Loading...
HomeMy WebLinkAbout2017-07-12 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: August 2, 2017 Page 1 of 9 UTILITIES ADVISORY COMMISSION MEETING FINAL MINUTES OF JULY 12, 2017 SPECIAL MEETING CALL TO ORDER Chair Danaher called the meeting to order at 7:05 p.m. Meeting of the Utilities Advisory Commission (UAC). Present: Chair Danaher, Vice Chair Ballantine, Commissioners Forssell, Johnston, Schwartz, Segal, Trumbull, and Councilmember Filseth Absent: None ORAL COMMUNICATIONS David Carnahan, Deputy City Clerk said the City was recruiting for the Storm Water Management Oversight Committee. The Committee was forming to provide oversight for the recently passed Storm Drain Management Fee. The group would meet a couple of times per year to keep an eye on the spending. Several for two years, others for four years. Encouraged UAC to reach out to at least one community member. APPROVAL OF THE MINUTES None. AGENDA REVIEW AND REVISIONS None. REPORTS FROM COMMISSION MEETINGS/EVENTS Commissioner Schwartz said she had not been at the last UAC meeting because she had been in Baltimore at the Low-Income Energy Issues Forum. She gave a presentation on Community Solar. Many of the issues the UAC was wrestling with were discussed in her presentation, which she had been shared with the UAC prior to the last meeting. She thought there was no reason to do community solar as a cheaper form of solar electricity. Large-scale solar was less expensive. The advantage to community solar could be in research and understand on how islanding can work, using it to explore the possibilities of resiliency and to make it more visible to people in the community, or to use it to generate funds by supporting charging stations that could then be used for purposes like energy assistance to lower bills. There were reasons to do it, but not because it was cheaper. BGE (Baltimore Gas and Electric) had the most advance program of any utilities that were there. Some of the most innovative community solar projects were located in Colorado. She had also heard a discussion of Energy Savings Accounts. While there was not a large low-income community in Palo Alto, there were people struggling to get by who could find this helpful. Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 2 of 9 Chair Danaher spent time in Lisbon with a number of European utilities. The utilities there were focused on making money rather than efficiency. Most had already adopted smart meters and were looking at how to make the most of them. Many were grappling with what to do with the electric vehicle (EV) market. The utilities wanted to leverage EVs for demand response and frequency regulations. Meeting was focused on the group getting to know each other, introducing startups to utility staff. UTILITIES GENERAL MANAGER REPORT Demand Response Program: There was a heat wave the week of June 19. On Thursday, June 22 Palo Alto experienced its peak demand of 171.1 megawatts (MW). During that week the utility activated its demand response program, which includes four customers, one of which is Palo Alto City Hall. Those customers were able to achieve a 14% reduction in load by managing building energy usage during the hot afternoons. In total, they reduced electric demand by 724 kilowatts (kW), with the City achieving more than 50 kW, or about 11%, in peak demand reduction. Carbon Neutral Gas: Carbon neutrality for the gas utility went into effect on July 1. Staff will purchase carbon offsets for the carbon emissions corresponding to any natural gas usage after July 1. Until September 1, this will be funded using revenue from sale of Cap and Trade Program allowances. Starting in September, customers will see a line item charge on their bill to fund the purchase of carbon offsets. While this charge was previously adopted by Council through approval of the Carbon Neutral Gas Plan, it was not reflected on a rate schedule. After consultation with the Attorney’s office, staff decided it was prudent to delay the rollout of this line item charge to allow time to get approval of a revised gas utility rate schedule and expand educational outreach to customers about carbon neutrality. Rate Changes Adopted: On June 27, the City Council adopted its budgets, including all rate changes recommended by the Utilities Advisory Commission. These included a 3% decrease in water rates and a 12% to 14% increase in electric rates to pay for new renewable energy projects coming online, increased transmission rates, and increased infrastructure investment. There are no changes to gas or sewer rates, aside from the previously discussed carbon offsets charge for the carbon neutral natural gas program. Despite the rate increase, Palo Alto's electric rates are more than 35% lower than PG&E, and the overall utility bill for the median Palo Alto resident continues to be lower than what most residents pay in neighboring communities. An overview of rate adjustments is available at