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HomeMy WebLinkAbout2011-02-02 Utilities Advisory Commission Summary MinutesFINAL UTILITIES ADVISORY COMMISSION MEETING MINUTES OF FEBRUARY 2, 2011 CALL TO ORDER Chair Waldfogel called to order at 6:15 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Berry, Cook, Eglash, Foster, Keller, Melton, Chair Waldfogel and Council Member Scharff. Absent: None STUDY SESSION II. Overview of Parameters to Consider Regarding Implementing Feed-in-Tariffs for Solar Photovoltaic Systems in Palo Alto Senior Resource Originator Tom Kabat provided a presentation on Solar PV Feed-in-Tariff (FIT) considerations for Palo Alto. He described the main elements of FIT programs and discussed the value and market potential for solar photovoltaic (PV) installations in Palo Alto. Staff has a preliminary value estimate of 15 cents/kWh, and expects that market potential for a value based FIT will be low given current cost estimates. Kabat also presented a number of policy choices for designing a PV FIT. The tariff could be based on the value to the utility, which would be around 15 cents/kWh in Palo Alto, or it could be priced higher to incent more installations. The traditional utility role is “arms length” – post the tariff on the utility website with some level of marketing. An alternative would be to have the utility play a much bigger role assisting in the PV FIT development, such as having the utility assist in shopping by gathering and sharing information with building owners and PV developers. Craig Lewis and Sahm White from the CLEAN Coalition made a presentation. Lewis recommended a 4MW limit, which could enable the City to meet its RPS goals with PV FITs. He also indicated that the utility should not be required to play an assistive role for customers as he did not see this as necessary for customer participation. He indicated that a 15 cent/kWh FIT should result in some interest and, as time goes on and PV prices fall, should spark more interest. Lewis advocated for the value-based approach since it protects other ratepayers. Yoriko Kishimoto stated her support for FITs and noted that the U.S. is behind the curve on this, but Palo Alto has the opportunity to lead the way and set the pace. She urged a higher FIT rate than 15 cents/kWh to encourage greater participation. Commissioner Cook asked if it was true that there would be no ratepayer impact. Kabat stated that, if the FIT was value-based, then there would be no additional rate impact than any other renewable resource if it was used to meet RPS goals. Commissioner Berry asked what the benefits were of using a FIT rather than having the utility install the systems. Kabat replied that with a FIT, the utility only pays for generation produced and doesn’t risk any capital. In addition, the City would not benefit from the tax savings that other private developers use to help make the projects cost-effective. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 1 of 10 Council Member Scharff noted that Mr. Lewis stated that FITs could be used to fill the remaining gap in the RPS goals. Lewis responded that the goal could be met with 4 MW of FITs and that the cost of PV installations is falling. Council Member Scharff asked at what rate are costs falling. Lewis indicated that costs are falling about 10% per year. Council Member Scharff asked if FITs were used to meet the RPS goal, would staff time be reduced. Kabat indicated that he did not believe that staff time would be reduced since staff is required to complete these contracts and pay the system owners and that there would be many more contracts to follow than with larger Power Purchase Agreements. The Commissioners provided feedback on the policy choices for a PV FIT in Palo Alto. Commissioner Foster expressed support for moving forward with a value based program and supported an “arms length” role for the utility. He agreed with a number of the other strategies offered for consideration by staff, except for limitations on the total nameplate kilowatts of annual subscriptions and minimum system sizes. He also expressed a preference for not charging a fee to subscribers unless it was found to be necessary. Commissioner Melton agreed with Commissioner Foster on everything except he saw a need to limit the size of the program, at least at the start of the program. Commissioner Eglash agreed with a value based tariff. He stated that a premium payment over the value to the utility would be both inefficient and unfair. It would be inefficient because the utility could purchase more renewable power from alternative sources for the same cost, and it would be unfair because the extra cost would be socialized. This would mean that many customers, particularly lower income, would be subsidizing those able to participate in the business opportunities. Commissioner Eglash also advised that the utility not invest a lot of time/resources marketing the program. He also suggested considering setting the tariff lower than value to the utility if it was sufficient to incent participation, especially since PV costs are projected to fall. Commissioner Keller asked if there was any value to waiting on implementation for a while to try and optimize timing. She indicated that it could be worth waiting if prices are falling as has been indicated. Commissioner Cook, expressed a preference for the “arms length” utility role with the tariff based on the utility value, and he supported limiting the size at first and revisiting that limit semi-annually. He suggested that the queue position expire in twelve months, rather than the two years suggested by staff. He also recommended that staff consider a reverse auction mechanism. Chair Waldfogel agreed with most of the positions expressed by the other Commissioners. He supported a twelve-month duration for the queue and evidence of financing to get on the queue. He also advised staff to coordinate with the City’s building and planning departments as soon as possible. ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES Commissioner Cook had an amendment to Item 5, Commissioner Eglash should be replaced with Commissioner Cook as member of the Ad Hoc Committee on Innovation, Technology and Projects. The Minutes from the January 12, 2011 UAC special meeting were approved as amended. AGENDA REVIEW No changes to the agenda were requested. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 2 of 10 REPORTS FROM COMMISSION MEETINGS/EVENTS Commissioner Eglash reported on a workshop at Stanford on the grid integration of renewable energy, particularly intermittent resources. Senator Bingaman from New Mexico and Commission Byron from CEC attended. Commissioner Cook attended the NCPA 101 session and thought it was well put together, he learned a lot and recommends others to attend. Commissioner Foster reported on his attendance at the CMUA Capitol day and visits with Assembly Member Gordon and Senator Simitian’s staff. Two of the main issues discussed were the Renewable Portfolio Standard bill introduced by Senator Simitian, and the renewal of funding for public benefits charge. Commissioner Foster also reported on a meeting with former US Senator Bryon Gordon of N. Dakota and Andy Karsner (former Assistant Energy Secretary for Energy Efficiency and Renewable Energy in the Bush administration). Chair Waldfogel reported that he had been selected as liaison to the Rail Corridor Task Force. While there continue to be questions and risks as to how and when high speed rail is developed, Caltrans has long term plans to electrify the tracks which will have utilities impact. Chair Waldfogel suggested that staff think about budgetary requirements and work with the planning department. Director Fong replied that the utility would receive compensation for moving any of its facilities and was already coordinating with planning through Greg Scoby from Utilities Engineering. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong delivered an oral report on the following items: 1. Hydro Conditions: The La Nina condition and associated forecast correctly predicted a wet start of the hydro year turning to dry in January. The forecast now predicts February, March and April to have below normal rainfall for our area of California. For this time of year, snow-packs are around 130% of average water content at the high elevations and reservoirs have storage at or above average levels. The hydroelectric forecast currently is for near average generation. 2. EV Chargers: City has received approximately $35,000 in grants from the California Energy Commission (CEC) and the Bay Area Air Quality Management District (BAAQMD) to install 5 or more chargers in the City. The Utilities Department, through the Public Benefits R&D Funds, will also be participating in paying part of the cost to install these chargers. The City is expected to issue an RFP to for these chargers. A UAC special meeting to discuss various aspects of smart grid, including EV charger infrastructure development is planned for mid-March. 3. Smart Grid Application Assessment for Palo Alto: The consultant has completed the assessment. The initial assessment was shared with the UAC’s Innovation subcommittee and the report is planned to be presented to the full UAC in March at the mid-March special meeting. 4. Smart Grid Survey of Residential and Commercial Customers: Also on the agenda for the mid- March special smart grid meeting is the results of survey of customer perceptions and value they place on elements of smart grid applications. The survey, conducted in November, also assessed customer interest in EVs, CPAU service levels, and customer preference for various strategic directions for the utilities. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 3 of 10 5. Spring Light Program: The spring light program this year will focus on specialty bulbs. Palo Alto Hardware and Stanford Electric Works are coordinating a program with CPAU. Residents will receive a coupon in the utility bill in March. They will be able to use this coupon at one of the stores just mentioned to receive up to four free ENERGY STAR certified “globe” style fluorescent bulbs during the months of April and May. Staff continues to search for ENERGY STAR certified and quality tested LED bulbs for future programs; however, the field of qualifying bulbs still only includes very expensive bulbs for niche markets, such as under counter lights. 6. UAC Calendar: The rolling calendar of upcoming items for UAC meetings has been updated with items on the LEAP and GULP Implementation Plans. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: ACTION: Proposed Water Utility Rate Adjustments and Long -Term Financial Projections Senior Resource Planner Ipek Connolly provided a presentation on the water utility’s five-year financial projections and proposed rate adjustments for FY 2012. Connolly noted that over the five-year planning period, the cost of water purchases is expected to increase from $10.8 million in FY 2011 to $21.5 million in FY 2016. Regarding the rate adjustments, staff proposed to make the cost-of-service analysis (COSA) adjustments between customer classes and between fixed and volumetric charges in one year, along with a 12.5% ($3.5Million) increase in overall sales revenue. This translates to a 17.4% increase in residential sales revenue and an 8% increase in business sales revenue since the COSA realignment between customer classes is a 4% increase in residential rates and a 10% reduction in commercial rates, and a 14% increase in commercial irrigation rates. The adjustment to the fixed charge component would increase the revenue collected from fixed charges from 5% to 15% of total sales revenue. The staff proposal would also add a tier to residential and commercial rates. The financial projections illustrated the impact of the revised (higher) SFPUC supply rate increases, lower water demand projections, and additional capital improvement projects. Connolly also presented a couple of alternative scenarios suggested by UAC members. One alternative was to raise rates sooner to avoid more increase later and avoid going below the minimum reserve guideline. Another alternative was to try and achieve stable rate increases (i.e., the same percentage over the 5 year planning horizon). Commissioner Eglash asked for an explanation of how revenue from commercial customers was increasing when they were getting a 10% decrease. Director Fong and Connolly explained that the 10% decrease was for the cost of service realignment between customer classes. With the proposed FY 2012 increase of 12.5% in overall revenue requirements and the COSA increase of 14% for irrigation accounts the net increase to the commercial customers overall was 8%. Commissioner Melton stated that he thought it was a well thought out proposal but expressed his concern about dropping below minimum reserve guidelines for two years. He acknowledged that it would take a large increase in FY 2012 to stay above the minimum guidelines in future years, but requested that it be made clear to the Council of that possible outcome. Chair Waldfogel and Commissioner Berry discussed alternatives to reduce the impact of the CIP increase. Chair Waldfogel suggested stretching the CIP over three years, and Commissioner Berry asked if the two new projects could be financed instead of paid for out of current ratepayer revenues. Director Fong replied that she would not recommend delaying the projects as they were safety related, and bond financing was not the typical way of financing such projects, but that it is something that could be considered. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 4 of 10 Commissioner Keller asked if the demand reduction was mainly from the business sector and economy driven. She also observed that the reserve calculations were very sensitive to demand projections, so the Commission should not get too focused on the reserve projections for future years. Connolly replied that the demand reductions were partly driven by the economy, but also by the weather and conservation actions. Commissioner Cook asked how the tiers were determined, and if the tiers were effective in encouraging conservation. Connolly explained that tier points had been selected based on the percentage of customers that would fall into them for winter and summer usage. For example, tier one was set based on winter usage and was designed so that 50% of customers would not exceed tier one based on their winter usage. Connolly also explained that price response is low but there is some, and the response is higher for low income customers and irrigation use. Chair Waldfogel indicated that the UAC received a letter from Canopy and read the questions in the letter: 1. Do we know what impact these rate changes might have on the landscape and health of trees in particular? 2. Was Planning Arborist Dave Dockter consulted on this matter? 3. Is demand for water usually elastic to price? Does this elasticity vary tier to tier? 4. If the rate change is accompanied by additional encouragements to conserve water in the landscape (such as the removal of irrigated lawns), could instructions be given regarding the need to provide alternate irrigation for trees that are currently irrigated indirectly through the watering of lawns? Commissioner Keller recognized that the COSA resulted in a 4% residential increase, but she asked if the cost could be split differently so that low usage customers could still have the ability to lower their bills. She was concerned that the drop in volumetric rates for residential tiers one and two did not give a conservation signal and was a confusing message to customers. Director Fong stated that staff’s proposal was to increase the fixed charge to the COSA recommendation especially since there is strong sentiment among the Council to avoid ramifications to the Water Fund when usage drops based on the experience of the Refuse Fund. However when fixed rates increase, volumetric rates must decrease to maintain the same revenue. Commissioner Eglash summarized the “big picture”; water rates are rising dramatically, water is a finite resource, and the City needs a rate structure to encourage conservation and has an obligation to send correct price signals. There are significant avoided costs from conserving water. He indicated that we have a responsibility to bring in the third usage tier to incent efficient use. He recognized there was some concern about trees but he did not think most trees relied solely on irrigation because of the relatively high water table in Palo Alto. Although he didn’t think trees would be impacted, he indicated that if they were we would need to find a solution to that problem. He expressed a preference for keeping commercial rates flat rather than having some commercial customers having bill reductions and suggested applying Commissioner Keller’s suggestion to commercial rates in not having their volumetric charges reduced. Commissioner Foster expressed his appreciation for staff’s report and asked for clarification on COSA legal requirements. He asked if the City was under a legal obligation to follow COSA, if there was any arbitrariness to COSA studies, and if there was any obligation to move to the COSA fixed charge recommendation. Staff replied that yes, regulations (Proposition 218) required that rates be based on cost of service and the COSA study used industry standard cost causation models for assigning cost of service. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 5 of 10 The fixed cost was a rate design issue, but that the current low fixed costs were not collecting the full cost of service from low usage customers. Commissioner Foster recognized that the proposed rate increases are painful and he would rather the COSA be phased in more gradually so as to avoid the rate increase differential between low usage residential customers and commercial customers. He would like to see all customers share some of the required increase. He also would like a more gradual move to the fixed cost increase (he would prefer no fixed costs). He also advised that staff communicate clearly the projected rate increase over the next few years. Commissioner Melton asked why staff proposed to move to full COSA alignment by customer classes in one year although both the UAC and the Finance Committee previously indicated a preference to move to the class alignment over more than one year. Staff indicated that since the Water Fund’s reserves are currently healthy and, therefore, it was possible to somewhat reduce the requested revenue increase for FY 2012 and include the COSA alignment in one year. Additionally, staff indicated its preliminary assessment that it would recommend no increase to gas or electric rates, so the total bill impact from the one-year COSA alignment for water rates was doable. Chair Waldfogel noted that the commission has several choices, including: 1) approve staff’s proposal now; 2) approve the proposal with tweaks now; 3) appoint a subcommittee to work with staff to develop new proposals; or 4) ask staff to return with a new proposal based on the commission’s input. Commissioner Eglash opposed delaying action and noted that the Commission needs to grapple with the issues now. ACTION: Commissioner Melton moved to recommend staff’s proposal with the change that staff make the adjustments necessary so that no customer would get a bill decrease. Commissioner Foster seconded the motion. Commissioner Eglash offered a friendly amendment regarding lower usage customers: that the volumetric rates for tiers 1 and 2 not be reduced from current levels and the fixed charge be lowered to account for the higher volumetric charges, the tier 3 residential rate would stay at the level proposed by staff. Commissioner Melton accepted the amendment offered by Commissioner Eglash, but stated he would not accept elimination of the residential 3rd tier. Chair Waldfogel offered an amendment to have a 14% increase in the revenue requirement for FY 2012 to have stable rate increases planned over the 5 year projection. Commissioner Berry seconded the motion, but then withdrew his second when he understood the net impact on residential customers of the revenue requirement increase and the COSA adjustment. Chair Waldfogel offered an amendment to remove the residential tier 3, but there was no second. Commissioners Eglash and Keller proposed modifying the first amendment so that residential tiers 1 and 2 rates would increase slightly instead of remaining at current levels. Commissioner Melton accepted the revised amendment and reiterated his earlier request that the Council be well apprised of the fact that the five-year financial projections show the reserves going below the minimum guidelines for two years. The final restated amended motion was: to recommend Council approve amendments to the water rates such that: a) overall retail water rates and annual revenues for the Water Fund increase by 12.5%, or $3.5 million, in Fiscal Year 2012; b) the rate adjustment proposal by staff be modified so that no customer’s bill would be decreased. These modifications will require that the volumetric rates for residential customers for usage in tiers 1 and 2 and for commercial customers be increased and the fixed charges be reduced; and Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 6 of 10 c) the Council be made aware that the UAC is aware that the five-year financial projections show that the balance of the Water Rate Stabilization Reserve falls below the minimum guideline level for two years. The motion passed (5-2) with Chair Waldfogel and Commissioner Berry opposed. Chair Waldfogel indicated that his opposition was due to the fact that the customers most affected by the proposal are those with large landscaped areas. Commissioner Berry indicated that he couldn’t support the motion since he couldn’t see that actual proposed rates that would result from the proposed modifications. ITEM 2: ACTION: Proposed Wastewater Collection Utility Rate Adjustments and Long Term Financial Projections Commissioner Foster asked for clarification that, although there is no total revenue increase, 93% of customers will see a rate increase. Senior Resource Planner Ipek Connolly stated that residential customers would have an increase and confirmed that residential did account for 93% of customers. Commissioner Waldfogel clarified that these were cost of service adjustments. Commissioner Waldfogel asked for alternative motions. Commissioner Foster stated that while he was not happy