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HomeMy WebLinkAbout2008-06-04 Utilities Advisory Commission Summary Minutes Utilities Advisory Commission Minutes Approved on: August 6, 2008 Page 1 of 4 FINAL UTILITIES ADVISORY COMMISSION MINUTES OF JUNE 4, 2008 CALL TO ORDER Chairman Rosenbaum called to order at 7:05 P.M. the scheduled meeting of the Utilities Advisory Commission (UAC). Present: Commissioners George Bechtel, John Melton, and Dick Rosenbaum Absent: Commissioners Dexter Dawes, Marilyn Keller, and Council Liaison Yiaway Yeh ORAL COMMUNICATIONS NONE. APPROVAL OF THE MINUTES The minutes from the May 7, 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: 1. FY 2008-09 Budget and Rates: The City Council is scheduled to consider the FY 2008-09 Budget and Utility retail rates for Electric, Gas, Water and Refuse on June 9, 2008. A total of 46 written protests were received by the City Clerk as of June 2nd, 2008 regarding the proposed water rate increase. According to Prop 218 rules, if more than fifty percent of property owners protest the water and refuse rate increases, the rate increases will not go forward. 2. FY 2007-08 Cost Increases: Council approved a BAO for Electric, Gas and Water on June 2nd to ensure that the FY 2007-08 budgets are sufficient to cover increased costs. Actual expenditures and revenues will be reflected in the year-end reports for the fiscal year and will be reported to the UAC when available. 3. COTP Assignment: The 15-year California-Oregon Transmission Project Assignment Agreement with SMUD, TID and MID is still in process and is expected to commence in October 2008. 4. Hydrologic Conditions: The combined hydroelectric supply projection from Western Base Resource and Calaveras for FY 2008-09 is 71% of long-term average. This is 150 GWh less than the estimate provided for development of the FY 2008-09 budget. Utilities Advisory Commission Minutes Approved on: August 6, 2008 Page 2 of 4 5. Increased Electric Costs: Electric wholesale market prices are high for the remainder of calendar year 2008 and for 2009. The expected FY 2008-09 supply cost is about $12 million higher than the budget as a result of the combination of lower than expected hydro supply and high market prices. A mid-year electric rate increase may be needed. 6. Renewable Portfolio Standard (RPS): If the renewable projects identified through the NCPA Green Power Pool process are completed, they would meet approximately 7% of our annual energy needs. The technologies include biomass-fired, landfill gas-fired, and cow gas fired generation and solar photovoltaic power. Staff is also pursuing short-term green power purchases in an effort to meet the RPS target of 20% by 2008. These efforts may fall short of the target, but staff anticipates meeting the longer-term RPS targets of 30% by 2012 and 33% by 2015. 7. APGA Gas Safety Survey: The Department of Transportation (DOT) requires that all natural gas utilities have a program promoting gas safety and perform a survey of customers’ understanding of safety issues on an annual basis. The survey is a test of the effectiveness of each utility’s public outreach programs. Palo Alto performed a baseline survey in May 2007 to show the level of safety understanding in customers and those in the neighborhood of other utilities. After the education process was implemented last year, annual surveys of our customers are required to show that knowledge of natural gas safety has been enhanced. Plans are to complete the current year’s survey during July 2008. 8. Drought Declaration: Today the governor declared the state to be in a drought. He ordered various state agencies to prioritize activities that will help California water users improve efficiency. UNFINISHED BUSINESS NONE NEW BUSINESS ITEM 1: INFORMATION ITEM: Presentation on Ground Source Heat Pump (GSHP) Demonstration Project Tom Auzenne, Utilities Assistant Director (AD) of Customer Support Services, introduced himself, Jerry Brown, a Utilities Key Account Representative, and Mr. Brion J. McDonald, the owner of the “Universal Building Systems Company, Inc.”, of Palo Alto, who was in the audience attending the Ground Source Heat Pump (GSHP) presentation to the UAC. AD Auzenne stated that the purpose of the short presentation was to describe an example of the types of technologies investigated by the Utilities Department funded under the “Research, Demonstration and Development” section of the AB 1890-mandated Electric Public Benefits Program. The presentation would be comprised of four sections: 1) a 10-minute video describing the technology and the Palo Alto project which investigated a GSHP, and how this particular technology was evaluated; 2) a PowerPoint presentation describing the location of the test site, how the technology operated in heating and cooling modes, gas and electric consumption after the unit was installed (and compared to the conventional unit), and a description of the GSHP installation and public operating display at the Children’s Library; 3) an article reprinted from “Geo Outlook” magazine; and, 4) a summary of “lessons learned.” Technical malfunctions prevented the video from being played in its entirety. The other material was presented as planned. Upon a technical