cityofpaloalto.org/ratesoverview Water Quality: Each year Utilities publishes an annual Consumer Confidence Report which informs customers about the City's water quality. The report on water quality conditions for 2016 is now available online in English, Spanish and Mandarin at cityofpaloalto.org/waterquality. Customers may also contact us to request a printed copy. Gas Safety Awareness: As a gas utility, the City is required to maintain a public awareness outreach plan about gas safety, which includes distributing an annual gas safety awareness brochure. These brochures are being included with July utility bills and will also be mailed to non- customers living around a gas pipeline, as well as public officials, emergency responders, locators, excavators, contractors and plumbers working in and around Palo Alto. The brochure is available online in English, Spanish and Mandarin at cityofpaloalto.org/safeutility. Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 3 of 9 City Open House at the Municipal Services Center: On Monday, July 3, Utilities and other City departments hosted an open house at our Municipal Services Center. It was an opportunity for staff to showcase some of the “behind the scenes” work that we do for the Palo Alto community. City employees, their families and members of the public were able to enjoy food, music, fun activities and special project demonstrations about key City services. The majority of attendees who provided feedback on the event rated it as excellent and requested that we host it annually. Many expressed appreciation for the variety of displays and information presented, complimenting staff on their knowledge, pride and enthusiasm for the work they do. We look forward to bringing this event back next year and further expanding upon its size and success. Thanks to the entire team who helped pull it off! COMMISSIONER COMMENTS Commissioner Trumbull noted a story in the Palo Alto Weekly regarding flaws in the City’s pipeline inspection program. He thought it would be helpful for the UAC to review this. The story had sounded bad for Palo Alto, but he had heard there were reasonable explanations of the situation and it was important to get those explanations aired publicly with the community. Utilities General Manager Shikada clarified this was a report on the audit of the crossbore program. He had requested the audit. The next step in that audit would be to report to Council. A debrief with the Commission would be arranged. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: DISCUSSION: Utilities Department Strategic Planning Workshop with City Consultants General Manager/Assistant City Manager Shikada introduced the strategic plan consultants. NewGen (“NewGen”) Strategies and Solutions would be leading the development process for the Strategic Plan, while BluePoint Planning (“BluePoint”) would be managing employee engagement in the process. Tony Georgis, NewGen, gave an overview of the strategic planning process and the role of the UAC. The purpose of a strategic plan was to align the utility’s vision and strategic destination with tactical decisions with a clear connection between staff activities and strategic direction. Tony believes the current strategic plan had a very long list of initiatives and benchmarks and it is important to filter that list through this strategic planning process. He expects this process would involve a fairly comprehensive refresh of the plan, and would ensure that the plan was filtered down to all levels of the organization. The consultants would lead the plan development and work with stakeholders, both internal and from the community. He gave an overview of the process for developing the plan, including workshops, market research, an evaluation of strengths, weaknesses, opportunities, and threats (SWOT), and evaluations of goals, objectives, tactical plans, and performance metrics (KPIs). Shikada said the connection between the strategic plan and the day to day activities of the utility needed to be strengthened. To do that the plan would need to be simplified and more focused. Focusing on the role of people in the plan would make a difference, as would limiting the number of priorities and activities. The role of the strategic plan was to coordinate activities at a higher Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 4 of 9 level, while there were more specific planning efforts that would address detailed topic areas (for example, smart grid planning or electric portfolio planning). Georgis gave an overview of the different layers of detail in a strategic plan, from long-term elements down to short-term objectives and tactics. The Tactical Action Plan would identify specific projects, plans to achieve them, budgets, and roles and responsibilities to ensure achievement of strategic objectives. He discussed the UAC’s role, saying the UAC would be involved at three points in the development of the plan, providing feedback as the plan evolved. Georgis provided an overview of some of the national trends and key issues currently faced by Palo Alto and other utility including:  Technology-related issues (such as cyber security and the availability of smart grid and advanced metering technologies).  