-15001)2015 400,000 - 293,869 21,991
EL-16003 Substation Physical Security (EL-16003)2015 200,000 1,910 46,992 75,778 88,039 103,072 659,123
EL-12001 Underground District 46 - Charleston/El Camino Real (EL-12001)2015 1,895,454 3,535 73,545 76,862 214,263 1,894,650 42,200 197,414
EL-14000 Coleridge/Cowper/Tennyson 4/12kV Conversion (EL-14000)2016 120,000 - 29,827 82,052 68,934
EL-11014 Smart Grid Technology Installation (EL-11014)2016 781,766 65,625 34,742 17,240 162,505 97,288 136,613 96,905
EL-17007 Facility Relocation for Caltrain Modernization Project (EL-17007)2017 1,700,000 - 20,299 83,287 207,484 2,088,718
EL-17005 Inter-substation Line Protection Relay (EL-17005)2017 167,000 51,503 159,057 94,563 24,102 37,127
EL-17002 Substation Breaker Replacement (EL-17002)2017 600,000 22,513 146,253 79,472 103,012 1,004,469
EL-17008 Utility Control Center Upgrades (EL-17008)2017 400,000 2,813 - 437,831 81,373
EL-19001 Colorado Power Station Equipment Upgrades (EL-19001)1 2018 900,000 - 922,316 3,126,755 232,954
EL-19002 Colorado Substation Site Improvements (EL-19002)2018 500,000 16,360 100,265 66,579
EL-21001 Foothills Rebuild (Fire Mitigation) (EL-21001)2020 2,000,000 185,384
Electric Capital Projects 689,032 3,046,563 1,125,927 810,623 3,922,536 4,063,548 4,684,142
1 Replaced instead of refurbished one of the 115kV transformers
~CITY OF
~PALO ALTO
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GAS
MAY 4, 2022 www.cityofpaloalto.org
5.a
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GAS OPERATING PRELIMINARY PROPOSED EXPENSES
12
Allocated Charges
$5.11 M
9%
CIP
$10.48 M
18%
Contract Services
$1.9 M
3%
Equity Transfer
$7.17 M
12%
Other Expenses
$3.21 M
6%
Rent & Debt Service
$1.44 M
2%
Salary & Benefits
$9.21 M
16%
Utility Purchase
$20.11 M
34%
GAS FUND PRELIMINARY PROPOSED BUDGET
~CITY OF
~PALO ALTO
5.a
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GAS OPERATING EXPENSES FY22 BUDGET TO ACTUALS
13
GL Type Budget Group Adjusted Budget YTD Actuals Q3 FY22 Remaining Budget % of total
Revenues Net Sales $ 47,865,541 $ 36,391,916 $ 11,473,625 76.0%
Other Revenues $ 1,912,060 $ 939,136 $ 972,924 49.1%
Revenues Total $ 49,777,601 $ 37,331,052 $ 12,446,549 75.0%
Expenses Salary & Benefits $ 10,919,105 $ 7,208,715 $ 3,710,390 66.0%
Utility Purchase $ 23,780,287 $ 17,369,211 $ 6,411,076 73.0%
CIP/Contract Services $ 12,125,304 $ 3,972,958 $ 8,152,346 32.8%
Other Expenses $ 1,746,940 $ 1,206,403 $ 540,536 69.1%
Rent & Debt Service $ 1,422,532 $ 519,217 $ 903,315 36.5%
Allocated Charges $ 5,281,840 $ 2,798,527 $ 2,483,312 53.0%
Equity Transfer $ 7,240,000 $ 5,571,750 $ 1,668,250 77.0%
Expenses Total $ 62,516,008 $ 38,646,781 $ 23,869,227 61.8%
~CITY OF
~PALO ALTO
5.a
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GAS 5-YR CIP 2023-27
14
$0.0M
$2.0M
$4.0M
$6.0M
$8.0M
$10.0M
$12.0M
2022 Estimated 2023 Proposed 2024 Forecast 2025 Forecast 2026 Forecast 2027 Forecast
524 - Gas Fund - Customer Connections
524 - Gas Fund - System Improvements
524 - Gas Fund - Gas Main Replacements
~CITY OF
~PALO ALTO
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GAS HISTORICAL PROJECT ACTUALS
15
Proj. No.Project Title (No.) Start
Year
Original
Budget
FY15
ACTUALS
FY16
ACTUALS
FY17
ACTUALS
FY18
ACTUALS
FY19
ACTUALS
FY20
ACTUALS
FY21
ACTUALS
GS-09002 Gas Main Replacement - Project 19 (GS-09002)1 2013 5,800,000 1,821,628 68,899
GS-10001 Gas Main Replacement - Project 20 (GS-10001)1 2013 6,614,000 2,443,978 23,297
