Loading...
HomeMy WebLinkAbout2008-04-02 Utilities Advisory Commission Summary Minutes Utilities Advisory Commission Minutes Approved on: May 7, 2008 Page 1 of 4 FINAL UTILITIES ADVISORY COMMISSION MINUTES OF APRIL 2, 2008 CALL TO ORDER Chairman Rosenbaum called to order at 7:00 P.M. the scheduled meeting of the Utilities Advisory Commission (UAC). Present: Commissioners George Bechtel, Dexter Dawes, John Melton, and Dick Rosenbaum Absent: Commissioner Marilyn Keller and Council Liaison Yiaway Yeh ORAL COMMUNICATIONS Bruce Hodge, Palo Alto resident, spoke to the Commission regarding carbon emissions. He asked for the utilities plan to reduce emissions over the next 20 years. Chair Rosenbaum directed him to recent memos updating the Commission on such efforts. APPROVAL OF THE MINUTES The minutes from the March 5, 2008, were unanimously approved. AGENDA REVIEW No changes to the agenda were requested. REPORT FROM COMMISSION MEETINGS/EVENTS There were no reports. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong gave the following updates: Retail Rate: The UAC and staff recommendation for retail rates was unanimously approved by Finance Committee on March 18th and is expected to go to the full Council on June 9th. Fong also provided a quick update on past and upcoming customer communications regarding the rate increases including press releases, Frank’s Weekly memos, and notifications through customer bills, letters, postcards and customer meetings. Hydro Conditions: Northern Sierra precipitation is at 80% of average to date and because of low reservoir levels (about 80% of average), hydro electric generation is expected to be below average if precipitation resumes median levels for the rest of the season. New Lodi: NCPA’s 250MW new natural gas-fired Lodi project has been fully subscribed and permitting work has begun, however, Palo Alto declined to participate in the project as the City’s long term capacity needs require generation to be sited within the Great Bay Area. Utilities Advisory Commission Minutes Approved on: May 7, 2008 Page 2 of 4 Local Cogen: Staff continues to explore customer-sited cogeneration options within the City. Earth Month Activities: Copies of Earth Month activities provided to the Commission, and also posted on the City’s website, indicate special presentations planned for April 3, April 12, and April 16 with the Greenlight Film Festival planned for Thursday April 17. Compact Fluorescent Lights: The City of Palo Alto Utilities (CPAU) is offering 5 for $1 compact fluorescent lights through Palo Alto Hardware and Peninsula Hardware. Commissioner Dawes noted that the supplies are quickly snapped up at these locations, and suggested better inventory management for the inevitable customer demand for the item. UNFINISHED BUSINESS NONE NEW BUSINESS ITEM 1: INFORMATION ITEM: Energy Risk Management Report for the Second Quarter, Fiscal Year 2007-2008 Karl Van Orsdol, Energy Risk Manager, summarized the quarterly report. He noted that there were no exceptions to report and that all transactions were fully in accordance with the City Energy Risk Management Policies, Procedures and Guidelines. Van Orsdol noted that the overall credit exposure was approximately $7.5 million for gas and electricity combined. This exposure is significantly lower than from previous years. Van Orsdol also noted that the load resource balance is within limits and reflects the increasing importance of non-carbon sources of electricity in the City’s electricity purchases. He pointed out that all but one of the City’s counterparties maintains an excellent credit rating, but that the City has no exposure with that one outlier. ITEM 2: ACTION ITEM: Proposed Increase in Utility Water, Gas, Wastewater, and Electric Connection Fees and Water and Wastewater Capacity Fees Roland Ekstrand, Senior Engineer gave a short presentation explaining the methodology for calculating each of the two separate groups of one time charges (connection fees and capacity fees) for new or upgraded utility services. Eckstrand replied to questions regarding the impact of the capacity fees on low income housing, calculating the capacity fees for single family housing, and the completeness of the connection fees in capturing the City’s cost of installing new services. Commissioner Rosenbaum requested that the connection fees and the capacity fees be voted on separately. The connection fees were approved unanimously. The capacity fees were approved 3 to 1 with Rosenbaum the dissenting vote. Action: Commissioner Dawes moved to approve the recommended connection fee increase. Commissioner Bechtel seconded the motion. The motion carried unanimously. Commissioner Dawes moved to approve the recommended capacity fee increases. Commissioner Melton seconded the motion. The motion carried by a vote of 3 to 1 with Commissioner Rosenbaum dissenting. Utilities Advisory Commission Minutes Approved on: May 7, 2008 Page 3 of 4 ITEM 3: ACTION ITEM: Recommendation to Assign the Seattle City Light Exchange Contract to Another NCPA Member Agency Senior Resource Planner Shiva Swaminathan explained the rationale for the recommended assignment of the Seattle City Light (SCL) Contract. He noted that flows from the SCL exchange contract (Palo Alto receives energy in June through October and provides energy from November through March) do not fit with the electric portfolio since the hydro generation is highest in the spring and summer months and the portfolio has excess energy, but is deficit in the winter, when Palo Alto must return the energy. In addition, Swaminathan said that the value of the exchange is and is projected to be negative given the energy price differences between