Changes in customer preferences (such as the availability of distributed energy and changes in customer energy use). Utilities were not seeing as much load growth anymore.  Liquified natural gas export terminals were under construction that could affect gas prices.  In the water industry, it was difficult to quantify what a normal planning year was due to variability in water supplies. There were limitations on rate flexibility, as well as challenges in messaging the need for conservation when it does not necessarily reduce customer bills.  Workforce challenges, with many employees retiring and fewer entering the utility industry.  Changes in the way younger employees engaged with their professional careers. Vice Chair Ballantine said he had visited an island in the Pacific that was trying to eliminate carbon in its energy use and had experienced 7% per year load growth due to EV adoption. Commissioner Schwartz said that Palo Alto has a high penetration of EVs, more so than other parts of the country which could offset some load decreases. Vice Chair Ballantine said with more electrification there would be a need for more of a focus on reliability due to the fact that all customer energy uses were coming from one source. Commissioner Schwartz said there was not unanimous enthusiasm for building electrification on the UAC, as compared to vehicle electrification. She said it was also not likely that everyone on the UAC understood all of the evolving regulatory mandates. Commissioner Schwartz said one notable feature of Palo Alto is that older residents were more technologically savvy than in many places, which affected their attitudes toward technology. She noted that one challenge in attracting employees to Palo Alto was the lack of nearby affordable housing leading to extended commutes. Georgis acknowledged that concern and noted that many utilities struggled with particular positions, such as linemen. Chair Danaher asked what percentage of the workforce was eligible to retire in the coming years. Shikada said it was 35% to 50%. Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 5 of 9 Georgis said this was not uncommon. He proceeded to discuss the changes in the industry from 2007 to 2016, including the increased availability of electric vehicles, the substantial increase in renewable energy, and the availability of smart meters. Commissioner Schwartz noted that Palo Alto was one of the only communities in California without smart meters. Chair Danaher thought this would be a good discussion, but also asked that staff provide a deep dive on market trends that staff saw coming. Commissioner Schwartz asked if there would be opportunities for interactive workshops for UAC members outside of the regular UAC meetings. Shikada said there was a need for some reasonable pacing to allow staff to develop its thinking on various topics to provide proposals for the UAC to respond to. Commissioner Schwartz said the UAC meeting format was not effective for engagement. Georgis noted there would be community focus groups with a workshop format. Commissioner Schwartz asked whether the UAC would be able to attend those meetings or whether there would be Brown Act obstacles. Deputy City Attorney Jessica Mullan said there were ways to make workshops consistent with the Brown Act. Commissioner Trumbull noted that one big public input meeting would be useful as focus group meetings are not always open. Shikada said that the UAC’s role in the process was not 100% defined and that there were ways to have other formats for the meetings. He discussed the workshop format that had been used in development of the Sustainability and Climate Action Plan (S/CAP). Georgis gave an overview of the natural gas market. Commissioner Segal asked how priorities would be set in the plan, including priorities that could be at cross purposes, such as low cost and sustainable. She emphasized the community should have some input on the plan. Chair Danaher mentioned that Stanford University can be a great resource, specifically the Precourt Energy Center. He also added that would be helpful if, when staff presented its recommendations, it talked about the priorities it had let go of in order to set its recommended priorities. He supported incorporating the employee and organizational needs in the plan. Commissioner Schwartz said it was important to get staff buy-in by ensuring that leadership had a clear sense of what the direction was. It was possible for employees to sabotage the process due to an aversion to change. The current vision was uninspiring. Palo Alto was the kind of place where Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 6 of 9 it was possible to develop an exciting vision for the future of the utility, and having staff aligned with that vision was important. Georgis asked the UAC to speak to what the key market trends CPAU must address in the next five to ten years. The various commissioners offered the following insight and/or feedback: Commissioner Forssell:  Impacts on load associated with EV adoption in Palo Alto.  