GS-11000 Gas Main Replacement - Project 21 (GS-11000)1 2013 6,150,000 1,447,686 678,845 - - -
GS-12001 Gas Main Replacement - Project 22 (GS-12001)2015 3,668,000 306,590 348,143 383,432 1,186,940 8,400,336 412,975 51,398
GS-15001 Security at City Gas Receiving Stations (GS-15001)2015 150,000 - 15,942 69,358 6,167 31,134
GS-13001 Gas Main Replacement - Project 23 (GS-13001)2016 3,588,150 - 42,500 22,082 90,291 59,329 770,610
GS-18000 Gas ABS/Tenite Replacement Project (GS-18000)2018 1,500,000 31,015 987,792 839,223
Gas Capital Projects 6,019,882 1,135,126 495,290 1,215,189 8,552,776 1,460,096 1,661,230
1 GMR 19, 20, and 21 were combined under one contract in FY13; $9.3M actuals in FY13 and FY14
~CITY OF
~PALO ALTO
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FIBER
MAY 4, 2022 www.cityofpaloalto.org
5.a
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FIBER OPERATING PRELIMINARY PROPOSED EXPENSES
17
Allocated Charges
$0.72 M
16%
CIP
$2.02 M
45%
Contract Services
$0.24 M
5%
Other Expenses
$0.12 M
3%
Rent & Debt Service
$0.06 M
1%
Salary & Benefits
$1.34 M
30%
FIBER FUND PRELIMINARY PROPOSED BUDGET
~CITY OF
~PALO ALTO
5.a
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FIBER OPERATING EXPENSES FY22 BUDGET TO ACTUALS
18
GL Type Budget Group Adjusted Budget YTD Actuals Q3 FY22 Remaining Budget % of total
Revenues Net Sales $ 3,572,189 $ 2,532,639 $ 1,039,550 70.9%
Other Revenues $ 846,700 $ 282,656 $ 564,044 33.4%
Revenues Total $ 4,418,889 $ 2,815,295 $ 1,603,594 63.7%
Expenses Salary & Benefits $ 1,621,087 $ 860,558 $ 760,528 53.1%
CIP/Contract Services $ 3,151,519 $ 1,104,420 $ 2,047,099 35.0%
Other Expenses $ 123,176 $ 120,203 $ 2,973 97.6%
Rent & Debt Service $ 54,539 $ 39,750 $ 14,789 72.9%
Allocated Charges $ 725,232 $ 372,488 $ 352,744 51.4%
Expenses Total $ 5,675,553 $ 2,497,419 $ 3,178,134 44.0%
~CITY OF
~PALO ALTO
5.a
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FIBER 5-YR CIP 2023-27
19
$0.0M
$0.5M
$1.0M
$1.5M
$2.0M
$2.5M
$3.0M
2022 Estimated 2023 Proposed 2024 Forecast 2025 Forecast 2026 Forecast 2027 Forecast
533 - Fiber Optics Fund - Customer Connections
533 - Fiber Optics Fund - Capacity Improvements
~CITY OF
~PALO ALTO
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FIBER HISTORICAL PROJECT ACTUALS
20
Proj. No.Project Title (No.) Start
Year
Original
Budget
FY15
ACTUALS
FY16
ACTUALS
FY17
ACTUALS
FY18
ACTUALS
FY19
ACTUALS
FY20
ACTUALS
FY21
ACTUALS
FO-16000 Fiber Optics Network - System Rebuild (FO-16000) 1 2016 1,250,000 - 140,875 20,636 5,656 - 682 184,038
1 System Rebuild was place on hold until completion of fiber expansion study by Magellan; FY22 YTD is $1.0M
I I
~CITY OF
~PALO ALTO
I I
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WASTEWATER
MAY 4, 2022 www.cityofpaloalto.org
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WASTEWATER OPERATING PRELIMINARY PROPOSED EXPENSES
22
Allocated Charges
$2.86 M
12%
CIP
$3.59 M
15%
Contract Services
$0.25 M
1%
Other Expenses
$0.73 M
3%
Rent & Debt Service
$0.5 M
2%
Salary & Benefits
$3.76 M
16%
Utility Purchase
$11.85 M
51%
WASTEWATER FUND PRELIMINARY PROPOSED BUDGET
~CITY OF
~PALO ALTO
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WASTEWATER OPERATING EXPENSES FY22 BUDGET TO ACTUALS
23
GL Type Budget Group Adjusted Budget YTD Actuals Q3 FY22 Remaining Budget % of total
Revenues Net Sales $ 20,615,857 $ 14,959,360 $ 5,656,497 72.6%
Other Revenues $ 440,469 $ 208,020 $ 232,449 47.2%
Revenues Total $ 21,056,326 $ 15,167,381 $ 5,888,946 72.0%
