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HomeMy WebLinkAbout2011-01-12 Utilities Advisory Commission Summary MinutesFINAL UTILITIES ADVISORY COMMISSION – SPECIAL MEETING MINUTES OF JANUARY 12, 2011 CALL TO ORDER Chair Waldfogel called to order at 7:05 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Berry, Cook, Foster, Keller, Melton and Chair Waldfogel and Council Member Scharff. Absent: Commissioner Eglash ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES The Minutes from the December 1, 2010, UAC meeting was approved as presented, with the motion moved by Commissioner Melton and seconded by Commissioner Cook. AGENDA REVIEW No changes to the agenda were requested. REPORTS FROM COMMISSION MEETINGS/EVENTS No Commission Meeting Reports. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong delivered an oral report on the following items: 1. Hydro Conditions: So far, Sierra precipitation has been about 200% of normal to date and snowpack is above 150% of normal to date. Weather forecasts for three months out are for colder than average with about average precipitation. Reservoir levels are above average with Shasta and Folsom reservoirs at their maximum allowable levels with flood control storage reservations. Western forecasts its Base Resource volume to be about average for the coming 12 months. NCPA forecasts Calaveras generation to be above average. 2. Ram Geopower: In February 2008, Palo Alto agreed to participate in a Power Purchase Agreement (PPA) between NCPA and Western Geo for up to 5 average MW of renewable geothermal energy at a price of $98/MWh. However, Western Geo was taken over by another company and the original price in the PPA cannot be maintained. NCPA has negotiated a replacement PPA with a new price of $113/MWh. Silicon Valley Power (SVP) will subscribe to most of the output. We are working on a letter of intent with SVP to allow Palo Alto to come back in a few months to subscribe to up to 30% of the output at the same price and terms available to SVP. In exchange, Palo Alto will need to agree to execute a withdrawal agreement from the original agreement clearing the way for SVP to move forward. Staff hopes to bring this to UAC this summer with a recommendation and an update on our renewable portfolio standard. Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 1 of 7 3. Anaerobic Digester Update: In January the Public Works department will release its consultant’s draft analysis of the feasibility of locating a compost-to-energy project at the City’s landfill site. The project being studied would involve anaerobic digestion of yard waste, food waste, and possibly biosolids from the wastewater treatment plant. The resulting methane would be used to generate renewable power. The draft analysis will be released on the City’s website on January 24. The initial results of the study will be presented to the community in February and in front of the City Council in late March. A presentation to the UAC is planned for March or April, and all comments will be included in the final report to Council to be delivered in September. 4. LED Holiday Light Program: Customers received a coupon in their November utility bills that allowed them to exchange a working strand of incandescent holiday lights for a strand of LED lights. We purchased 744 multi-colored and 96 white LED ENERGY STAR rated strands for the holiday exchange. The lights were displayed in the office along with a watt counter to show customers the electric usage of both old and new bulbs. We received a lot of positive feedback on our display and on our marketing piece, which included a graph showing the difference in electric use between the bulb types. A total of 502 strands were exchanged, equaling 12,077 kWh in savings. Approximately 300 strands remain in addition to the 100 in storage from last year. The excess strands will be placed in storage and used for next year’s program. 330 pounds of old strands have been recycled as of January 12, 2011, costing $165. 5. UAC Calendar: Rolling calendar of upcoming items for UAC meetings. UNFINISHED BUSINESS 1. Utilities Advisory Commission Bylaws The Commissioners reviewed the amendments to the UAC bylaws proposed by the UAC ad-hoc committee (comprised of Commissioners Foster, Berry and Melton). Commissioners Foster and Melton agreed that the amendments shown were in line with the discussion held at the meeting of the ad-hoc committee on January 4, 2011. Commissioner Berry noted his disagreement with the requirement that Council approve later amendments to the bylaws and also noted that the UAC would not have the discretion to appoint a standing budget committee at a later date without going back to Council for approval. After discussion, it was proposed to remove the sentence in Section 4.1 that stated “Standing committees may be appointed only with the approval of the Council”. It was also proposed that Section 9.1 be amended to read “The Bylaws shall be amended or