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HomeMy WebLinkAbout2013-10-02 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: November 6, 2013 Page 1 of 7 UTILITIES ADVISORY COMMISSION SPECIAL MEETING FINAL MINUTES OF OCTOBER 2, 2013 CALL TO ORDER Chair Cook called to order at 7:00 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Cook, Eglash, Foster, Hall, and Melton Absent: Commissioners Chang and Waldfogel and Council Liaison Scharff ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES The minutes from the July 31, 2013 special UAC meeting were approved as presented. AGENDA REVIEW None. REPORTS FROM COMMISSION MEETING/EVENTS James Cook said that he attended the NCPA annual meeting, which had the theme of “Bringing Clarity to the Issues” and found it useful and informative. He added that the conference was very well done. James Cook reported that he attended the Council’s Connected City Committee meeting. The committee looked what other cities were doing and the history of the fiber to the premises effort to date. He noted that there is momentum going forward. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong provided the following report: 1. Northern California Power Agency (NCPA) Update: NCPA is developing a new strategic plan and one of the key goals is to form a new services entity that could offer services to other entities in order to increase agency revenues and lower costs for NCPA members. In order to be in a position to offer these new services, NCPA has undergone an exhaustive review of its governance agreements. These Utilities Advisory Commission Minutes Approved on: November 6, 2013 Page 2 of 7 agreements have been under review by staff and the City Attorney’s office and will soon go forward to the NCPA Commission. After the NCPA Commission approves the strategic plan and the governance agreements, the governance agreements must be approved by the City Council. The tentative schedule for NCPA Commission approval of the agreements is the end of the year. 2. Communications Update:  PG&E Update—The gas transmission pipeline-related projects are winding up in October, including the building of the PIG launching facility on E. Bayshore. However, some new electric-tower related projects are on the horizon and the first one starts next week. This new project, which will take place mostly on weekends in October, involves raising the height of several of PG&E's electric line towers out near our Golf Course, and much of the work will be done by helicopter. As always, details are on our website.  Safety and Emergency Preparedness—September was "Emergency Preparedness Month" and CPAU participated in several community events including the citywide neighborhood Safety Prep Faire on the 8th and the Quakeville event on Sept. 21st. We have expanded our materials and giveaways related to utilities safety, including outreach aimed at young people, and will continue this focus throughout the year. 3. Recent Recognition E Source Large Gap & Priority Survey—Key Account Reps are #1 In a recent ESource nationwide survey, the City of Palo Alto Utilities came in first place, with its customers giving both the utility and individual Key Account Representatives high scores for delivering outstanding value and service. Awards were given out at the ESource Annual National Conference last month. 4. Events and Workshops a. Qualified Water Efficient Landscaper (QWEL) Training—Palo Alto Utilities cosponsored the first ever South Bay Qualified Water Efficient Landscaper (QWEL) training with the Santa Clara Valley Water District and San Jose Water Company August 21-23. This class was attended by about 50 landscape contractors and crews, city and county parks staff, independent landscape designers and homeowners. QWEL is an education and certification program geared toward landscape professionals. Graduates receive certification of their training, continuing education credits and are added to a roster of skilled QWEL-trained gardeners. b. SJSU Water and Energy Policy Analysis Presentation—Catherine Elvert was recently invited to speak at a San Jose State University (SJSU) “Energy Policy Analysis” class on the connection between water and energy policy. For this discussion, Ms. Elvert brought Tom Kabat out of retirement to provide a perspective on hydrological resources and energy policy implications. The discussions included the potential energy savings, CO2 and GHG emissions reductions associated with water efficiency, conservation, water recycling and alternative non-potable water reuse programs. It was also an opportunity to inspire college students to pursue a career in water and/or energy resources management. Utilities Advisory Commission Minutes Approved on: November 6, 2013 Page 3 of 7 c. Graywater Workshop—On September 28, Palo Alto Utilities hosted a “laundry to landscape” graywater workshop attended by 40 people. The course provided education about all types of graywater systems and offered a hands-on portion in which attendees identified parts of and assembled a mock laundry to landscape (clothes washer) system. We continue to observe growing support in the community for the City to offer education and incentives for graywater. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: PRESENTATION: Celebrating Public Utilities Debra Katz, Utilities Communication Manager, stated that October includes Public Power Week and Public Natural Gas Week, but she is calling the whole month Public Utility Month. She showed examples of the outreach provided to customers, which include special messages on the website, bill inserts, and, many special events. She also showed a video of Utilities staff singing "There We'll Be." ITEM 2: ACTION: Discussion of Potential Transfer of a Portion of the City’s Individual Water Supply Guarantee Senior Resource Planner Nico Procos summarized the written report. He stated that the purpose of the item is to begin the dialogue about a water transfer and to get feedback from the UAC. He noted that in a normal water year, the sale of 1 to 2 million gallons per day (MGD) of the City's Individual Supply Guarantee (ISG) would not have an impact. However, under the drought allocation formula, a sale of ISG would result in moderate reduced allocations of water in droughts. Procos also stated that revenues from a water transfer could be used for conservation programs, the recycled water project, connection to the Santa Clara Valley Water District treated water system, or to offset water rates. Procos identified the applicable City policies that support water resource management including the City's Comprehensive Plan, the Water Integrated Resource Plan (WIRP) guidelines, and the Municipal Code. Procos advised that after the UAC discusses this item, it will go on to the Finance Committee for discussion, after which a recommendation to proceed with a 1-2 MGD sale will return to the UAC in February 2014. If that recommendation were approved by the City Council, staff would begin a formal solicitation to sell 1-2 MGD. Public Comment Herb Borock advised that lowering the water bill may be the only alternative for what to do with revenue from such a sale under Proposition 218, and the impact would be de minimus. Other alternatives include accepting lower water quality either from SCVWD treated water or groundwater, which doesn't seem like a good idea. He noted that the buyers of the water Utilities Advisory Commission Minutes Approved on: November 6, 2013 Page 4 of 7 would use the water for development, which may not be supported by Council and the community. He advised that the Council weigh in the simple idea of whether to pursue this and he predicts that the Council will reject the idea saving lots of staff time spent on an effort to develop the concept. Vice Chair Foster noted that the City gets all of its water from SFPUC, has a water allocation of 17.08 MGD, currently use 11.63 MGD and is forecasted to use 13.33 MGD in 2018. Procos confirmed that understanding. Vice Chair Foster noted that Table 1 the City’s drought allocation increased as a percentage of water use, even though water use increased. Procos confirmed that the drought allocation formula depends on many factors, including the water use patterns of the other BAWSCA agencies. Although Palo Alto’s water use is expected to increase, it is a smaller increase than many other BAWSCA agencies, and this results in the increased percentage allocation in 2018. Vice Chair Foster suggested that only if we addressed the drought impacts by what we did with the revenue, he would support a sale. These efforts could include recycled water, treated water from the Santa Clara Valley Water District (District) and other dry year mitigation efforts. He would not support a sale if the proceeds were used for rate increase reductions or conservation programs. Commissioner Hall agreed with Vice Chair Foster that any revenue should support drought mitigation. The closest substitute is to increase groundwater supplies to use in a drought to not suffer from the increased drought time reduction. He stated that a recycled water project would reduce net demand for potable water in a drought and in all years. He advised doing an analysis of the impact under different scenarios. He suggested that staff should run some numbers under the different scenarios to determine the impact and then have an idea about the level of proceeds needed to cover the costs of drought mitigation. He said that this analysis may show potential bidders the value, but noted that the process would be competitive and that we needed to find out this information. Commissioner Eglash remarked that it is very valuable to have a supply guarantee and that Palo Alto is in a good position due to having reduced its water usage substantially from the 1970’s. He said that the supply guarantee is also a great thing in drought time. The problem is that selling will result in more pain inflicted on Palo Alto in drought years. He doesn't think this is a good idea and is concerned with a sale of the ISG. He also stated that the future is uncertain and the impact of climate change is uncertain and may include extended droughts. He stated that if the current drought turned out to be longer or deeper than anticipated, the City would be even worse off in the future. On the other hand, the value of the asset could be higher in the future. He noted that in the future, in an extended drought, the City may not be able to rely on groundwater either. He stated that recycled water is also problematic due to the salt content and its impact on certain plants. He stated that he's not so inclined to look upon the City’s ISG as in excess of its needs. Utilities Advisory Commission Minutes Approved on: November 6, 2013 Page 5 of 7 Procos advised that the drought formula may be worse, rather than better, after 2018 and Palo Alto was treated better than most under the current formula. It is possible the ISG may have a larger or smaller role in the drought formula in the future. Commissioner Eglash noted that there are so many uncertainties and that releasing ISG may have large consequences in the future especially since some future drought allocation negotiations may rely on the ISG and Palo Alto's action would have reduced long-term value or access to future water supply when needed. Vice Chair Foster asked Commissioner Eglash that if the revenues could mitigate the impacts, would he be more supportive. Commissioner Eglash responded that it would depend on the potential revenues and indicated an interest in having a more detailed discussion on the potential revenues. Procos provided a summary of recent transactions. Commissioner Melton asked if a sale is even worth talking about—is there enough money in a potential sale to make it something worth talking about. Commissioner Eglash stated that if the revenue for a sale