Expenses Salary & Benefits $ 5,501,055 $ 3,568,069 $ 1,932,986 64.9%
Utility Purchase $ 11,153,615 $ 8,365,211 $ 2,788,404 75.0%
CIP/Contract Services $ 4,945,483 $ 101,612 $ 4,843,870 2.1%
Other Expenses $ 787,005 $ 546,101 $ 240,904 69.4%
Rent & Debt Service $ 485,791 $ 282,511 $ 203,280 58.2%
Allocated Charges $ 3,073,670 $ 1,703,452 $ 1,370,218 55%
Expenses Total $ 25,946,618 $ 14,566,956 $ 11,379,662 56.1%
~CITY OF
~PALO ALTO
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WASTEWATER 5-YR CIP 2023-27
24
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
$8.0M
2022 Estimated 2023 Proposed 2024 Forecast 2025 Forecast 2026 Forecast 2027 Forecast
527 - Wastewater Collection Fund - Customer
Connections
527 - Wastewater Collection Fund - System
Improvements
~CITY OF
~PALO ALTO
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WASTEWATER HISTORICAL PROJECT ACTUALS
25
Proj. No.Project Title (No.) Start
Year
Original
Budget
FY15
ACTUALS
FY16
ACTUALS
FY17
ACTUALS
FY18
ACTUALS
FY19
ACTUALS
FY20
ACTUALS
FY21
ACTUALS
WC-11000 Wastewater Collection System Rehabilitation Project 24 (WC-11000)1 2010 3,120,000 172,305 835,311 1,265,999 121,353 - 84,251
WC-12001 Wastewater Collection System Rehabilitation Project 25 (WC-12001)1 2011 3,212,000 168,802 834,017 1,383,387 346,954 - 128,619
WC-13001 Wastewater Collection System Rehabilitation Project 26 (WC-13001)1 2012 3,310,000 108,901 1,063,095 1,672,424 166,536 - 155,209
WC-14001 Wastewater Collection System Rehabilitation Project 27 (WC-14001)2015 3,410,000 103,583 203,558 2,988,313 741,531 -
WC-15001 Wastewater Collection System Rehabilitation Project 28 (WC-15001)2016 3,513,000 - - 47,557 430,621 2,200,390 117,224
WC-16001 Wastewater Collection System Rehabilitation Project 29 (WC-16001)2017 3,610,000 - 113,466 654,019 1,679,785
WC-17001 Wastewater Collection System Rehabilitation Project 30 (WC-17001)2018 3,712,000 - 42,317 191,055
Wastewater Capital Projects 553,591 2,935,981 7,310,123 1,423,931 544,087 3,264,803 1,988,063
1 SSR 24, 25, and 26 were combined under one contract in FY 2015
~CITY OF
~PALO ALTO
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WATER
MAY 4, 2022 www.cityofpaloalto.org
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WATER OPERATING BASE & PRELIM PROPOSALS
27
Allocated Charges
$5.23 M
9%
CIP
$13.73 M
23%
Contract Services
$0.86 M
2%
Other Expenses
$1.37 M
2%
Rent & Debt Service
$6.76 M
11%
Salary & Benefits
$9.59 M
16%
Utility Purchase
$21.85 M
37%
WATER FUND PRELIMINARY PROPOSED BUDGET
~CITY OF
~PALO ALTO
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WATER OPERATING EXPENSES FY22 BUDGET TO ACTUALS
28
GL Type Budget Group Adjusted Budget YTD Actuals Q3 FY22 Remaining Budget % of total
Revenues Net Sales $45,434,086 $33,098,917 $12,335,170 72.9%
Other Revenues $2,573,087 $1,903,443 $669,643 74.0%
Revenues Total $48,007,173 $35,002,360 $13,004,813 72.9%
Expenses Salary & Benefits $9,996,471 $7,253,483 $2,742,988 72.6%
Utility Purchase $21,408,998 $14,726,366 $6,682,632 68.8%
CIP/Contract Services $24,531,650 $3,911,368 $20,620,282 15.9%
Other Expenses $1,335,522 $1,167,834 $167,688 87.4%
Rent & Debt Service $6,663,395 $2,420,202 $4,243,193 36.3%
Allocated Charges $5,218,130 $3,032,176 $2,185,955 58%
Expenses Total $69,154,166 $32,511,429 $36,642,737 47.0%
~CITY OF
~PALO ALTO
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WATER 5-YR CIP 2023-27
29
$0.0M
$5.0M
$10.0M
$15.0M
$20.0M
$25.0M