repealed in accordance with the Code”, removing the reference to Council approval, so that if the Code allowed for UAC approval then the UAC Bylaws would also. ACTION: Commissioner Foster made a motion to recommend Council approval of the bylaws with the proposed amendments. Commissioner Melton seconded the motion. The motion carried (5-1) with Commissioner Berry voting no. NEW BUSINESS ITEM 1: DISCUSSION: Home Energy Reports Status Update Utilities Marketing Services Manager, Joyce Kinnear, introduced three members of the vendor team from OPOWER who are helping to put together the Home Energy Reports program. She then provided a presentation on the history of the program development, a discussion of the first report roll-out in November, and a brief overview of the customer feedback and concerns. Of note is that 18,648 customers have received the report and only 34 have asked to op-out. About twice as many customers as the opt-out number have requested more information on the program and about other ways that the utility can assist Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 2 of 7 them in reducing energy usage. Most of the questions about the program have been related to concerns about privacy and whether the neighbor comparisons are accurate. She explained that customer usage information is kept private and that no other person can identify an individual person’s energy usage. The explanation for how the comparison is developed and that it provides useful information to customers was given. Commissioner Foster raised the question about why customers who have solar electric (PV) systems can not receive the reports. Stephanie Berner of OPOWER said that the product works on usage information, so the modules do not work for customers who have zero usage. She pointed that that primarily due to Palo Alto’s request, OPOWER is looking at potentially adding this capability in the future. Commissioner Keller asked if it would be possible to add water to the reports’ energy (gas and electric) comparison. Kinnear said that Palo Alto has requested this capability. Berner added that many utilities in the west would like this capability, and that the addition of water to the reports is on the way. Chair Waldfogel appreciated the discussion about privacy issues, but he wanted to make sure that all questions were completely dealt with. He asked for specific details on the internal controls at OPOWER and in how data transfers were completed with appropriate security. Berner responded that OPOWER gets the customers and usage data from the City in a secure, encrypted process. OPOWER follows standards industry controls internally for the housing of the data. Also, no individual customer or personally identifiable information is presented to anyone other than that customer. Clayton Schloss of OPOWER added that the website portal is also gated, so that customers can only access their own information through the website. Chair Waldfogel requested details on the ownership of the data and its usage. Berner responded that the data can only be used with the program and is the City’s property. Commissioner Cook asked whether the opt-out rate (about 0.18%) is typical for this type of program. Berner said that it is an unusually low rate. Schloss added that customers typically are the most likely to opt out and are the most vocal in the first mailing or two. Cook also asked for more details on how the tip module is developed for the customer reports. Berner said that the modules help to turn what is learned from the report into action. The tips vary by both individual report and by cycle. They can be targeted to a particular usage pattern. Commissioner Keller wondered if customers who do reduce energy usage will receive a pat on the back. Commissioner Foster pointed out that the program contract allows for 10 reports, and that customers should get updates on their usage. He also mentioned that while OPOWER is serving many utilities, Palo Alto is one of the first to have nearly all customers in the program, and he is pleased that most customers can receive this benefit. ITEM 2: ACTION: Water Shortage Implementation Plan Senior Resource Planner Nico Procos provided a presentation, including the background, on the development of the proposed plan to split up the water available in a water shortage condition (drought) among the member agencies of the Bay Area Water Supply and Conservation Agency (BAWSCA). Under the plan, water is divided by a formula which is weighted one-third on the Individual Supply Guarantee (the long-term contractual entitlement) and two-thirds on a seasonal usage calculation that penalizes water use in the summer months. The formula is also bounded so that no agency is reduced less than 10% and no agency is reduced more than 20% more than the average reduction for all agencies. The formula also includes an adjustment for East Palo Alto to ensure that agency has enough water to meet basic health and safety requirements. The formula expires in 2018 and is only in effect for water shortages that require water use reductions of up to 20%. Procos stated that, for Palo Alto, the formula is not as beneficial as the expired formula, but results in a lower reduction than the average reduction for the BAWSCA agencies. Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 3 of 7 Procos stated that the representatives of all the BAWSCA agencies that were involved in the development and negotiation of the formula unanimously agreed to recommend the proposed formula to their governing boards. If any agency does not approve the proposed formula, then the BAWSCA Board would consider approval of a formula. If the BAWSCA Board were unable to approve a formula, then the San Francisco Public Utilities Commission (SFPUC) would decide on the formula. Commissioner Cook asked what happens if there is a reduction of greater than 20%. Assistant Director Jane Ratchye replied that the SFPUC would determine the reduction formula in that event. However, Ratchye noted that the SFPUC has adopted level of service goals for its Water System Improvement Program such that the greatest water supply reduction is 20%. In addition, since the 1987 through 1992 drought, the SFPUC has adjusted its system operations to make water shortages less likely by preserving water in storage rather than producing electricity and by calling for water use reductions earlier in a multi- year drought event. Chair Waldfogel asked if the formula would have been triggered in the past. Ratchye stated that she hadn’t done the analysis, but said that she thinks it would have been triggered in the 1987 through 1992 drought. Commissioner Berry inquired about the default process if any of the BAWSCA members did not approve the new formula. Specifically, did staff have a sense what the SFPUC might do if they had to make a decision on the process? Procos responded that the contract is clear that the BAWSCA Board of Director’s would be given an opportunity to approve a new formula and the SFPUC would only act if the board did not. Procos added that it is likely that the BAWSCA Board would exercise its authority to resolve the issue. However, assuming the SFPUC was given the opportunity, Procos does not know what approach it may take. ACTION: Commissioner Berry made a motion to recommend Council approval of the proposed Water Shortage Implementation Plan. Commissioner Melton seconded the motion. The motion carried unanimously (6-0). ITEM 3: DISCUSSION: Draft 2011 Utilities Strategic Plan Assistant Director Jane Ratchye stated that the Utilities Strategic Plan is close to final, but that she is soliciting additional feedback before bringing the plan back to the UAC for action at the next (February) meeting of the UAC. She provided a presentation of the highlights of the four themes of the strategic plan: safety and reliability, customer service excellence, cost management, and environmental sustainability. One strategy that was added was to ensure that the strategy itself was implemented as this will require resources to manage, track and report regularly so that the UAC and Council can follow the progress towards completion of the initiatives and whether the performance targets are met. Commissioner Berry stated that he was very involved with staff in the development of the strategic plan and requested that the UAC use this opportunity tonight to provide staff feedback on the draft plan so that it can be finalized for consideration at the next meeting. Commissioner Keller asked why objective BP1 (ensure a reliable supply of utility resources) did not include anything about back-up supplies and emergency preparedness. Ratchye said that not all Utilities activities are reflected in the Strategic Plan, but it is intended to capture those areas that need continued focus and, especially, those areas that need improvements, changes in focus, additional resources, or changes in practice or operations. Commissioner Keller asked if there needs to be a placeholder for important issues that may not be an issue now, but could be in the future. Ratchye stated that the strategic plan will Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 4 of 7 necessarily change as we move forward with implementation and that new initiatives will be added as others are completed. Since the plan will be reported on every six months, there will be opportunities to make adjustments to the strategic objectives and performance measures. Regarding objectives BP4 and BP6 relating to customer service, Commissioner Keller asked if there was a way to add outreach for new development. She is concerned that there are resource efficiency opportunities for new buildings that could be incorporated in the design phase. She suggested coordinating with the City’s Economic Development Manager to determine any upcoming development plans. Regarding objective PT1 (be an attractive place to work), Commissioner Keller noted that the performance