was $1 million per year, then this is only about 4% of the entire water fund's annual cost. Commissioner Melton asked how much groundwater we can pump in a drought. Procos stated that the Environmental Impact Report completed for the wells and water storage tank project included a mitigation measure that limits pumping in a drought to about 1.2 MGD. Commissioner Melton mentioned that one of the potential uses of proceeds is to extend the SCVWD treated water pipeline. Commissioner Melton stated that the only way to ensure a supply is to invest in a SCVWD connection because that would be a different source of water in a drought, which could be a true alternate source of supply. He stated that if the income stream from a sale could cover that cost, this could be a good solution. Unless that could be done, Commissioner Melton agrees with Commissioner Eglash that the sale would not make sense. Commissioner Eglash stated that the City would not have to sell the ISG first and then build the SCVWD connection. The City could first build the connection, then decide to sell the 1-2 MGD. Commissioner Melton stated that the money to do that construction of the SCVWD connection is too much. He noted that the two big ideas—recycled water and SCVWD treated water—have not been able to get off the ground due primarily to lack of money. Director Fong commented that the City’s water rates are very high. Vice Chair Foster asked why that is so. Assistant Director Ratchye mentioned that the a water benchmarking study was completed and provided to the UAC in the past and that staff plans to return to the UAC with water benchmarking information in January (as shown on the 12-month rolling calendar). Utilities Advisory Commission Minutes Approved on: November 6, 2013 Page 6 of 7 Commissioner Melton asked if there is enough money in this deal to make it worth considering. Procos stated that we could identify a minimum purchase price in any deal so that we get at least a certain minimum amount. Commissioner Eglash noted that without a dollar value for the sale, it is very difficult to provide good feedback. He suggested that identifying the minimum revenue should be an integral part of the discussion. Commissioner Melton stated that staff has not provided enough information on a potential sale to move on to the Finance Committee at this time. He said that there needs to be some feel as to what type of deal is doable. He stated that the deal seems too hazy to proceed at this point and that there needs to be more information, even if it is assumptions. Commissioner Hall agreed that additional analysis or discussion is needed. He noted that as the 2018 time frame approaches, the drought formula may change. He asked why the City needs to proceed with this now. He added that 2018 is not that long in the future. Chair Cook asked what happens to the water when Palo Alto doesn’t use the water it is allocated? Procos stated that the water may be used by other BAWSCA agencies. He added that, if not used by other agencies (with or without enough allocation), the water would either remain in the storage reservoirs or would go down the river. Chair Cook asked if staff is only considering a perpetual sale, or could it be a short-term assignment. Procos stated that, under the 2009 Water Supply Agreement, the sale must be permanent. Chair Cook opined that the offset of future rate increases is not a good use of the potential revenues and that funding conservation programs do not make sense either. He said that it seems like there's not a lot of demand for the recycled water project. The connection to the SCVWD treated water line or mitigating dry year impacts seem like better ideas. Chair Cook asked if the wells could provide the 1.2 MGD. Procos replied that the existing and new wells have plenty of capacity and could easily supply the 1.2 MGD of water supply. Chair Cook stated that, in general, he sees no urgency to sell the water and doesn't see the clamor for the sale, but believes that it is worth the discussion and exploring this proposal to sell. He concluded that wise use of the funds would be to pay for significant projects such as SCVWD treated water pipeline connection. Chair Cook stated that he was somewhat uneasy with the City having only one source of water supply. He asked about reverse osmosis as a treatment option, which is used in other places in the world. Procos stated that there are pilot studies for desalination of sea (or bay) water being done with Bay Area water agencies, including BAWSCA. Commissioner Eglash stated that reverse osmosis is a major and active interest in reinventing municipal water infrastructure and how to handle urban water issues in an area that is subject to drought and water shortage and that lots of research is going on at Stanford on these issues. Utilities Advisory Commission Minutes Approved on: November 6, 2013 Page 7 of 7 Chair Cook stated that the next war may be all about water and that it's a valuable and scarce resource. Combine that with climate change, and this is a momentous decision and we need to be cautious in the evaluation of a potential sale of the City’s water supply allocation. Chair Cook concluded that he didn’t want to see us moving forward unless there's a burning need, which he doesn't see. ACTION: The item was a discussion item with comments from the UAC requested and no action required. ITEM 3: ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting Vice Chair Foster asked when the changes to the PaloAltoGreen program will return to UAC. Director Fong stated that the PaloAltoGreen Gas program is currently scheduled to go to the UAC in December. She added that staff must return to the Council by March 2014 with a recommendation on how to use the surplus funds from the PaloAltoGreen electric program. ACTION: None. COMMISSIONER COMMENTS None. Meeting adjourned at 8:50 p.m. Respectfully submitted, Marites Ward City of Palo Alto Utilities