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HomeMy WebLinkAbout2011-09-07 Utilities Advisory Commission Summary Minutes _______________________________________ FINAL UTILITIES ADVISORY COMMISSION MEETING MINUTES OF SEPTEMBER 7, 2011 CALL TO ORDER Chair Foster called to order at 7:01 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Cook, Eglash, Foster, Keller, Melton and Waldfogel. Absent: Commissioner Berry and Council Member Liaison Scharff. ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES Amendments to the July 20, 2011 UAC meeting minutes were proposed as follows: 1. Change the ninth paragraph under Item #2 so it reads as follows: “Commissioner Keller expressed that she is in favor of stability. Predictable rates are more conducive to investing in conservation measures, as customers are more inclined to make investments when they can predict future savings. She added that CPAU has the benefit of focusing on customers, unlike PG&E, which focuses on shareholders. People value the service of having stable and predictable rates.” 2. Add an eighteenth paragraph under Item #2 as follows: “Commissioner Keller commented that there was an advantage to buying when we want rather than at the fluctuating market price. For example, by buying ahead of the delivery month, we can avoid buying gas during a natural disaster such as a hurricane that disrupts prices. Fong responded that there is never certainty that market prices will be short spikes or sustained. Many of the price spikes are sustained for some period and a laddered strategy cannot protect against these price spikes.” The minutes from the July 20, 2011 UAC meeting were approved as amended. AGENDA REVIEW No changes. REPORTS FROM COMMISSION MEETING/EVENTS Commissioner Melton reported that the City held a public meeting to allow residents to ask questions about the upcoming water rate change. However, only one resident attended so it seems clear that there was less interest in attending an event in person than to comment via email. Commissioner Waldfogel commented that the City should consider alternative communications methods including video conferences, which could induce more participation. City of Palo Alto Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 1 of 8 UTILITIES DIRECTOR REPORT In the absence of Director Valerie Fong, Assistant Director Jane Ratchye presented Fong’s Utilities Director Report. 1. New generation of EV Chargers in City Hall garage: Two new EV chargers were installed at the City Hall garage in late July. We got these chargers under the Charge Point America grant. Over the past month, approximately 4 cars on average have utilized these chargers each day. 2. Esource has just completed a survey of business customers and how utility companies meet their needs. Palo Alto ranked third nationwide. CPAU stood out from other utilities in a number of areas, most notably the high scores business customers gave CPAU for delivering reliable energy. CPAU was also recognized as an environmental steward by its large business customers, who appreciate the utility’s efforts in helping them manage their energy costs. Large business customers also highly rated their CPAU representatives, indicating their availability and attentiveness was a big factor in overall satisfaction. 3. Three water efficiency workshops were held in August. All were very well attended and received very positive feedback from residents. A workshop on September 24 will be a “Hands-On” family planting session at the new native plant/low water use demonstration garden at Lucie Stern. The demonstration garden is a collaboration the City, Acterra and the Bay-Friendly Landscape and Gardening Coalition. Funding sponsors include the City, Acterra, the Bay Area Water Supply and Conservation Agency (BAWSCA), the California Native Plant Society, EarthCare Landscaping, Lyngso and community members. 4. Update on R&D opportunities. In the past couple of weeks we were presented with an opportunity to partner in the Helios Community Solar Project (HCSP) – a fully integrated approach to high penetration community solar. The project sponsor (Distributed Energy Consumer Advocates or DECA), assembled a team to apply for a grant from the California Solar Initiative Research, Demonstration, and Deployment Program. Other participants were Stanford’s Program on Energy and Sustainable Development and EnerVault Corporation. Staff responded promptly and put together a team and budget estimates within a couple of days. Unfortunately, last minute changes in the proposed partnership (EnerVault pulled out) and last minute expansion of the project definition and budget led staff to conclude that further participation was not wise. 5. Update on Water Rate Changes: The Council will vote on the revised changes to water rates on September 19 following a Public Hearing. As required by Proposition 218, all customers and parcel owners in Palo Alto were notified of the proposed changes to water rates in a letter sent on July 29. The Utilities Department also organized a community meeting on August 29 to discuss any issues related to water costs and rates. The meeting was attended by Vice Chair Berry and Commissioner Melton, but had minimal public attendance. 