measure relates only to new employees and not to retaining valued existing employees. Chair Waldfogel stated the draft strategic plan omits the rate of return to the City provided by the Utilities Department and, since it is a key element of the City’s revenues and the Utilities expenses, it should be captured in the strategic plan. He recommended the financial perspective as the location for an objective related to the City as a stakeholder. Council Member Scharff commented that the stable rate objective is embedded in the strategic plan, but that is premature since the laddering strategy and rate stability issue will be reconsidered by the UAC and Council as a result of an added implementation task in the proposed Gas Utility Long-term Plan (GULP). He added that the performance measure for objective C3 (I expect to pay a reasonable bill) should not necessarily be the aggregate Utilities bill, but rather each fund separately. Otherwise, the information about the relative position of each fund is lost. Commissioner Berry added that he did not think the performance measure for objective C3 related to the annual rate change should necessarily be the same for all Utilities funds. Ratchye acknowledged that, at least in the short term, rate increases for water are likely to be higher than 10% per year. Commissioner Berry stated that, if that was the case, it is not a good idea to include a performance measure that you know you are not likely to meet and suggested having different targets for each fund. This would signal to the Council and public what the direction of rate changes are likely to be. Commissioner Keller added that predictable rates are valuable if communicated to customers to allow them to make informed investment decisions regarding efficient appliances and other improvements. Regarding objective C4 (care for our environment), Commissioner Cook stated that environmental sustainability should be across all operations. He indicated that he supported objective PT4 (investigate and adopt innovative technologies) and agreed with Chair Waldfogel that the equity transfer should be added to the financial perspective. Minimizing financial risk should be incorporated into the financial perspective as well. Commissioner Cook also indicated that environmental sustainability should be included in the mission statement. Commissioner Foster agreed that environmental sustainability should be included in the mission statement and that the last phrase “…in support of the vibrant community of Palo Alto” should be omitted. Commissioner Foster stated that objective C1 (I receive safe and reliable service) is about service interruptions, yet the performance measure was about response time after an interruption. He suggested that the measure should be related to the number of interruptions/outages. Regarding objective PT4 (investigate and adopt innovative technologies), Commissioner Foster recommended additional clarity on the performance measure target of three new technologies evaluated per year. He wanted to ensure that it was at least a somewhat extensive evaluation, perhaps including a trial or pilot program, rather than solely a paper economic evaluation. Commissioner Foster also stated that the performance measure and target for objective F3 regarding rate structures essentially is a policy change and this type of policy change should be debated and discussed prior to be incorporated into the strategic plan. Ratchye responded that Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 5 of 7 she agreed with Commissioner Foster’s suggestion and will move the idea to a strategic initiative as something that should be addressed and a policy call made. Commissioner Berry stated that the performance measure for objective PT1 (be an attractive place to work) should be employee satisfaction as determined by a regular, periodic survey. He suggested that this is the best way to determine if employees feel that they are working in an attractive place. It is also a way for management to address any issues that are raised. Regarding objective C1 (I receive safe and reliable service), Commissioner Berry advised that recovery time is important as well as number of outages. ITEM 4: ACTION: Proposed Ten-Year Gas Energy Efficiency Goals Resource Planner Christine Tam provided a presentation on the development of the ten-year gas energy efficiency (EE) goals. She showed that over 90% of residential gas use is for water and space heating. For commercial customers, about 75% of gas used is for water and space heating with about 20% for cooking. Tam stated that the goals were developed by first assessing 40 gas efficiency measures to determine how much gas could possibly be saved. This is the technical potential and is equal to about 45% of the total gas usage. The amount that can be saved with cost-effective energy efficiency measures is equal to about 34% of the total City gas usage. Tam indicated that there are many barriers to