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HomeMy WebLinkAbout2012-09-05 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: October 3, 2012 Page 1 of 7 UTILITIES ADVISORY COMMISSION MEETING FINAL MINUTES OF SEPTEMBER 5, 2012 CALL TO ORDER Vice Chair Foster called to order at 7:05 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Foster, Eglash, Hall, and Waldfogel Absent: Commissioners Chang, Cook and Melton, and Council Liaison Scharff ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES The minutes of the July 11, 2012 UAC meeting was approved as presented. AGENDA REVIEW None. REPORTS FROM COMMISSION MEETING/EVENTS None. UTILITIES DIRECTOR REPORT 1. Demand-Side Management Update: a. Annual DSM Report: Staff is developing the annual Demand Side Management (DSM) report which will show the achievements for the Fiscal Year 2012. Early estimates for energy savings are about 14 million kWh and over 200,000 therms. The fiscal year’s high level of savings reflect a huge effort to promote a variety of new programs, but are primarily due to the completion of a once-in-a-lifetime upgrade on the only large data center in town. This level of savings is, unfortunately, not replicable in future years. The final DSM report is expected to be delivered to the UAC in December. b. Updating 10-Year Electric and Gas Efficiency Goals: In October the UAC will review the recommendations for the updated ten-year electric and natural gas efficiency savings goals. Upgraded state and federal codes and standards mean that we will no longer be able to count savings for a variety of cost-effective technology upgrades. c. New Initiatives are being coordinated with the Planning Department and the Building officials, including offering a Key Card control system for hotels and setting benchmarking requirements for Utilities Advisory Commission Minutes Approved on: October 3, 2012 Page 2 of 7 buildings. It was originally hoped that these programs could be ready soon, but due to various resource constraints, these programs are likely to be delayed for a few months. 2. Communications Update: a. PG&E Projects: The pipeline replacement on Charleston Road is virtually complete, with the only part pending being the tie-in of the new pipeline into PG&E’s system, now set for September 28th. The pipeline replacement on Miranda Road & the Foothill Expressway is just beginning, with initial tree trimming and removal taking place this week and excavation scheduled to begin next week. CPAU has undertaken a program of extensive communications and customer outreach for both these projects as PG&E has neither the customer information nor staffing to do this job effectively itself. Full details and the status of the projects are always available on our website. b. Speaking of the “utility projects” web page: All the many CPAU gas, water, sewer and electric projects going on all over town right now are also listed and updated on that page. We’ve also kept the public apprised of these projects via inserts in the PA Weekly, notices on the bills and even direct mailings, as in the case of our ongoing crossbore program. 3. Emerging Technology Program: We received two applications in the first solicitation round, both related to customer engagement and personalized recommendations on conservation activities. Selection recommendations will be made soon from the first application period. So far, one more application has been submitted for consideration in the second round. 4. Renewable Energy RFP: A new request for proposals for renewable energy to meet the City’s Renewable Portfolio Standard (RPS) is on the street. Responses are due on September 19. Vice Chair Foster said that the City should do some outreach to venture capital firms on the emerging technology program to prompt more interest in the program. He stated that he could help with this outreach effort. Commissioner Waldfogel asked if the data center load was new load. Assistant Director Tomm Marshall said that this was new load for Hewlett Packard. Commissioner Waldfogel stated that we may need to do outreach to ensure that the public understands why it makes sense to provide rebates to new load. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: ACTION: Recommendation on an Advisory Body Structure to Solicit Public Input on the City of Palo Alto Utilities’ Electric Undergrounding Policy Senior Resource Planner Nico Procos presented slides on the appointment of an advisory body to evaluate potential changes to the overhead to underground conversion program. Staff recommended the advisory body be appointed by the City Council or Utilities Advisory Commission. Commissioner Eglash stated that he supported the staff recommendation as it needs to have the greatest possible legitimacy in the community since there will be unpopular outcomes for different groups depending on the ultimate decision. Therefore, the process to arrive at a recommendation must be supported by the community. Commissioner Eglash asked about the tasks identified for the advisory body. Procos