question by Commissioner Rosenbaum regarding the source of Utilities Advisory Commission Minutes Approved on: August 6, 2008 Page 3 of 4 heat to bring a room to 70-plus degrees when the temperature of the earth averaged 66 degrees, Mr. Brion McDonald described a process by which the higher temperature from the discharge side of the compressor accounted for the additional heat. In recounting the “Lessons Learned,” AD Auzenne stated: 1) The operating efficiency of the technology in Palo Alto was 300 percent greater than anticipated (30% savings instead of 10%), 2) PV systems and smaller GSHP systems (less than 50 tons) have similar costs and benefits for customers (but may not be cost-effective from energy savings without rebates or other subsidies), 3) Unlike PV systems, increasing the size of a vertically-bored GSHP project can result in greater efficiency and savings (since PV has relatively fixed $/kW cost, regardless of size), 4) System modifications have been identified that may reduce installed cost for GSHP while maintaining efficiency levels (using horizontal subsurface loops with favorable soil conditions, rather than vertical boring), and, 5) System modifications have been identified that may increase installed system cost, but improve overall efficiency and economics (when PV is combined with GSHP to offset fan and pump loads). The “Next Steps” would: 1) Review and refine the economics of GSHP technology, and the market potential in Palo Alto, to determine the best way to support and promote the technology, in conjunction with the programs outlined in the Ten-Year Energy Efficiency Portfolio Plan (CMR:216:07). Implementation of a final program design would occur in FY 2009-10, and, 2) Presentation of findings to the PAUSD for consideration of the economics of and applicability of GSHP technology to the pending infrastructure improvement plans. ITEM 2: ACTION ITEM: Joint UAC/Council Proposed Discussion Items Chair Rosenbaum told the commissioners that he plans to have a meeting with the mayor and vice mayor to decide on an agenda for the July 14, 2008, joint UAC/Council meeting. He asked the commissioners to provide him a list of potential topics to discuss at that meeting. Commissioner Bechtel stated that the Utilities rate increases should be a topic of interest. He noted that the Council should be assured that operating and commodity costs are being controlled as much as possible. Chair Rosenbaum mentioned the transfer to the General Fund from the Water Fund could be a topic of interest and that it relates to rates. Commissioner Melton said that although the General Fund transfer has been discussed at the UAC, Council has never asked the UAC for input on this item. Chair Rosenbaum stated that the new Council Members may not be aware that water rates are much higher than in surrounding communities. Commissioner Melton noted that the transfer is a big hit for the Water Fund. Chair Rosenbaum responded that Palo Alto’s rates are also getting higher with respect to PG&E and to Santa Clara. Commissioner Bechtel said that the question arises as to whether the City should sell the Utilities and the overall bill compared to surrounding cities could be used as a benchmark. Chair Rosenbaum asked whether the green program efforts should be a topic for the joint meeting. Commissioner Bechtel said that there is the question of whether Utilities should be striving to be carbon neutral. Utilities Advisory Commission Minutes Approved on: August 6, 2008 Page 4 of 4 Director Fong asked whether financial reserves would be a topic of interest, particularly the Calaveras Reserve and how it should be used. Also the RPS target of 20% by 2008 may be of interest. Commissioner Melton noted that the cost of renewables is increasing dramatically and wondered whether the policy limit of .05 cents/kWh will be sufficient to meet the targets. Chair Rosenbaum noted that the renewables in the portfolio are at or below the market cost. Commissioner Bechtel stated that a discussion with Council on the Calaveras Reserve should be at the strategic level rather than the tactical level. Chair Rosenbaum noted that staff has not discussed the Calaveras Reserve with the Council yet. Commissioner Melton asked how local generation can be dealt with. He stated that Palo Alto has not developed a program to address or promote local generation. Director Fong noted that the PLUG-In program addresses this and that there is the potential for 20 MW of local cogeneration in town. She suggested that the UAC may want to talk to Council about cogeneration and the fact that it could result in an increase in Palo Alto’s greenhouse gas emissions, but reduce global emissions. She also noted that such a project would help meet the local capacity requirements. Chair Rosenbaum listed the topics that he had for discussion with the mayor and vice mayor: 1) Rates and rate increases; 2) financial reserves; 3) the possibility of missing the 2008 RPS goal; 4) the desirability of local cogeneration; and 5) the cost of renewable resources in the portfolio. The meeting scheduled for July 2, has been cancelled. The next scheduled meeting is set for August 6. Meeting adjourned at 8:15 P.M. Respectfully submitted, Marites Ward City of Palo Alto Utilities