achieving the entire “economic potential” and that the achievable, or “market,” potential is about 5.5% of the Citywide gas usage. This 5.5% is the proposed ten-year gas EE goal. Commissioner Keller asked whether the projected potential capture savings from new construction projects. Kinnear responded that only energy savings above the City’s building code, or the CALGREEN requirements, which exceeds the Title 24 building code. UMS staff is working with the Building Planning department to offer rebates to new construction projects with energy savings that exceeds the City’s building code. Tam explained that the bulk of the savings potential is for space heating for both residential and commercial customers. The next biggest end use with the potential for saving gas is for water heating. For residential customers, barriers to achieving the full economic potential include: high upfront costs, long payback periods, long equipment life, the fact that contractors often do not have high efficiency alternatives in stock, and the fact that water heater permits are time consuming at a point of immediate need, thus reducing customer compliance with requirements. For commercial customers, the barriers include the lack of incentives for either tenants or landlords in multi-tenant, rented buildings and business uncertainty and cash flow issues for small businesses. Tam noted that the proposed ten-year goals are similar to those of PG&E and other California utilities. Since the proposed annual goals are higher than in the past three years, costs for the programs – both for program administration and rebates and incentives – are expected to increase over the ten-year period. In summary, Tam advised that the goals are aggressive – 5.5% compared to the 3.2% ten-year goal set three years ago. She added that the proposed goals were developed using a comprehensive analysis and that the implementation plan – expected in the spring – will contain more details on programs and resource requirements. The plan is to seek all gas EE savings possible and that the goals should be achievable if the resources are increased. Commissioner Foster asked if staff evaluated a dramatically ramped up program to capture a larger share of the economic potential. Tam stated that scenario analyses were performed concluding that the impact on retail rates goes up dramatically to capture a greater fraction of the potential. Commissioner Foster added that the triple net leases definitely remove the incentive for either party – the landlord or the tenant – to invest in improvements and equipment that would result in energy savings. He also noted the fact that solar hot water heating systems were so non cost-effective. He said that since the potential for savings is Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 6 of 7 Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 7 of 7 so high for the water heating end use that we need to find a way to improve the economics of solar hot water heating installations. Chair Waldfogel indicated that he and others on the UAC undoubtedly have many comments on how to achieve the gas EE savings goals most effectively, but that the implementation plan may be the most appropriate place to make those comments. At this time, the establishment of the goals is the issue. Commissioner Berry questioned the economic incentive to save gas for the utility. He noted that for the electric utility, avoiding increased electric load or reducing load through energy efficiency can result in avoiding the cost of large, expensive generation and/or transmission equipment. On the gas side, this is less apparent until there is a real market for carbon emissions. Commissioner Melton indicated that increasing the gas EE goal is not necessarily the right thing to do. He indicated that it may not be economic to do so and may not be the right economic environment to reduce gas sales. He indicated support for maintaining the current goals as we need to spend more money for a smaller result. ACTION: Commissioner Foster made a motion to recommend Council approval of the proposed ten-year gas energy efficiency goals for the period 2011 to 2020. Commissioner Cook seconded the motion. The motion carried (5-1) with Commissioner Melton voting no. ITEM 5: ACTION: Form an Ad Hoc Committee on Innovation, Technology and Projects ACTION: Chair Waldfogel appointed Commissioners Foster, Keller and Cook to the Ad Hoc Committee on Innovation, Technology and Projects. By Section 4.1 of the UAC’s proposed Bylaws, this Ad Hoc committee will be in place until June 30, 2011. ITEM 6: ACTION: Potential Topic(s) for Discussion at Future UAC Meetings None COMMISSIONER COMMENTS Commissioner Cook announced that on January 25, 2011 he would be attending the first session of the Northern California Power Agency’s (NCPA) Strategic Issues Conference – NCPA 101 History and Introduction. Meeting adjourned at 10:00 P.M. Respectfully submitted, Marites Ward City of Palo Alto Utilities