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HomeMy WebLinkAbout2013-12-04 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: January 8, 2014 Page 1 of 10 UTILITIES ADVISORY COMMISSION SPECIAL MEETING FINAL MINUTES OF DECEMBER 4, 2013 CALL TO ORDER Vice Chair Foster called to order at 7:07 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Chang, Eglash, Foster Hall, and Melton Absent: Chair Cook, Commissioner Waldfogel, and Mayor and UAC Liaison Scharff ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES Director Fong advised that the minutes in the packet need to include the statement: “The motion was approved unanimously (6-0) with Chair Cook absent. The minutes from the November 6, 2013 UAC meeting were approved as modified. AGENDA REVIEW None. REPORTS FROM COMMISSION MEETING/EVENTS None. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong provided the following report: 1. Communications Update: a. PG&E Projects—November was a big month for finishing up major projects including the above-ground survey of their 3 transmission pipelines to remove any vegetation or structures in the way. (As far as we know, there was minimal need to have landscape or buildings altered.) Also completed was the pipeline upgrade and PIG-launching station off E. Bayshore Road. (Final landscape restoration is being negotiated with the Planning Dept.) A smaller project to raise PG&E electric towers near the Golf Course has also been completed. Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 2 of 10 b. Keep Calm Campaign---As you may have noticed, we’ve been getting a good response to our series of program outreach pieces using variations on the “Keep Calm and Carry On” theme. We set five examples at your places, addressing our residential rebate, solar, safety and low-income programs plus our commercial rebate program. We have additional ones in various stages of production addressing our special programs for Eichler owners, our “call before you dig” message and our “avoid clogging sewers” message. c. MyUtilitiesAccount Survey---we are in the process of upgrading and improving our online services and wanted feedback on what features would be most valuable to our customers. To that end we just sent an online survey to our 3,700 current MyUtilitiesAccount users and have gotten back over 1,100 responses so far! We have not yet analyzed the responses but are delighted by this phenomenal response rate as it means we will have solid data to help us prioritize tasks on this project. 2. Events and Workshops a. Demonstration Garden - The Utilities Department coordinated a free hands-on planting workshop for community members, groups and environmental organizations. As part of Utilities' educational outreach for water-efficient and sustainable landscaping, volunteers replanted a major section of the City Hall King Plaza with native, low water use plants and efficient irrigation. The workshop was intended to be an educational event with value to the community as a demonstration of the City's commitment to environmental sustainability. b. LED Bulb Exchange and Aurora Tree Lighting Ceremony – The Utilities Department launched the LED Lighting Rebate Program on November 16, 2013 in front of City Hall with the launch of Aurora, an interactive LED sculpture by Charles Gadeken. Palo Alto residents can purchase up to three SWITCH brand LED bulbs, at either 40W or 60W equivalencies at a reduced cost at three different retail stores (Ace Hardware, Piazza Fine Foods and Fry’s Electronics). 3. Georgetown University Energy Prize: At its meeting earlier this week, Council endorsed the City’s participation in this competition designed to spur energy efficiency gains in local government and residential buildings in small to medium sized communities. Public Works and Utilities are working together on the application. Energy efficiency gains for the period from August 2014 to August 2016 will be compared to the prior two year base period. The winning community is eligible for a $5 million prize sponsored by the Department of Energy. The criteria for evaluation are: • To spur innovative approaches for communities to decrease per capita energy usage; • To highlight best practices for communities to create and implement inventive plans for sustained energy efficiency; and • To educate the public and engage students in energy efficiency issues including methods, benefits and the environmental costs of the full fuel cycle; 4. Residential Customer Connect Pilot: CPAU is in the process of activating the web-portal and engagement tools for about 300 customers who enrolled in the advanced meter pilot Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 3 of 10 program. Next week, the first 110 customers will be provided access to the web-portal to view their electricity, natural gas, and water use on an hourly or daily basis, on the day after. The remaining 190 customers are expected to receive the service early next year. Staff plans to provide a comprehensive update to the UAC on the progress of the smart grid pilot projects and other technology projects in the Spring. Commissioner Melton asked what percentage of the customers are receiving and paying an electronic bill rather than a paper bill. Director Fong stated that she didn’t have the exact number, but thought it was around one-third of the customers. Commissioner Eglash commented that he really liked the “Keep Calm” and other recent marketing campaigns, like the pirate “Call Before You Dig.” He asked if City staff created the marketing campaigns in-house or relied on national marketing organizations who create programs for utilities. Communications Manager Debra Katz said that staff, in an effort to find innovative, fun ways to deliver important messages, has developed these campaigns and uses a contractor to complete the final materials for printing. Responding to Eglash’s query about sharing ad concepts with other utilities, Katz noted staff contributes to idea-sharing websites sponsored by organizations such as the American Public Power Association and the American Public Gas Association. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Establishing the PaloAltoGreen Gas Program Using Certified Environmental Offsets and Approving Three New Gas Rate Schedules: Residential Green Gas Service (G-1-G), Residential Master-Metered and Commercial Green Gas Service (G- 2-G) and Large Commercial Green Gas Service (G-3-G) Senior Resource Planner Karla Dailey provided a presentation summarizing the written report. She stated that the PaloAltoGreen (PAG) Gas program is a way to allow customers to reduce greenhouse gas (GHG) emissions associated with their gas usage since the electric supply portfolio is carbon neutral and the PAG electric program was suspended by Council. Dailey discussed the different attributes of carbon offsets, including the certification protocol, the type of project, and the price. She stated that staff recommended backing the PAG Gas program with carbon offsets certified by the Climate Action Reserve (CAR) for forestry, urban forestry, or livestock protocols with a preference for projects located in California. She said the proposed PAG Gas program would be structured similarly to the successful PAG program with the cost on a per therm basis and an option for commercial customers to participate in the program for less than their full usage. Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 4 of 10 Commissioner Eglash commended the program for its simplicity in design. He asked if staff envisions difficulties in marketing the program as far as communicating how purchasing offsets make a difference. Dailey responded that the protocols chosen were well developed with attributes that are relatively easy to explain. Dailey added that the Communications Manager would help with the messaging about the program. She remarked that offsets are similar to the Renewable Energy Certificates (RECs) used to back the PAG electric program. Commissioner Melton asked how offsets are generated and how offset projects are developed. Dailey replied that the project has to be a real project and that the registry certifies that the project is real and meets its criteria. Commissioner Melton, noting that the draft Urban Forest Management Plan was provided as an information item in the packet, stated that it would be great if an urban forestry project could be done in Palo Alto so people could see the impact locally. Senior Resource Planner Shiva Swaminathan responded that a local project would be possible, but it would be in the longer term as it takes time to define and certify projects. Commissioner Hall asked how stable offset prices are since it would be impractical to change the program rate often. Dailey said that the offsets prices don’t appear to vary wildly and can be purchased in blocks either during or after the program year to ensure that the correct number of offsets was procured. Commissioner Hall asked if the program could start sooner than July 1, 2014. Dailey replied that the changes needed to implement the new rates in the billing system are the reason for establishing the implementation date of July 1, 2014. Marketing and notification to customers will start before that date. Commissioner Hall stated that he likes the idea brought up by Commissioner Melton of using local projects for the offsets and thinks that it would be highly supported by the community. Commissioner Chang commented that the concept of offsets is more difficult to grasp than the concept of RECs was for the PAG program. Commissioner Chang noted that we assume the same participation rate as for the PAG program. She asked if we know the participation rate other utilities have had with their green gas programs. Commissioner Chang noted that staff recommended using CAR-certified offsets but asked about using the CARB offsets since they are in a regulated system and have been vetted by a state agency. She added that CARB offsets would be used as a way to reduce the number of offsets available in the cap-and-trade market. Therefore, since CARB-certified offsets can be used for compliance in the cap-and-trade system, if Palo Alto purchased CARB offsets, it would reduce the number of offsets available to others who have to comply with their obligation under the state-wide GHG emissions cap. Commissioner Change added that using CARB offsets would be more in keeping with being a leader and raising the bar by using the higher standard. Director Fong stated that the CARB market was not as developed as the one for CAR offsets. Vice Chair Foster asked if the program can state that CARB-certified offsets are preferred, but allow CAR certified offsets. Vice Chair Foster asked Commissioner Chang why she preferred Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 5 of 10 CARB offsets to CAR offsets. Commissioner Chang said that CARB offsets were the only ones vetted by a state government. Vice Chair Foster asked if it was possible that the program start with CAR offsets for the first year and possibly move to CARB offsets after a year of experience with the program. Director Fong said that staff intends to return to the UAC and Council after having one year experience and it can review the