responded that part of the first task of the advisory body would be to develop a more thorough task list and Utilities Advisory Commission Minutes Approved on: October 3, 2012 Page 3 of 7 to clarify the scope of work for the advisory body. Fong suggested that the Infrastructure Task Force could be used as a model for this body. Commissioner Hall asked how often would the committee meet and how much commitment would be required to participate in the committee. Procos said that the body would need to commit time to understand the background of the program and options for funding the work in the future. Fong said that it will likely be meetings at least every other month. Hall stated that the UAC could perform this task depending upon the time commitment. Commissioner Eglash commented that the staff recommendation is responsive to the need to have broader community support and not a function of whether the UAC has the time to commit to the job. Commissioner Waldfogel offered another option is for the UAC to appoint an ad hoc subcommittee and to include members of the planning commission and Architectural Review Board. He stated that it may be best to have someone other than Utilities lead this process and that it may be better suited for Planning, as the undergrounding is primarily for aesthetic considerations. The key question is whether to spend the money for the aesthetic benefit for the community. Vice Chair Foster said that he would recommend that the Council appoint a committee and include at least two members of the UAC. Commissioner Eglash stated that this is really a Utilities issue, but best for a community committee to get broad input and that the Brown Act requirements are in line with the need for transparency in the process. ACTION: Vice Chair Foster made a motion to recommend that the City Council appoint an advisory body to solicit broad community input on potential changes to the CPAU electric overhead to underground conversion policy and that the advisory body should include two UAC members, two members of the ARB and two members of the Planning Commission be appointed to the body. Commissioner Eglash preferred that UAC members not be on the body itself, but be associated with the body in an advisory role to provide comments and input. Vice Chair Foster stated that he didn’t have a strong feeling about the need for UAC members to be on the body, but recognized that the UAC has worked on this issue and may have some valuable information it could provide to the body. The motion died for lack of second. Commissioner Eglash moved the staff recommendation, Commissioner Hall seconded the motion. Foster offered an amendment to specify that the Council appoint the advisory body. Since the ultimate path may require a vote of the people, the advisory body is best to report to the Council. Procos stated that a possible funding option could be in the form of an electric rate increase which may be brought before the commissioners. Commissioners Eglash and Hall accepted the amendment so that the motion reads: “The Utilities Advisory Commission recommends that the Council appoint an advisory body to solicit broad community input on potential changes to the City of Palo Alto Utilities electric overhead to underground conversion policy.” The motion passed (3-0) with Commissioner Waldfogel abstaining. Utilities Advisory Commission Minutes Approved on: October 3, 2012 Page 4 of 7 ITEM 2: ACTION: UAC Recommendation that Council Adopt a Resolution Approving the Policy Pertaining to the Purchase of Energy from Potential Green Waste-to-Energy Facilities Resource Planner Jon Abendschein gave a presentation on staff’s recommendation for purchasing electricity from proposed biogas facilities at the Regional Water Quality Control Plant or the adjacent site undedicated by 2011 Palo Alto Ballot Measure E. The Public Works Department planned to release an RFP in January for project proposals for these biogas facilities, and needed to be able to describe CPAU’s energy purchasing policy. Staff’s recommendation was to establish a policy enabling a variety of uses: use of the energy on site, sale of the energy to CPAU at market prices, or sale of the energy to another utility. The Public Works Department had also requested a firm price to enable proposers to provide more certainty in their proposals. Because the project wouldn’t start until 2018, and there was a lot of uncertainty in the price of energy so far away, staff recommended providing a “floor price” at which the CPAU would purchase the energy, 7.7 ¢/kWh. Proposers could be assured of that price, but could also reject the price and sell to CPAU at the current market price if it turned out to be higher. Commissioner Waldfogel asked what the size of the generation from the project would be. Abendschein stated that the size depends upon what project was developed. It could be 750 kilowatts (kW), or 6,000 megawatt-hours per year (MWh/yr) if it was only for the green waste. If it was a combined with the use of biosolids, it could be 1.5 MW and 12,000 