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HomeMy WebLinkAbout2011-12-07 Utilities Advisory Commission Summary Minutes _______________________________________ City of Palo Alto FINAL UTILITIES ADVISORY COMMISSION MEETING MINUTES OF DECEMBER 7, 2011 CALL TO ORDER Chair Foster called to order at 7:15 pm the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Berry, Cook (arrived at 7:22 pm), Eglash (arrived at 8:00 pm), Foster, Melton, and Waldfogel Absent: Council Member Liaison Scharff and Commissioner Keller ORAL COMMUNICATIONS Julia, Sam, and Gary Hirschman described Aurora, the Green Energy Tree, and asked the UAC to consider interacting with the Art Commission to see how Utilities can support this art project. The tree is metal and uses 40,000 LED lights that are solar powered. The tree is 40 feet tall and 8 feet in diameter and was inspired by a weeping willow. It can be made interactive with a control panel. The Hirschmans are proposing it as a public art piece in Palo Alto. APPROVAL OF THE MINUTES Commissioner Melton recommended a change to the minutes from the November 2, 2011 UAC meeting: change “impressed” to “thankful” in the Reports from Commission Meetings/Events section. The minutes were approved as amended. AGENDA REVIEW The third topic under new business (Proposed Revisions to the Gas Utility Long-term Plan) was moved to be the first item discussed under new business. REPORTS FROM COMMISSION MEETING/EVENTS None. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong delivered an oral report on the following items: 1. Tour of Half moon Bay Landfill Project: The City is organizing a tour of this project on Thursday, December 8 for some of Palo Alto’s larger customers. This Ameresco project supplies 4% of our energy at a cost of about $54/MWh and has been in commercial operation since April 2009. 2. The LED holiday light exchange program is going very well this year, with over 100 light strands already exchanged. Utilities Advisory Commission Minutes Approved on: February 1, 2012 Page 1 of 5 3. The residential ENERGY STAR LED light rebate program is already getting interested calls from customers, due to our December utility bill insert. In addition, between January and March, we will ask for residents to submit their pictures of the ugliest incandescent and halogen lighting. The two winners will each receive rebates of up to $400 to replace these lights with LED’s. If any Commissioners are interested in judging the “Ugliest Lighting Contest” in April, please let me know. 4. Hydroelectric Conditions Update: Reservoir storage levels were about 29% above average as of October 31. 5. City Declines to Approve PG&E/Ameresco San Joaquin Interconnection Agreement: In the contract between Palo Alto and Ameresco, Palo Alto must review and approve the Interconnection Agreement between PG&E and Ameresco for the San Joaquin landfill-gas-to-energy project. According to the terms of our contract, Palo Alto must pay a “monthly cost of ownership” to PG&E. For our three operating projects with Ameresco, these costs have been very small. However, since the cost of the interconnection for the San Joaquin project is much higher than anticipated (almost $3.8 million), these costs amount to $216,432/year. The increased costs add $7/MWh (about 6%) on top of the price we pay for the San Joaquin power, making the power purchase agreement relatively uneconomic. We estimate the levelized cost of the PPA and our share of the interconnection agreement (if we approve it) would be $120/MWh. This is much higher than proposals we have received through our recent Request For Proposals, which are in the $90-110/MWh range for solar power. Therefore, Palo Alto has declined to approve the Interconnection Agreement. As a result, Ameresco may choose to: either absorb the approximately $7/MWh cost increase; or terminate the PPA without liability to either party. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 3: ACTION: Proposed Revisions to the Gas Utility Long-term (GULP) Objectives, Strategies and Implementation Plan Director Valerie Fong stated that the changes ensure that GULP is in line with the Council approval of the new gas purchasing/rate strategy. ACTION: Vice Chair Berry made a motion to recommend that the City Council approve the proposed revisions to the GULP Objectives, Strategies and Implementation Plan. Commissioner Cook seconded the motion. The motion passed unanimously (5-0). ITEM 1: ACTION: Utilities Legislative Policy Guidelines for 2012 Senior Resource Planner Debra Lloyd presented the Utilities Department’s proposed Legislative Policy Guidelines for 2012. Lloyd explained the reason for the guidelines, to provide direction in evaluating and responding promptly to legislative action involving utilities and utilities’ issues throughout the year and to Utilities Advisory Commission Minutes Approved on: February 1, 2012 Page 2 of 5 clarify approved policy and advocacy direction when active involvement of Palo Alto elected officials is required. With the guidelines, advocacy positions can be taken, including having the Mayor or City Manager send letters without returning to Council. Lloyd described legislation that is anticipated to be introduced (or re-introduced) in 2012. This includes legislation related to the Renewable Portfolio Standard, upgrades to the state's water delivery systems requiring fees on water users, public goods charges, expansion of net metering, distributed generation, expansion of direct access, use of revenues from cap-and-trade allowance sales, reporting consolidation, and cyber security issues. Lloyd described each proposed change from the approved 2011 guidelines. Vice Chair Berry suggested that water utility guideline #10 be broadened so it is not so restrictive to SFPUC customers as this could assist the City in its legislative strategy by including allies. Staff proposed changing the language in the guideline to clarify that the City’s particular interest in impacts on SFPUC customers, while not eliminating any other interests. Commissioners Melton and Waldfogel questioned the absence of specific guidelines for fiber, as the City may need guidelines addressing cyber security issues for the fiber system, and municipal ownership of a fiber utility. Staff explained that fiber is included in the broader “all utility” goals and guidelines, but if and when issues unique to the fiber utility were identified it would have a separate section in future legislative guidelines. Regarding the current cyber security issues, Director Fong explained that the city provides dark fiber service and so cyber security was an issue in respect to how the system was then used by the department in its business activities. Therefore, cyber security issues were included