program and the offset requirements at that time. Vice Chair Foster stated that the incremental cost for the proposed PAG Gas program is less than the cost for the average customer for the PAG electric program. He stated that he would prefer that the program be an opt-out for current PAG electric program participants. Director Fong stated that not all electric customers are also gas customers and vice versa. On the issue of local offsets, Vice Chair Foster is supportive of local programs, but believes that there is more "bang for your buck" for offset projects in certain locations than in others and that restricting to California may not be the best way to go. He also recommended that staff look at projects in Palo Alto's sister cities around the world. Assistant Director Ratchye explained that offsets are traded on a per ton basis. Vice Chair Foster stated that Commissioner Waldfogel has raised the issue of fracking and would want to determine if it was possible to buy non-fracked gas. Dailey says that this is an offset program, not a physical gas program, but, setting that aside, there's no non-fracked gas product available She stated that pretty much every molecule of gas is fracked in some form and that it is not possible to buy a non-fracked product except for biogas. Commissioner Hall said that with respect to having an opt-in or an opt-out program, he'd prefer to make a new decision and opt in to the program. He also commented that the Communications Manager will have her work cut out for her in describing this program. ACTION: Commissioner Melton made a motion to support the staff recommendation. Commissioner Eglash seconded the motion. Vice Chair Foster made a substitute motion to support the staff recommendation, but with an opt-out for current PAG program participants. The motion failed for lack of a second. Commissioner Chang proposed a friendly amendment to request that staff consider CARB- certified offsets in the future. Commissioner Melton did not accept the amendment. He stated that Council can re-consider the registries and protocols in the future when staff returns with a report after the first year of the program after it has a year of experience administering the program. Commissioner Chang stated that staff could use the first year to gain a better understanding of the differences between CAR and CARB certified offsets. Compliance Manager Debbie Lloyd explained that under CARB's cap-and-trade program it is the allowances that are capped, but she is not aware of a cap on the number of offsets that can be made available. Offsets are available (in addition to allowances) to provide flexibility for Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 6 of 10 participants to meet their compliance obligations, and there is a limit on the number of offsets that a participant can use to meet their compliance obligations, but not necessarily a cap on the number of offsets that could be made available. Therefore, it wouldn’t necessarily be true that using CARB offsets would be a way to reduce the number of offsets available in the cap-and- trade market, if supply could just be increased to meet the increased demand. The motion passed unanimously (5-0) with Chair Cook and Commissioner Waldfogel absent. ITEM 2: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Approving the City of Palo Alto Utilities Legislative Policy Guidelines for 2014 Compliance Manager Debbie Lloyd presented an overview of the written report. She reviewed the changes made from the Council-adopted 2013 guidelines, summarized legislative action in 2013 and provided a look ahead to legislative activity expected in 2014. Lloyd highlighted the more substantive changes to guidelines, which included: supporting tax-exempt financing options; adhering to a beneficiary pays philosophy for large infrastructure investments; monitoring impacts to the City’s Western hydro resource allocation; local flexibility for using cap-and-trade revenues; science based regulations for hydraulic fracturing that ensure transparency and public safety; and fair dry year water allocations and rate structures for the City’s water supply. Lloyd stated that while there had been minimal new state regulations introduced in 2013 for publically owned utilities, such as Palo Alto’s Utilities Department, we may see renewed attempts to increase net energy metering caps and renewable portfolio standards in 2014. Regarding Federal issues, Lloyd highlighted continuing activity to increase cyber security requirements, threats to tax-exempt bond financing, and ongoing activities relating to the City’s Western allocation. Commission Eglash commended staff on the development of the legislative guidelines noting that they are a terrific tool to help staff be responsive and use time efficiently. With respect to Gas Guideline #9 regarding fracking, he supports the recommended changes and stated that the fracking is used universally and banning it is not practical, but it is appropriate to do it responsibly. Vice Chair Foster asked that if all gas is fracked, then what is the debate about fracking? Commissioner Eglash responded that in the past, there were some well casings that were constructed badly which led to environmental problems; and there is the ongoing question about fugitive emissions and the environmental impact of natural gas in general. There is also a small but vocal minority of concerned people that worry about very small seismic events triggering earthquakes, so that even if there are sound well casings, there could still be some leakage and contamination of ground water, although he was not aware of any data or studies that supported that concern. Director Fong added that the methods used can vary and we want to make sure that the most responsible techniques are in use. Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 7 of 10 Commissioner Hall asked about the proposed new Guideline #9 under all utilities regarding maintaining existing local municipal financing options. Lloyd replied that there are threats to tax-exempt municipal bonds and other federal funding as a result of the Federal budget issues and sequestration. Commissioner Hall asked for clarification that the electric guideline #11 relating to critical cyber assets was in the context of NERC guidelines. Director Fong verified that there was a very specific definition of NERC critical cyber assets and that staff would clarify this in the guidelines so that it will be clear that the City is not discounting critical assets such as our SCADA and communications systems. Commissioner Hall commented about proposed Delta Flow criteria changes and water impacts during dry years. He asked where this should be addressed in the guidelines. Lloyd referred to electric guideline #7 that supports “ balancing efforts for competing environmental improvements in rivers and Delta conditions with water supply and hydropower impacts”. Director Fong also referred to water guidelines #1 and #3 as being relevant to the Delta flow issues. ACTION: Commissioner Eglash made a motion to recommendation Commissioner Hall seconded the motion. The motion carried unanimously (5-0) with Chair Cook and Commissioner Waldfogel absent. ITEM 3: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Declining to Set an Energy Procurement Target for the City of Palo Alto Utilities or Provide Thermal Energy Storage Rebate Incentives Because Such Targets and Incentives are Not Cost-Effective Director Fong acknowledged Senior Resource Planner Shiva Swaminathan and intern Larsen Plano who worked on the report. Commissioner Eglash stated that he enjoyed the report and learned a lot about storage. He supports the conclusion. He stated that it takes lot of energy to build a battery, which is an issue and we can find ourselves in a situation that we invest so much energy to build the product that it takes a lot of time to recover that energy. So if Palo Alto wants to do things "right" as a leader, we think about cost and energy! Commissioner Eglash added that the technologies described in the report are active areas of research and he encouraged CPAU to consider testing these technologies under the emerging technologies program. Commissioner Hall stated that the report was very helpful and well-constructed. He asked which applications would be beneficial in Palo Alto if there was a change in the characteristics of the system in the future. Swaminathan replied that the storage technologies could become valuable because of their ability to ramp up and down quickly to integrate variable renewable energy sources such as wind and solar. The market price for those services, called "regulation", would have to increase substantially before the storage technologies would be cost effective. In addition, if loads grow on some of the City's electric feeders, adding storage at a substation could alleviate the load on the feeders. However, this was not expected in the next 10 years. Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 8 of 10 Swaminathan added that the cost of these technologies would have to fall considerably before they were cost effective in Palo Alto. ACTION: Commissioner Eglash made a motion to recommend that the UAC recommend that Council decline to set an energy procurement target for CPAU. Commissioner Hall seconded the motion. The motion carried unanimously (5-0) with Chair Cook and Commissioner Waldfogel absent. ITEM 4: DISCUSSION: Evaluation of the Cost Effectiveness of Residential Gas-to-Electric Fuel Switching Options for Appliances and Gasoline-Fueled Vehicles to Natural Gas-Fueled or Electric Vehicles Resource Planner Christine Tam acknowledged the work completed by Andrea Romano, CPAU's summer intern. Tam provided a presentation summarizing the written report. Tam noted that the analysis was focused on the cost-effectiveness of replacing residential gas appliances with electric appliances and replacing gasoline-fueled vehicles with natural gas, or electric vehicles (EVs). The analysis conducted concludes that replacing gas water heaters, space heaters, clothes dryers, or stove/oven with high efficiency electric appliances is not cost-effective from the societal perspective. For EVs, the Nissan Leaf is cost-effective compared to the Honda Civic and the Ford C-Max and the Prius Plug-In are cost-effective compared to a Toyota Camry. Tam stated that from the customer perspective, replacing gas space heaters, clothes dryers, or stove/oven with high efficiency electric appliances is not cost-effective, but replacing gas water heaters with heat pump water heaters is cost effective if a reasonably price solar photovoltaic (PV) system was able to provide electricity for about 14 cents per kilowatt-hour. Commissioner Eglash noted that the advocates for fuel switching for residential appliances are not focused on the cost, but on the environmental benefits. He stated that since the electric supplies are carbon neutral, some view that the next way to reduce greenhouse gas (GHG) emissions is to switch from gas to electric appliances. He asked how the environmental value of reduced/eliminated carbon emissions was analyzed. Tam stated that the carbon value was monetized according to the current forward price of carbon prices and included in the calculations. In addition, a sensitivity analysis was completed in which the carbon price assumed was doubled and still the fuel switching for residential appliances was not cost effective. Commissioner Eglash is concerned that proponents of fuel switching for environmental reasons will state that the analysis was not done properly and asked how staff plans to respond to those concerns. Assistant Director Jane Ratchye responded that a proponent of fuel switching for appliances may view the analysis as supporting fuel switching since for some of the technologies, the cost difference was not extreme. Therefore, fuel switching proponents can use the analysis to convince themselves and others that they will not pay that much more to install electric appliances instead of gas appliances when those appliances fail. Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 9 of 10 Commissioner Eglash said that he believes that fuel switching for appliances is a very bad idea. He stated that the City's electric supply portfolio is carbon free in an accounting sense, but it is still using electricity from the larger grid, which is a mixture of many supplies. Commissioner Eglash stated that he didn’t want to minimize the City’s move to carbon neutral electric supplies, but that when discussing the idea of fuel switching, it takes it to a much higher level of awareness. He added that using gas for space and water heating is very efficient and that using electricity for heating is not efficient since there are many losses in the transition from the electric source all the way to the use of electricity for heating. Commissioner Eglash added that disposing of a gas appliance that has not reached the end of its useful life is a profound waste of resources. Commissioner Hall asked if the appliance replacement analysis assumed that a new appliance was needed, for example for a water heater, if it had reached the end of its life. Tam confirmed that the analysis was for "replace on burnout" so the consumer would have to buy a new water heater anyway. If the analysis assumed that the existing appliance had more useful life left in it, the economic analysis would look even worse for fuel switching. Commissioner Hall asked why rebates might be considered for new construction since the analysis should be the same since the need to buy a new appliance anyway. Tam stated that often a new electric panel is needed if switched from gas to electric and, in new construction, the cost for a new electric panel would not be an additional cost. Commissioner Melton asked if a new construction project was all electric, it would obviate the need for a gas connection or a gas meter and there could be cost savings from that which could make an all-electric home cost effective. Director Fong stated that she was not certain of the new green building requirements and that the code was increasingly focused on making new construction projects more energy efficient. Vice Chair Foster stated that he is strongly supportive of the report and conclusions. ITEM 5: ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting Commissioner Eglash stated that he would like to start a philosophical discussion with the UAC. He commented that he would like to discuss what Palo Alto should do to follow the carbon neutral electric supplies, aggressive renewable standard and other aggressive environmental programs. He suggested that to keep on the leading edge, more effort could be spent on more renewable energy and energy efficiency in our schools. He stated that the PaloAltoGreen program could be used in these areas. He stated that the City could evolve to lead us to establish new programs to address these areas. He asked if there was a new class of programs that could be developed to take the next step towards environmental sustainability. ACTION: None. Utilities Advisory Commission Minutes Approved on: January 8, 2014 Page 10 of 10 COMMISSIONER COMMENTS Vice Chair Foster commented on the Green Business Leader acknowledgement program and asked if we recognize these people ahead of time or in advance of the year-end, or when the building upgrades are completed. Commissioner Eglash agreed that energy efficiency improvements are something very significant and worthy of celebration. Vice Chair Foster discussed an effort for buildings to disclose their energy use efficiency, which could be a great program for Palo Alto to develop. He noted that some larger cities are requiring this. Vice Chair Foster indicated that he has mentioned this to the City Manager and that this might be an effort that the new Chief Sustainability Offer might lead. Director Fong mentioned that Assistant Director Tom Auzenne is working with the Development Center team to develop a database that will provide information to building owners on the energy use in their buildings. Director Fong assured Vice Chair Foster that his patient and repeated suggestions to move forward on grading energy use in buildings has not fallen on deaf ears. Commissioner Hall asked for an update on the effort when there is something to report. Vice Chair Foster stated that he would like the UAC to weigh in on the price that would be paid for renewable energy produced by the anaerobic digester. Commissioner Chang asked when the issue related to how the gas utility will be treated under the cap-and-trade system will come before the UAC. Director Fong said that this issue will definitely come back to the UAC once the CARB rules have been finalized. Meeting adjourned at 9:40 p.m. Respectfully submitted, Marites Ward City of Palo Alto Utilities