MWh/yr (1.2 % of the City's load). If biogas from the landfill was available for use in a generator as well as the green waste and biosolids, the generator would be about 2.25 MW and 18,000 MWh/yr (1.8% of the City's load). Commissioner Waldfogel asked whether the energy would be intermittent or baseload. Abendschein responded that it would be baseload energy. Commissioner Eglash asked who would operate the system. Abendschein responded that it could be operated by the City or an external vendor, but that it was uncertain at the moment. Commissioner Eglash noted that the power could be purchased from either a 3rd party or another City Department. Abendschein agreed. Commissioner Eglash asked if the default price would be a floor price, and if so, would it be the seller’s option to sell at the higher of the floor price or the market price. Abendschein responded that was the case. Director Fong added that the City would not be obligated to purchase the energy at the market price, if it were higher, but that she expected the City would need that energy and willingly buy at the market price. Commissioner Eglash recommended clarifying the resolution to make that policy clear. Commissioner Eglash asked whether the primary purpose of this policy was to give some certainty to RFP proposers. Director Fong clarified that it was, but that normally CPAU would not commit to a purchase price so far out without a competitive solicitation. So in addition to providing certainty on CPAU’s energy purchase policies, the policy also provided a “floor price” that the CPAU would commit to. Commissioner Eglash asked whether it made sense to commit to a price without knowing the costs. If the Public Works Department operated the plant, for example, and the costs turned out to be very low, meaning that the energy could be sold for a low price, shouldn’t CPAU get that price? Assistant Director Ratchye replied that this was an extremely unlikely situation. The project would primarily be a waste disposal project, and most of the revenue would come from Refuse ratepayers. Both the Refuse ratepayers and Electric Utility ratepayers would provide a revenue stream to the project, via tip fees (from the Refuse ratepayers) and electricity purchases (from the Electric ratepayers). To assess the cost to the Refuse ratepayers, the Public Works Department wanted the Electric Utility to provide some certainty on the revenue from electricity purchases. This resolution provides some of that certainty. Commissioner Eglash said this was a helpful clarification, and in that context, the proposal made sense. Utilities Advisory Commission Minutes Approved on: October 3, 2012 Page 5 of 7 Vice Chair Foster asked whether the Public Works RFP would allow proposals that used all three waste streams: biosolids, food waste, and yard waste. Abendschein clarified that it would. The city-owned digester for biosolids was one option for biosolids processing among many alternatives. Vice Chair Foster said he believed that Compressed Natural Gas (CNG) was the best use for the gas, so he hoped there was some provision for that in the RFP. Commissioner Waldfogel recommended adding a provision in the resolution making it clear that the project must be an eligible renewable resource and that the City would receive the green attributes in order to receive the 7.7 ¢/kWh price. Commissioner Hall asked if the price would be 7.7 cents/kWh fixed, or escalating and how long the term was. Abendschein said it was a fixed price for 20 years. Commissioner Hall recommended reviewing the resolution to make sure it was clear that the resolution covered sales from both 3rd parties and other City departments. Director Fong said staff would make those clarifications. Commissioner Hall recommended taking into account the risk of project failure, such as bankruptcy or non-performance by the facility operator. Abendschein responded that the Public Works Department would be taking responsibility for those types of issues. Public Comment: Herb Borock commented that Section 1 of the resolution refers to the Regional Water Quality Control Plan (RWQCP) as "the Measure E site", but it is a site adjacent to the RWQCP. He recommended reviewing the language to make sure the distinction was clear. Abendschein agreed with the clarification. Director Fong thanked Mr. Borock for his comment. ACTION: Vice Chair Foster made a motion that the UAC recommend that Council adopt a resolution approving the policy pertaining to the purchase of energy from potential green waste-to-energy facilities with the changes discussed to recital D, Section 1 and Section 3. Commissioner Hall seconded the motion. The motion carried unanimously (4-0). ITEM 3: PRESENTATION: Overview of Residential Customer Engagement & Time-of-Use Rate Pilots Shiva Swaminathan, Senior Resource Planner, provided a presentation of an overview of the Smart Grid program and proposed pilot projects on “Residential Customer Engagement” and “Residential Time-of-Use Electric Rates. Commissioner Waldfogel commented that this