6. PG&E Pipeline Safety: PG&E filed its Natural Gas Transmission Pipeline Replacement or Testing Implementation Plan on August 26 as required by the CPUC. Phase 1 of the proposed plan covers pipeline work in urban areas. The work will be undertaken between 2011 and 2014, and has a total cost of $2.2B, of which $222M is proposed to be paid for by shareholders (the additional revenue requirement for 2012 -2014 is $768M). Costs for Phase 2 are yet to be determined. Under PG&E’s proposal, Palo Alto’s local transmission rate would increase from $0.025 to $0.050 per therm - an increase of $1.10 per month for an average residential customer. Staff is monitoring the developments Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 2 of 8 in this case and plans to attend a meeting with PG&E to discuss cost recovery. Staff will intervene in the appropriate CPUC proceeding in accordance with Gas Utility Long-term Plan strategy #5: “At a reasonable cost, protect the City’s interests and maintain access to transportation on par with PG&E’s core customers by participating in the regulatory and legislative arenas when the potential impact on the City is aligned with the cost to intervene and the probability of success.” 7. Legislative Update: Assembly Member Bradford, who chairs the Assembly Utilities & Commerce Committee (on behalf of LADWP) has gutted and amended one of his bills, AB 1391, inserting language that would give the California Energy Commission (CEC) RPS enforcement and penalty authority over publicly owned utilities for the first time ever. With September 9 as the last day for bills to pass the Assembly and Senate, this bill will move quickly over the next couple of days. NCPA has been meeting with key legislators and staff to beat back this effort, and is asking members to contact their representatives to express their opposition. This week, the City sent letters to Senator Simitian and Assembly Member Gordon urging them not to accept this change of authority. UNFINISHED BUSINESS 1. Subcommittee Proposed Response to the Council Colleagues’ Memo The UAC subcommittee did not complete its work on this item. Chair Foster suggested it be re-agendized at the next meeting for a full Commission discussion. Commissioner Melton asked if it there should be an effort to reach out to the authors of the Colleagues' Memo or if the UAC should just submit a report to the Council. Commissioner Waldfogel remarked that the item should not be held up any longer and to discuss it next month even if no outreach has been done. Chair Foster recommended that outreach should be attempted and suggested that four Commissioners could each contact one of the authors. NEW BUSINESS ITEM 1: DISCUSSION: Report on the Status and Future Alternatives to Consider for Completion of the Electric Overhead to Underground Conversion Program Assistant Director Tomm Marshall introduced Senior Electrical Engineer Tom Ting, who provided a presentation on the information contained in the written report. Chair Foster opened the floor to clarifying questions from the commissioners. Commissioner Eglash asked if other cities do undergrounding, or have overhead systems, and does it depend on if it's a new development. Marshall responded that underground utilities are required in new developments in Palo Alto and other cities, but PA has many older neighborhoods that would need to be converted from overhead to underground. Commissioner Melton asked for clarification on prior information regarding funding the AT&T costs. Could Utilities pay for these costs or would they need to come from the general fund? Marshall responded that he would need to clarify with the City Attorney’s office, but if they cannot be collected from rates, there may be other ways, such as assessment districts. Commissioner Melton asked if every property owner must agree to an underground district and how do you work with customers who refuse conversion. Marshall stated that the decision on an underground district is the Council’s. Staff will survey customers in an underground Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 3 of 8 district on their level of interest and provide the results to Council who make the final decision. Once established, all customers must convert from overhead to underground service. Commissioner Waldfogel asked if the $5000-$10,000 cost of conversion is a cost that the homeowner has to pay. Marshall responded this is correct. Commissioner Waldfogel asked if the substructures work was done concurrently. Marshall stated that the cost estimates are based on joint trench construction which provides significant savings on costs. The primary cost of the work is digging