$30.0M
2022 Estimated 2023 Proposed 2024 Forecast 2025 Forecast 2026 Forecast 2027 Forecast
522 - Water Fund - Water Main Replacements
522 - Water Fund - Customer Connections
522 - Water Fund - System Improvements
~CITY OF
~PALO ALTO
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WATER HISTORICAL PROJECT ACTUALS
30
Proj. No.Project Title (No.) Start
Year
Original
Budget
FY15
ACTUALS
FY16
ACTUALS
FY17
ACTUALS
FY18
ACTUALS
FY19
ACTUALS
FY20
ACTUALS
FY21
ACTUALS
WS-11000 Water Main Replacement - Project 25 (WS-11000)2011 3,785,386 380,487 4,555,303 276,672 - -
WS-09000 Water Tank Seismic Upgrade and Rehabilitation (WS-09000)2014 2,230,000 714,139 643,014 747,065 602,721 752,256 171,875 1,019,663
WS-12001 Water Main Replacement - Project 26 (WS-12001)1 2015 5,904,489 22,005 68,497 218,686 4,547,950 4,574,968 215,513
WS-15004 Water System Master Plan (WS-15004)2015 155,520 192,207 106,005 358 -
WS-13001 Water Main Replacement - Project 27 (WS-13001)2016 6,206,216 - 42,500 862 105,524 3,972,049 301,700
WS-14001 Water Main Replacement - Project 28 (WS-14001)2017 585,107 - - 22,591 244,535
WS-19000 Mayfield Reservoir Subgrade and Venting Repair (WS-19000)2019 200,000 - 36,747 258,940
Water Capital Projects 1,308,838 5,372,819 1,285,281 5,151,533 5,432,748 4,418,774 1,824,837
1 Includes Upgrade Downtown Water Main Replacement
~CITY OF
~PALO ALTO
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STAFFING
MAY 4, 2022 www.cityofpaloalto.org
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STAFFING -Vacancies and Recruitments
Division Authorized FTE Vacancies Active
Recruitments % Vacancy
Administration 18.5 2 0 11%
Customer Support 23 0 0 0%
Electric Engineering 21 9 9 43%
Electric Operations 67 21 9 31%
Resource Management 23.5 2 2 9%
WGW Engineering 25 3 1 12%
WGW Operations 70 8 3 11%
Grand Total 248 45 25 18%
32~CITY OF
~PALO ALTO
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STAFFING (continued)
Movement by Calendar Year (CY)
CY 2021 JAN -APR 2022
Hires 15 7
Promotions 19 8
Retirements 8 2
Separations 11 10
33~CITY OF
~PALO ALTO
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STAFFING RECRUITMENT AND RETAINMENT STRATEGIES
34
•Departmental Reorganization for Engineering and Operations
•Electric and Fiber
•Water, Gas and Wastewater Collection
•Higher than Market Compensation
•Retention Bonus
•Flexible and Remote Work Schedule
•New Apprentice and Training Programs
•Cross Training
•Succession Planning
•Career Fairs
•Employee or Subsidized Housing
~CITY OF
~PALO ALTO
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PROPOSED STAFFING REQUESTS
35
FY 2023 STAFFING REQUESTS (Net Change +5.5 regular FTEs and +2.6 hourly FTEs)
SCAP (Net Change +2.50 FTE)-Increase project management support to accelerate SCAP
•Associate Sustainability Program Administrator
•Principal Utilities Program Manager*
•Sustainability Program Administrator
•Senior Resource Planner (0.5 FTE)
Fiber Expansion (Net Change + 1.0 FTE) -Provide a dedicated engineer for fiber expansion and
customer projects
•Fiber Project Engineer
Keep Up (Net Change +2.00 FTE) -Increase staffing capacity to keep-up with current and new projects
•Equipment Operator
•Management Analyst
*New Classifications~CITY OF
~PALO ALTO
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PROPOSED STAFFING REQUESTS
36
FY 2023 STAFFING REQUESTS (…continued)
AMI (Net Change +2.6 hourly FTEs)-Provide adequate staffing during AMI transition