looks like a great way to move forward. He offered three suggestions: 1) ask participants for unrestricted rights to the data for analysis and publication; 2) involve someone in the research community; and 3) encourage collection of data of the smallest granularity possible as the value of the data is hard to predict. Commissioner Hall agree this was a great way to move forward and asked if “fast switching”, as it relates to electric service restoration, was considered in the benefits. Swaminathan stated yes, this was part of the benefits associated with distribution automation and was included the consultants report. Commissioner Eglash liked the proposal and liked the idea of using smart phones. He also supported Commissioner Waldfogel's suggestion to involve the research community and asked if staff had considered working with Stanford professors on the evaluation. To what degree will the hardware and software for the pilot be scalable for a full-scale roll-out? Swaminathan stated that we are in discussion with Stanford staff Utilities Advisory Commission Minutes Approved on: October 3, 2012 Page 6 of 7 on this topic as part of the emerging technologies program. He emphasized that this pilot is focused on customer engagement, but the proposals received in the RFP are scalable for larger roll-out. The solution selected provides a solid foundation for future roll-out if the pilot proves it is economically feasible. Commissioner Hall appreciated the project overview and asked that staff provide updates during the conduct of the pilot and on other Utilities’ projects. ITEM 4: ACTION: Recommendation on Approval of Re-priced Power Purchase Agreement with Brannon Solar, LLC for up to 52,000 Megawatt-hours per Year of Energy Over Twenty-five Years at a Cost Not to Exceed $91.0 Million Vice Chair Foster stated that the report provided a good summary, which is that the original price was increased due to the impact of import tariffs on solar panels. Commissioner Eglash stated that even the higher price is quite good. Vice Chair Foster agreed that the new price was still attractive. Commissioner Waldfogel added that he hopes that this re-price will be the last re-price for this contract. Senior Resource Originator Tom Kabat presented slides showing the charts and tables provided in the report. Commissioner Eglash stated that, while this price is still attractive, the re-pricing of the contract should not be taken lightly and is disappointing. We take the initial prices seriously and no bidder should think that renegotiation should be a normal business practice. Vice Chair Foster summarized the history of the project which started at $72/MWh with a public declaration that any impact of import tariffs would not change the price, but now the supplier is coming back with a higher price after blaming the impact of the tariffs. This calls into question the very process by which the City competitively solicits proposals and negotiates contracts. The City chose to negotiate with Trina Solar on the Brannon project and to not pursue other proposals based on the bid price and, now, the bid price is not being honored. Vice Chair Foster said it is not appropriate behavior for a company to adjust a quoted price and added that with that adjustment behind us we look forward to working with Trina Solar on this project. Milo Terzich, representing Trina Solar, replied that Trina Solar was surprised by cost developments related to the ripple effects of the tariffs and consequently needed to raise the price to make the project financeable. Commissioner Waldfogel asked if we need to move forward or if we have re-engaged with any other bidders. Kabat replied that since the Trina Solar Brannon price is still more attractive than the prices of other bidders staff has not re-engaged other bidders for price updates. Kabat added that all bidders have a chance to provide their bids in the fall 2012 RFP that is currently open. Commissioner Hall asked if Trina Solar or staff was aware of anything that could further increase the price. Trina Solar Development Manager Milo Terzich replied that he did not see anything that would require further price adjustments. Kabat replied that he saw nothing in the text of the agreement that contemplates price increases. ACTION: Commissioner Eglash moved staff recommendation. Commissioner Hall seconded the motion. The motion passed unanimously (4-0). Utilities Advisory Commission Minutes Approved on: October 3, 2012 Page 7 of 7 ITEM 5: ACTION: Potential Topic(s) for Discussion at Future UAC Commissioner Waldfogel requested that the Commission get an update on the status of the Emergency Supply and Storage Project, including a reiteration of the Measure N promises compared to the project results. It would be an opportunity to communicate that we have plans in place and facilities in place to respond in emergencies, or an opportunity to update the plans. ACTION: None. COMMISSIONER COMMENTS None. Meeting adjourned at 8:46 p.m. Respectfully submitted, Marites Ward City of Palo Alto Utilities