Aging infrastructure and increasing cost of replacing and maintaining and the impacts on safety and reliability  Water supply availability given climate change. She thought it was important to consider possible futures in which there were many more frequent dry years, and in which precipitation fell more in the form of rain rather than snow.  Impacts of LNG on natural gas prices and natural gas demand and load trends.  Market trends in energy efficiency. Is Palo Alto a leader or follower in terms of building code standards for energy efficiency and what are the implications.  Price point at which storage, which is not currently cost effective, becomes a viable resource. Vice Chair Ballantine:  Resiliency is important and should be a core strategy. Customers are more and more dependent of electricity for many end uses. Reliability and resiliency are not the same.  Environmental goals and reliability goals could be at odds. Solar was being installed in Palo Alto, which could reduce carbon emissions, but it was not set up to operate in islanded modes, meaning it did not increase reliability.  Value of resiliency when evaluating storage. Commissioner Johnston:  Focus on cyber security to ensure reliability. Commissioner Schwartz:  Implications of sea level rise. There were parts of Palo Alto that would be more exposed to flooding due to sea level rise.  Need to consider the interconnection and trade-offs. For example, there was a tradeoff between trees and solar exposure. It might be more worthwhile to leave the shade up and insulate a home rather than cut down the trees and put solar on the roof. Another example of interconnected thinking was leveraging the fiber ring for smart metering for all three metered utilities.  Workload and priorities. Need to take some work off the plate.  Leverage other utilities efforts. Chair Danaher:  Long run water recycling was going to become very important, and that could have implications for how buildings were designed.  Vehicle to grid and smart charging could be important in the long run, and it could be important to get standards in place to allow the utility to take advantage of these resources in the long run. Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 7 of 9 Councilmember Filseth:  Value of energy storage in resiliency versus the need for a second transmission line.  Focus of the strategic plan would likely need to be on the low tech issues and the nuts and bolts activities such as staffing and operations.  The current focuses of the strategic plan captured the basic requirements of operating a utility pretty well.  New strategic plan needs to focus on long-term strategy of staffing and infrastructure cost. Commissioner Segal:  Use of technology to meet workforce issues. Chair Danaher thanked the UAC for its discussion. NO ACTION ITEM 2: DISCUSSION: Preparation for Council and Utilities Advisory Commission Joint Study Session Utilities General Manager Ed Shikada said the discussion of the strategic plan earlier in the meeting would help inform the topics for the joint study session. He asked the UAC for feedback on what was important to include on the agenda for the joint study session. Chair Danaher said wants to include Council priorities and policy issues. Commissioner Schwartz said a critical discussion was a focus on resilience. She said it would be valuable to look at microgrids and islanding and where in Palo Alto it would make sense to have these features. She thought household electrification and undergrounding could come off the work plan to allow the utility to focus on resiliency. She said staffing was an important part of resiliency. Temporary shift housing might be a way to approach the issues with commute problems. Chair Danaher noted that the UAC had previously recommended a discussion of the value of rooftop solar. Shikada noted that the typical protocol was to have joint meeting of the UAC Chair and Vice Chair along with the Mayor and Vice Mayor to meet prior to the joint meeting to discuss potential topics. ACTION: No action. ITEM 3. DISCUSSION: Discussion Regarding Utilities Leak Adjustment Rules Utilities General Manager Ed Shikada said this issue had been discussed in one of the neighborhood e-mail groups and had led to some misconceptions. As a result he felt it was important to bring this to the UAC. Assistant Director of Customer Support Services Tom Auzenne gave an overview of water metering and billing. He said customers occasionally experienced leaks on their water systems and experienced a high bill. If the utility observed a leak or had it reported to them, staff would