the trench and restoration. Commissioner Waldfogel stated that if AT&T does not participate in the undergrounding with the other utilities it could put them at risk for a higher cost should there be a City rule change that requires undergrounding of facilities in the future. Marshall stated they would likely fall back to the CPUC rules on undergrounding. Public Comment Jeff Hoel asked why anyone would do an underground district if the cost to maintain it was higher than aerial systems. The current report indicates a 10% AT&T, 10% Comcast, and 80% CPAU and customer split. It was previously reported that cost was split into thirds between the three utilities. Gary Lundgren recommended accelerating the undergrounding program. He recommended not pursuing the option to change a rule at the CPUC as it would be too costly for legal fees. He stated that the AT&T cost was only 10% of the cost so the City or customers should pay that. He also noted that it is a good time to do undergrounding projects as there is the possibility of getting federal stimulus grants and installation costs can be low in this economic environment. Herb Borock noted that the useful life of an undergrounding is identified as 30-40 years in one report and 40-50 years in another. He stated that it should be at least 50 years. He asked who paid for the Electric Fund’s share of the costs – residents, businesses, or all customers. He stated that the rebuilding of underground districts delays the construction of new districts. These should be done in addition to the new projects. He suggested an alternative, which we may not like, is to underground just the electric service and retain the AT&T lines on the aerial poles. He stated that the main concern is the equity with the entire City paying for the undergrounding in certain areas. Commissioner Discussion Chair Foster asked for clarification on the split of costs between the three utilities. Marshall stated that the 60-20-20 split that was previously reported was only for the substructures. It did not include the cost of electrical facilities. Commissioner Eglash stated there is a question of equity and fairness across the City. Residents appreciated the aesthetic benefit and any decision to stop leaves some with and some without. A decision to discontinue the undergrounding program may need to be brought to a vote of the people. He is struck by the cost of completing the program ($281 million) and ongoing maintenance. He does not see a sensible way to proceed given these costs, but we need to involve public in discussion. Commissioner Keller was struck by the cost and concerned about the equity issues. She stated we should try to quantify the value of the benefits – property value, safety (fire, etc.), improved reliability; but greater exposure to electric and magnetic fields – noted in the report from January 2010, and maybe ask real estate professionals for advice to better compare the costs and benefits. Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 4 of 8 Commissioner Waldfogel asked what is or was the rule that required undergrounding at homes. Marshall replied that there was a rule that required boxes be placed in the sidewalk and that services be underground, but this was changed about 10 years ago since facilities were in wrong place and had to be abandoned. Commissioner Melton agreed with speaker Lundgren not to pursue any changes with the CPUC. He stated that we need to proceed under our existing rules. He is torn between cost and desire to have facilities undergrounded and felt that it would be best to put the alternatives before the public to decide which direction to move in. We should move as quickly as we can to a decision. Commissioner Keller stated she is not necessarily a proponent of undergrounding, but wants to see benefits quantified. She also felt that we should look at how else we could spend the money needed for this program. Commissioner Waldfogel stated that the accelerated program would cost $17.50/month per customer so should show the public this as it may be affordable. Commissioner Eglash asked how much of system is already underground. Marshall stated half of city, but only a small amount of residential areas. Commissioner Melton stated that the remaining areas to be undergrounded are residential and primarily a residential issue. It is not just $17.50 per month per customer, but also the cost of converting their services. Commissioner Eglash stated that approximately half of the city has underground facilities which should be kept in mind in terms of equity. Marshall stated that some of these facilities went in underground when the area was developed and that a majority of the money for undergrounding has come from business customers, collected through the rates, who make up 80% of our revenue. Commissioner Cook disagreed with AT&T’s position that the residential areas were not of public benefit, felt that we should continue the program