•Meter reading function over the next 3 years (2023 –2025)
•Elimination of 6.0 regular FTEs post AMI deployment
Job Classification FY 2022 FY 2023 1st H FY
2024
2nd H FY
2024 FY 2025
Regular Meter Readers 7 5 4 3 1
Hourly Staff 2 3 3 2 0
Total 9 8 7 5 1
~CITY OF
~PALO ALTO
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PROPOSED STAFFING REQUESTS
37
FY 2023 STAFFING REQUESTS (…continued)
Reclassifications
•Streetlight Fiber Technician to UTL Projects Coordinator
•SCADA Technician to Utilities System Analyst
•Electric Heavy Equipment Operator to Utilities System Operator
•Installer/Repairer Lead to Installer/Repairer Welding Lead
~CITY OF
~PALO ALTO
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STAFF RECOMMENDATION TO UAC FOR APPROVAL
38
Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council
approve proposed FY2023 Utilities Operating Budget.
Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council
approve proposed FY2023 Utilities Capital Budget.
~CITY OF
~PALO ALTO
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CITY OF
PALO
ALTO
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APPROVED STAFFING REQUESTS
FY 2022 MIDYEAR STAFFING CHANGES (Net Change +3.0 FTE)
•Increase project management support and engineering to
accelerate SCAP initiatives
•(+2.0 FTE) Electric Project Engineers to build in-house
expertise and increase engineering capacity
•(+1.0 FTE) UPS Manager to focus on SMB and
Commercial and integrate SCAP into existing programs
40~CITY OF
~PALO ALTO
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Date: May 04, 2022
FORECAST 12-MONTH ROLLING CALENDAR
Utilities Advisory Commission
City Council
May 2022 - Budget Day FY23 Operations and Capitol (A)
- Selection of Budget Subcommittee (A)
- Selection of Fiber Subcommittee (A)
- Selection of Officers (A)
- CV19 Resolution
*2025 Base Resource Contract with NCPA (C)
June 2022 - Electric Integrated Resource Plan (D)
- 2021 Annual Water Shortage Assessment Report (D)
- Wildfire Safety Migration Plan Update (D)
- Utilities Quarterly Financial Report FY22 Q2 (I)
- AMI Opt Out and Remote Disconnect Policy
*Approval of Contract for Perimeter Security Lighting for Substations
(C)
*Financial Plans and Rates (A)
*Water, Gas and Wastewater Utility Standards (I)
* Develop a Plan for Implementing a One Water Portfolio (C)
* 2021 Annual Water Shortage Assessment Report (I)
* SV8 Equinix Lease Amendment (C)
* NERC Agreement (C)
* Outage Management System (C)
*Palo Alto Unified School District Dark Fiber Service (C)
*Resolution Implementing Water Use Restrictions (C)
*Transformer Supplier Prequalification Process and Authorization (C)
July 2022 - UAC BREAK COUNCIL BREAK
August 2022 - Sea Level Rise
-
*Joint UAC/CCM Study Session on Fiber
* CA Ave and Page Mill Rd Turn Outs Project (C)
To be Scheduled
- 60kV Breaker Contract (C)
- SSR 31 (C)
- Educational Update on any Type of New Technology or Terminology
- Projects with a Resiliency Component
- Quarterly Reports
Financial Report
Utilities Programs Update
Informational EV Charger Installation Updates
Informational Bucket 1 REC Sales Updates
Informational Fiber Updates
Permit Processes for Various Energy Technologies
- Recycled Water Purple Pipe
- 5 yr WGW and Electric Project Review (2015-2020)
- Underground Process and Progress
- water quality in response citizen Bob Wenzlau
- GM Update: Fiber Hut Count (first update February 2023)
**NOTE**
- Annual Budget Meeting in May will be a special meeting after the CCM