with increases for the residential customers while other classes of customers were getting a decrease, and based on time, he was done with comments. No further discussions were held. ACTION: Commissioner Cook made a motion to recommend Council approval of the proposed Wastewater Collection Utility Rate Adjustments. Commissioner Eglash seconded the motion. The motion carried unanimously (7-0). ITEM 3: ACTION: Pilot Demand Response Program for Large Electric Commercial Customers Commissioner Eglash recused himself from the discussion because of the proposed involvement in the project of his Stanford colleague. Commissioner Foster stated he would like to see more implementation of this program but understood the need to start slowly on a new program. Commissioner Keller asked if there were other plans to encourage commercial customers to manage their own peak usage. Senior Resource Planner Shiva Swaminathan replied that the Plug-In Program would address that. ACTION: Commissioner Foster made a motion to recommend Council approval of the Demand Response Pilot Program. Commissioner Melton seconded the motion. The motion carried unanimously (5-0) with Commissioners Cook and Eglash absent. ITEM 4: ACTION: 2011 Utilities Strategic Plan Chair Waldfogel indicated that this item was extensively discussed at the commission’s January 2011 meeting. Director Fong indicated that the changes that were requested at the January meeting were incorporated into the proposed plan staff is now recommending. Chair Waldfogel noted that the plan was fundamentally to continue what we are doing now, but a little bit better and is not a transformational plan, which is consistent with our objectives over the next five years. Commissioner Keller indicated that the proposed plan seemed to incorporate the sense of the commission from the last meeting where the plan did get substantial discussion and that she was comfortable approving without more discussion. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 7 of 10 ACTION: Commissioner Foster moved to approve the proposed Utilities Strategic Plan. Commissioner Melton seconded the motion. The motion carried unanimously 6-0 (Cook absent). Assistant Director Jane Ratchye requested advice from the commission on how to communicate the plan as it goes forward to the Finance Committee and Council. Director Fong stated that the commission may want to have a representative at the Finance Committee meeting when it discussed the Utilities Strategic Plan. Commissioner Melton indicated that the usual commission representative is the Chair, but in this case, it may be more appropriate to appoint Commissioner Berry since he was so involved and is the most knowledgeable about the plan and the steps taken to develop it. Director Fong noted that more than one Commission representative could attend the Finance Committee meeting. ACTION: Commissioner Melton moved to appoint Commission Berry to represent the UAC when the plan is discussed at the Finance Committee. Chair Waldfogel seconded the motion. The motion carried unanimously 6-0 (Cook absent). ITEM 5: ACTION: Agreement Terminating the Third Phase Agreement for Western GeoPower Incorporated Renewable Energy Power Purchase Agreement Director Fong provided a brief summary of the report. Palo Alto signed up for the project with a $98 per megawatt-hour ((MWh), but the project does not go forward due to financing difficulties. The Northern California Power Agency (NCPA) has been able to negotiate an agreement for the project, but at the higher price of $113/MWh. Fong indicated that staff feels that it cannot recommend going forward with this project at $113/MWh at this time since it has not completed some of the planning work requested by Council: LEAP, GULP, and the Strategic Plan. In addition, the City of Santa Clara has offered to take on more of the project initially and has indicated a willingness to let Palo Alto in to the project. First, Palo Alto needs to step aside to let participants, including Santa Clara, proceed with the project. Therefore, staff’s recommendation is to terminate the original $98/MWh contract so that participants can sign up for the available project at $113/MWh. Commissioner Foster asked for clarification that there is no reason to agree to execute the $113/MWh contract now since Santa Clara will offer it to us later. Fong indicated that the first thing to not be a roadblock is to execute the termination agreement. Then, Santa Clara has offered to provide Palo Alto the opportunity to become a participant in the project if it can complete its required planning tasks and approvals by the end of the year. Commissioner Melton said that the geothermal source looked good in the past to us and still looks good to us and noted that the feed-in tariffs can only supply half of our remaining RPS needs over the next five years. He asked if staff was inclined to do the project. Senior Resource Originator Tom Kabat indicated that the size of the project would fit nicely into the portfolio and could help achieve the RPS goals. He anticipated that the City could release another request for proposals for renewable power to verify that the $113/MWh was a competitive price. Commissioner Melton said that the price seemed to be in the ballpark of what we’ve seen in the recent past. Commissioner Keller agreed that we need to get out of the way now by terminating the existing contract, but asked if there could be anything lost by waiting such as having the price move. She asked about the term of the contract and if the plant was currently operational. Kabat stated that the contract term was 25 years and that the plant is not yet operational, but there have been test wells drilled. She asked if there was certainty that there is 25 years of a steam source. Kabat indicated that he is not certain of the life of the steam source, but because the contract is a Power Purchase Agreement, the City would only pay for actual generation produced. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 8 of 10 Commissioner Foster stated that he supports terminating the original agreement and, in general, is supportive of this renewable purchase. However, if the decision can be delayed, this is acceptable. Commissioner Eglash indicated that he did not agree with the recommendation and disagreed with the statement in the report that the price of $113/MWh was “reasonably competitive.” Instead, he noted that we know that the price is very competitive as it is essentially the same price as the landfill gas contracts Council approved last year. In addition, one of the issues with those landfill gas contracts was the fact that we already had many such contracts in the portfolio and there was a question of resource diversity. The Western GeoPower contract would add diversity to the portfolio. Environmental issues regarding the operation of the landfills was also raised as another concern and the Western GeoPower project would not have these concerns. For those reasons, this contract is overwhelmingly compelling and we still have far enough to go to achieve the RPS goals and enough uncertainty around the PV FIT that this would be a good decision. Commissioner Eglash concluded that having too much renewable energy at $113/MWh is a happy problem to have, it’s a terrific deal and he would support recommending it to the Council. Commissioner Foster indicated that he was persuaded by Commissioner Eglash’s arguments. Commissioner Melton also indicated that he was supportive of the project at the $113/MWh and advised against hesitating on the project. Commissioner Eglash could recommend option 2.b in the report (execute the Termination Agreement and not enter into the new Third Phase Agreement at the $113/MWh price at this time), while staff recommended 2.a. (execute the Termination Agreement and enter into the new Third Phase Agreement at the $113/MWh price at this time). Commissioner Keller asked for staff’s reaction to Commissioner Eglash’s proposal. Fong indicated that staff does support option 2.b., but it has heard many times from the Council that it must have LEAP and the Strategic Plan completed and approved before bringing any new renewable resources for consideration. The new price does look attractive to staff and it has had discussions with Santa Clara to allow the City to get the price if it is able to act by the end of the year. Commissioner Eglash is sympathetic to staff’s position, but this is a case to treat as an exception and that the burden to make the recommendation is on the Commission and not on staff. This is one case where the staff and the Commission are under different pressures and may make different recommendations to the Council. He itemized the reasons for the Commission to make a recommendation to agree to the new contract now: 1) it is an attractive price; 2) it is well within the scope of what we do; 3) the Finance Committee will be able to review the project’s merits even if staff does not have the time to do its usual thorough review; and 4) the project is not a new project, but a derivative of an earlier one which was approved. We would not be doing anyone at the City a favor to take part of a year to more fully analyze and vet the project or to send out another request for proposals. We already know the project is a good one with a reasonable price. Fong indicated that there is no problem with staff taking a recommendation to the Finance Commission that is different from the UAC’s recommendation. Commissioner Eglash indicated that staff should explain that the reason for not agreeing with the UAC’s recommendation is based on procedural concerns and not on disagreement with the merits of the project. Regarding the choices on the participation level for the project, Commissioner Eglash indicated that it would be best to stick with the level from the original agreement (up to 15% of the project size), which would provide about 3% of the City’s annual electric needs. Thus, this would not be a proposal for a new level. Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 9 of 10 Utilities Advisory Commission Minutes Approved on: March 2, 2011 Page 10 of 10 ACTION: Commissioner Berry made a motion to execute the Termination Agreement and enter into the new Third Phase Agreement at the $113/MWh price at a participation level of up to 15% of the project. Commissioner Eglash seconded the motion. The motion carried unanimously by a vote of 6 to 0, with Cook absent. ITEM 6: ACTION: Potential Topic(s) for Discussion at Future UAC Meetings Commissioner Eglash asked for clarification on the purpose of the FIT agenda item in April. This will be to ask the UAC to recommend that Council adopt FIT policy guidelines. At a future date, staff will come back with tariff proposals. Commissioner Melton asked for more details on the special meeting in mid March. This is to update the UAC on grant funding for EV charges and smart grid developments. Final date and time was not yet finalized. Commissioner Foster noted that there had been discussions about having Thomas Fehrenbach attend a UAC meeting to discuss economic development for the City and what the Utilities department role might be. COMMISSIONER COMMENTS None Meeting adjourned at 10:30 P.M. Respectfully submitted, Marites Ward City of Palo Alto Utilities