contact Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 8 of 9 the customer. Sometimes a customer or neighbor would contact the utility, and described how staff helped diagnose whether there was a leak, and how difficult it can be to find a leak in the house or irrigation systems. He explained that people often do not inspect or test their irrigation systems for leaks. In the future, with advanced meters, customers may be able to receive a notification when unusual flow was observed, but right now customers often do not discover the leak until they receive their bill. It was not their fault, but neither was it the water utility’s fault. Chair Danaher noted there had only been twelve leaks in the past eight years. Mark Harris, a Palo Alto resident of Crescent Park addressed the Commission. He said the utility had previously had a policy to provide a bill credit when a customer experienced a water leak. He recommended returning to the water leak adjustment policy that was in place prior to 2006. He said a policy should include three elements: first, the number of adjustments for any individual customer should be limited. Second, the burden of proof to demonstrate the consequence of the leak and the fact that it had been fixed should be the customer’s responsibility. Third, the customer should pay at least the wholesale price of the water. He said the leak policy would not result in any Proposition 218 issues, and the current policy in fact resulted in a windfall from customers who experience a leak. He said that he had previously been an Assistant Director of the City of Palo Alto Utilities and had handled several water leak credit requests when he was there. Later, as Director of Utilities for Mountain View he used the City of Palo Alto policy as a model. He said the concerns in the staff report could be addressed and offered his assistance if it was desired. Jonathan Foster, a Palo Alto resident and former UAC member said this was an easy problem to fix. The leaks were infrequent and would not result in a significant cost to other customers. He recommended instituting a leak adjustment policy. He was comfortable paying an additional minor amount on his water bill to help other residents deal with the problem. Vice Chair Ballantine agreed that the cost impact among all customers would be negligible. He said it would make sense in the future to address the design issues around water appliances so that appliances and systems shut off when they are experiencing a leak. Commissioner Schwartz agreed that the problem was small and that if customers fix the problem, there should be a leak forgiveness policy. Customers who had experienced these leaks would likely be excited to participate in advanced metering or leak detection pilots. Councilmember Filseth asked whether it would make sense to go to a separated distribution and wholesale water rate. Auzenne said there was currently a fixed and variable component to the rate. Councilmember Filseth said customers experiencing leaks should pay the wholesale water cost but not necessarily the distribution component. Also, part of the marketing pitch for smart meters should be leak detection. Auzenne said the City’s pilot smart meter project had detected some leaks and those customers were contacted in advance of their scheduled meter read date. Utilities Advisory Commission Minutes Approved on: August 2, 2017 Page 9 of 9 Commissioner Johnston noted there were a high number of check reads. He asked whether there had been a significant change in customer calls about leaks after the City moved away from the 2006 policy. Auzenne said that there had not been a significant change in the number of customer calls after the policy change. Auzenne also said the number of check reads was driven by automated quality control algorithms in the billing system. He said the recent rise in check reads and water leak complaints was the result of customers beginning to use their irrigation systems more frequently since the California drought had officially ended. Commissioner Schwartz said it sounded like the City was doing the right things from a Customer Service standpoint. Chair Danaher supported instituting a well-designed leak adjustment policy. Commissioner Segal discussed staff remarks related to homeowner insurance and whether that was applicable in the case of a water leak. There was a comment from the audience that homeowner’s insurance typically would not cover the cost of water associated with the leak. ACTION: No action. ITEM 4. ACTION: Selection of Potential Topics(s) for Discussion at Future UAC Meeting Chair Danaher suggested a discussion of low-income programs available in Palo Alto. Commissioner Schwartz recommended a discussion of the segmentation of customers to understand their attitudes and preferences. This would help guide the UAC’s policy discussions. ACTION: No action. Meeting adjourned at 9:20 p.m. Respectfully Submitted, Marites Ward City of Palo Alto Utilities