with all customers paying for cost, we should not vote to discontinue the program, and advocates moving forward with the accelerated program. Commissioner Keller asked if we always know that maintenance cost was higher for underground systems. Marshall replied yes, this was not a surprise as this was noted in reports in the 1960’s. He also mentioned that the old cables lasted 30-40 years, but new ones are expected to last 40-50 years. Commissioner Keller felt that we should sit back and reassess for residential areas. The fact that it was a good idea in the past is not a reason to continue now. Chair Foster requested clarification on costs. All customers would pay $230 (if paid by residential customers only) per year for 30 years and those being undergrounded would also have to pay to underground their services. Marshall stated yes. Marshall stated that we will return to UAC after discussions with Finance Committee. Commissioner Melton wanted to go on record that the UAC is in support of staff pursuing a survey with the public with a sample size large enough to adequately represent how the community feels about this item. Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 5 of 8 Commissioner Keller would like the opportunity to review the questions prior to starting the survey. Chair Foster would like to see the underground program move forward but is cognizant of the cost; he is supportive of surveying customers to try to reach as many people as possible and asks that we not rely on getting comments at a Council meeting. He realizes that $210 (if paid by all customers) per year is not an insubstantial sum of money. ITEM 2: PRESENTATION: Update on the Citywide Ultra High-Speed Broadband System Project Assistant Director Tomm Marshall introduced Management Specialist Jim Fleming, who presented updated information about the plan to evaluate approaching fiber-to-the-premise (FTTP) by using a “user-financed” business model. This business model would ask the property owner to pay a one-time installation fee to connect fiber service connections to the premise. The property owner would also agree to pay a monthly recurring charge to interconnect with an Internet Service Provider (ISP) for bandwidth services. A key component of the user-financed model is that an extension of the fiber backbone to a nodal access point would be contingent on a certain level of participation of households within a neighborhood willing to pay the one-time installation fee. The next steps for evaluating the user-financed model for FTTP are conducting a community survey to measure interest in the user-financed approach and the development of a financial analysis for the model which will include an assessment of a City-operated or third party-operated business models. To complete the community survey and financial analysis outside consulting firms will be retained. Fleming also provided an update on ongoing discussions with the Palo Alto Unified School District regarding dark fiber service connections for the District Office and the schools, in addition to an update on recent discussions with Crown Castle, an independent builder and operator of shared wireless infrastructure such as cellular-towers and Distributed Antenna Systems (DAS). Public Speakers Jeff Hoel commended staff for coming up with this creative approach for FTTP (i.e. user-financing). Mr. Hoel is interested in staff naming other communities trying this approach. He knows of only a couple of communities where that comes close. The first community is UTPOIA (consortium of 16 Utah cities building a FTTP network) where they already have an open access system with lot’s of retail service providers in place. According to Mr. Hoel, when UTOPIA builds-out in new communities they are asking new customers to chip-in a $3,000 connect fee, but in exchange for that customers know in advance about what products they can buy from which companies. The second community is Danville, Virginia, where there is a fiber-to-the-business network. Mr. Hoel stated that he does not care about wireless, but he does care about wireline being connected for ultra high-speed. Mr. Hoel stated that if wireless wants to be a low- profile customer that’s fine, but don’t let it get in the way of FTTP going forward. Herb Borock stated that it seems to be déjà vu all over again in terms of staff advocating hiring another consultant to prepare a report and deferring to the same Citizen Advisors. Mr. Borock stated that we need to take a step back and determine what the Council wants to accomplish. Mr. Borock expressed his concern that just three months ago, the UAC got a report from staff summarizing two consultants’ reports. Mr. Borock thought the next step would be a report making a recommendation from those consultants’ reports to the Council. The first steps seemed to be focused on extending the dark fiber so that some businesses, who don’t think it’s economic to be subscribers to the dark fiber, would get a lower rate. Mr. Borock suggested the library funding model be considered for a fiber build-out. Mr. Borock observed that Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 6 of 8 the policy seems to be to delegate review to the Citizen Advisors and the staff, without the Council addressing the real policy of what they want to accomplish. Other suggestions and concerns stated by Mr. Borock include:  The funds to build-out the fiber system could be provided by returned earnings in the fiber fund, in addition to using the revenue stream to back-up a bond.  