summer and winter. Commissioner Melton asked why others value the SCL Contract while Palo Alto does not. Swaminathan replied that other agencies have different portfolio profiles. Moreover, they might be able to achieve additional value by doing their own scheduling and trading, and the nature of their transmission assets may provide more pathways for buying and selling energy. Action: The UAC acted on a combined motion with Item 4 below. ITEM 4: ACTION ITEM: Recommendation to Lay-off the City’s Share of the California-Oregon Transmission Project Swaminathan explained that the primary justification for the recommended long-term lay-off of the California-Oregon Transmission Project (COTP) is that the cost of the asset is greater than its value. COTP, located within the Western Area Power Administration-Sacramento Municipal Utility District (SMUD) control area has more value to entities within the SMUD control area. Commissioner Dawes asked what the risks of the layoff are to Palo Alto. Fong responded that, as outlined in the report, the risks include: 1) Palo Alto’s access to resources in the northwest will be reduced and these resources could become valuable to meet the City’s Renewable Portfolio Standard (RPS) goals; and 2) the risk that the counterparties harvest some value from COTP, but do not pay the bills – this could conceivably occur for a maximum of two months. Action: Commissioner Dawes moved to approve both the recommended SCL assignment and the COTP layoff. Commissioner Bechtel seconded the motion. The motion carried unanimously. ITEM 5: INFORMATION ITEM: Utilities Report: Water, Gas, Electric, Fiber and Financial Issues Updates Staff offered no presentation on this item, but answered questions from Commissioners. On the water report, Commissioner Dawes asked about the likelihood of litigation on San Francisco Public Utilities Commission’s Program Environmental Impact Report for the Water System Improvement Program Assistant Director Jane Ratchye responded that it depends on what alternative San Francisco selects. Commissioner Melton noted the grim progress on the new water contract negotiations. There were no questions on the gas report. Regarding the electric report, Commissioner Bechtel asked what the definition of “local” means in terms of the local capacity requirements. Senior Resource Planner Shiva Swaminathan explained that this is defined by the California Independent System Operator and that not all of it needs to be in the Greater Bay Area load pocket. Utilities Advisory Commission Minutes Approved on: May 7, 2008 Page 4 of 4 On the financial report, Commissioner Melton asked why the expenses are front loaded in the first half of the fiscal year. Utility Rates Analyst Eric Keniston responded that the amounts in the first half of the fiscal year include commitments as well as actual expenses. Commissioner Dawes remarked on the great profitability of the fiber fund. ITEM 6: INFORMATION ITEM: Energy Policy Act (EPACT) Reporting Update on Time Based Metering and Pricing Commissioner Melton stated that CPAU is not expanding its time-based metering options due to short-term software and hardware issues. However, the report also says that even if all the software and hardware were in place, this doesn’t make sense given CPAU’s portfolio costs and profile. Director Fong agreed that even if everything was in place, it still may not make sense to offer these rates, however we must study them under the EPACT of 2005 and make a decision whether we implement them or not. Commissioner Bechtel also noted that it would make sense when/if customers demanded it. Given that TOU rates have been in existence for six years and customers have not taken them suggests that they are not in demand. Commissioner Rosenbaum offered that another reason that this wouldn’t make sense at least for the residential sector is the fact that the residential customer load is only 16% of the total load, which is not enough to provide much mutual benefit. He suggested that this should also be mentioned in the report. ITEM 7: INFORMATION ITEM: 2007 Statewide and Palo Alto Business Customer Satisfaction Survey Results Commissioner Dawes observed that it was mildly disappointing to see CPAU’s ratings fall from 2 years ago and be lower than other NCPA members. He wondered if staff has developed any programs to address the concerns raised on the report. Director Fong responded there were a few things to mention here. Unfortunately this year the number of major accounts surveyed was much smaller, and they usually provide more favorable evaluation of utility services. Second, there is greater focus on customer service to small (non key) accounts. We are somewhat restricted in terms of our customer service representatives for smaller accounts due to other projects, and that may have also impacted the results. We also know that the web site could be improved and we have plans to tweak the web site so that information is more easily accessible. Commissioner Melton perceived that the power delivery score declined and that reliability is always the customer’s most important issue. He said that he personally had not experienced power outages, but asked whether outages are more common in some areas of the city. Fong replied that capital improvement projects have been moved up to address problems in some targeted areas (e.g. California Avenue business district). In summary, we are disappointed that these are the results, we are not surprised, and we are taking action to address the issues raised in this survey. The next schedule meeting is set for May 7. Meeting adjourned at 8:45 P.M. Respectfully submitted, Marites Ward City of Palo Alto Utilities