under the electric utility guidelines. ACTION: Commissioner Melton made a motion to recommend that the City Council approve the proposed Utilities Legislative Guidelines for 2012. Vice Chair Berry seconded the motion. The motion passed unanimously (6-0) with Commissioner Keller absent. ITEM 2: ACTION: Plan to Achieve Carbon Neutrality for the Electric Portfolio Senior Resource Planner, Monica Padilla, briefly described the information presented in the report including the recommendation to the UAC to support pursuing a carbon-neutral electric portfolio and development of a plan by December 2012 on how to achieve carbon-neutrality. She described what staff expects to learn over the next year, including 1) a updated assessment of cost effective electric energy efficiency through the development of a new 10-year energy efficiency plan; 2) experience with the feed-in-tariff program; 3) new renewable contracts to meet the City’s Renewable Portfolio Standard (RPS); 4) a better understanding of cap-and-trade; 5) better cost estimates; and 6) results from community input on support for carbon- neutrality. Padilla further outlined the key issues which need to be addressed, which include why Palo Alto should pursue carbon neutrality, the local definition of carbon neutrality, and how to engage the community. Public comment: David Coale supported the recommendation and suggested that this issue is very important and action needs to be taken. Utilities Advisory Commission Minutes Approved on: February 1, 2012 Page 3 of 5 Bruce Hodge, leader of Carbon-free Palo Alto, commended staff for their work thus far and supports staff’s recommendation. Mr. Hodge believes that the cost of achieving carbon neutrality will be on the lower end of the scale shown by staff in the report. Mr. Hodge stated that the alternative of not acting is not cost-free and there is exposure to carbon costs in the future. Further, he believes the timeline should be shortened and the time to achieve carbon neutrality should be 2015 as time is short and Palo Alto needs to act and be a model for other communities. Walter Hays, chair of Community Environmental Action Partnership (CEAP), also supports staff’s recommendation and Bruce Hodge’s comments. Mr. Hays stated that he feels the cost of adaptation to climate change is very high and this cost should be figured in to future analysis. For community input, Utilities should ask CEAP, since it represents a broad swath of the community. Mr. Hays believes there is strong support from the community and would like to have the plan to achieve carbon neutrality by 2015. UAC Discussion: Commissioner Waldfogel asked what would be a carbon-free resource that is not RPS, or whether there be regulatory risk that something we would buy would not be counted for a future state or federal regulation. Assistant Director Jane Ratchye responded that in the development of the plan the risk that action could lead to negative regulatory consequences will be considered. Commission Waldfogel also commented that Palo Alto could achieve carbon neutrality quickly through the use of Renewable Energy Certificates (RECs), however this may not be the path Palo Alto should take. He further stated that he would like staff to develop a program that is scalable and can be replicated by others. Commissioner Eglash commended staff on the report and indicated that he was pleased that staff was considering a carbon-neutral portfolio to reduce Greenhouse Gas (GHG) emissions, which will serve as an example to other municipalities. Commissioner Eglash expressed support for a focus on the process so that the community understands the implications and the cost of pursuing carbon neutrality. Further, he stated there should be a strong communication effort with the community and the process should be as transparent, open and honest as possible with a thorough analysis of the risks. He would like to see staff conduct analysis which shows the cost under a price scenario where natural gas prices fall. Commissioner Eglash would like the plan to consider how intermittent resources, such as wind and solar, will figure in the overall cost, if gas and nuclear are required for regulation of the electricity grid. Last, he suggested staff consider carbon neutrality in the context of using the Calaveras Reserve. Commissioner Cook expressed that perhaps there are efforts in addition to pursuing the RPS that are important to the community. He supports Commissioner Eglash’s comments that Palo Alto can lead by example in that carbon neutrality is a far reaching concept and can benefit a larger area. Further, he supports a robust analysis of all the risks, costs, and how to handle hydroelectric variability. He is supportive of staff’s suggestion to seek community input and would support setting an ambitious goal of achieving carbon neutrality by 2015 or 2016. Commissioner Foster also commended staff on the report and expressed his enthusiasm and support for moving forward with an aggressive goal to achieve carbon neutrality by 2015, rather than as late as 2020. He asked staff to determine how early the City could achieve carbon neutrality and include an analysis of the costs for different timelines to achieve carbon neutrality. He also asked if staff was seeking a recommended timeline. Staff explained that the plan to be developed by end of 2012 would lay out the elements needed to achieve carbon neutrality including a time line and that staff currently has no Utilities Advisory Commission Minutes Approved on: February 1, 2012 Page 4 of 5 Utilities Advisory Commission Minutes Approved on: February 1, 2012 Page 5 of 5 recommendation for a date to achieve carbon neutrality, but is now seeking support for the concept to pursue carbon neutrality for development of the plan. Commissioner Melton added that the City needs to evaluate the sense of the regulatory certainty since there are significant risks in this area and that the plan should identify those risks and determine which risks will not be resolved and whether or not the City should go forward even with uncertainty. He added that the City should evaluate securing more hydroelectric power as this may be a good resource under the right terms and conditions. ACTION: Commissioner Waldfogel made a motion to recommend that the City Council support a policy to pursue a carbon-neutral electric portfolio and direct staff to develop a plan by December 2012 to achieve that goal. Commissioner Cook seconded the motion. The motion passed unanimously (6-0) with Commissioner Keller absent. ITEM 4: ACTION: Potential Topic(s) for Discussion at Future UAC No discussion. ACTION: None. COMMISSIONER COMMENTS None. Meeting adjourned at 8:45 p.m. Respectfully submitted, Marites Ward City of Palo Alto