The fiber system should be operated by a private operator who would have the incentive to provide proper quality service.  The legal issue of Proposition 218 should be discussed by Council in terms of a universal service versus a service that is only provided to those that want the service.  The policy questions and engagement of the Council are important related to proposals for the fiber network. Commissioner Comments Commissioner Waldfogel thanked staff for the presentation and stated that he thinks it’s a creative way to respond to the Council’s request for some motion and movement forward on a FTTP project using a less capital intensive approach. Commissioner Waldfogel stated that he looks forward to seeing the business models and survey results. Chair Foster asked staff about the timeline. Fleming responded that the consultants’ work will take six to eight weeks. Chair Foster asked Assistant Director Tomm Marshall if this project will come back to the UAC in the first half of 2012. Assistant Director Marshall replied yes, and he stated that we’ll also be going to the Council to provide an update about the project. ITEM 3: DISCUSSION: Exploration of the Potential and Feasibility of Siting a 25 to 50 MW Gas-Fired Power Plant in Palo Alto Assistant Director Jane Ratchye introduced the author of the report, Resource Planner Dr. Jim Stack, who was available to answer Commissioners’ questions. Chair Foster thanked staff for producing an excellent report. Commissioner Melton noted that this topic has been analyzed before, but believes that it had been long enough since the last analysis that it was worth reexamining. He thanked staff for putting together a report that addresses a number of different alternatives to building a local gas-fired power plant that could achieve the same reliability benefits that the generator would. He said that he is persuaded that the alternatives presented – namely the Ames and SLAC redundant transmission line projects – solve most of the reliability issues that he was concerned about. He noted that it was now imperative to execute on one or more of those alternatives. He said that he is pleased to accept this report, and promised not to ask about local gas-fired generation again for another couple of years. Commissioner Eglash thanked staff for its work on the report, calling it an example of staff work at its best. ITEM 4: ACTION: Potential Topic(s) for Discussion at Future UAC Chair Foster stated that he distributed his notes from the July 11, 2011 joint UAC/Council meeting and asked Commissioners if they would please review the notes along with the 12-month rolling calendar to determine if there are some items of interest that came up at the meeting that should be on the calendar. Commissioner Keller heard that an alternative transmission line was a major issue and should be discussed. Ratchye said that staff is definitely working on that issue, but had no specific timeline set out on when a recommendation on a project would be brought to the Commission. It depends on the negotiations Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 7 of 8 Utilities Advisory Commission Minutes Approved on: October 5, 2011 Page 8 of 8 with the various parties involved. She added that updates are provided in the quarterly reports on the progress. ACTION: No action was taken. COMMISSIONER COMMENTS Chair Foster remarked that he appreciated the information report provided on LED streetlights, but thought that the total LED streetlight savings should include maintenance cost savings. Reviewing the 12-month rolling calendar of upcoming items, Chair Foster noted that the October agenda contains a discussion in the Innovation Fund. He stated that the fund should be larger, rather than smaller, since Palo Alto is at hub of Silicon Valley and a center of innovation. He urged staff to think broadly. Chair Foster stated that there is a need to look at the composition of the various UAC subcommittees at an upcoming meeting. He also noted that the bill insert he received in the most recent Utilities bill on the regional water system’s seismic upgrade very helpful. Chair Foster added that the participation rate in the PaloAltoGreen program has leveled off and wanted to examine if there were ways to increase participation in that program. Meeting adjourned at 8:47 p.m. Respectfully submitted, Marites Ward City of Palo Alto