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HomeMy WebLinkAbout2015-04-01 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: May 6, 2015 Page 1 of 12 UTILITIES ADVISORY COMMISSION MEETING FINAL MINUTES OF APRIL 1, 2015 CALL TO ORDER Chair Foster called to order at 7:03 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Commissioners Cook, Eglash, Hall, Melton, Chair Foster, and Vice Chair Waldfogel Absent: Commissioner Chang and Council Liaison Scharff ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES Chair Foster moved to approve the minutes from the March 4, 2015 UAC meeting as presented and Vice Chair Waldfogel seconded the motion. The motion carried unanimously (6-0 with Commissioners Cook, Eglash, Hall, Melton, Foster, and Waldfogel voting yes and Commissioner Chang absent). Commissioner Hall noted that he abstained on the items in the minutes that were covered after his departure from the meeting as a result of his self-identified conflict on water-related items. AGENDA REVIEW AND REVISIONS None. REPORTS FROM COMMISSION MEETING/EVENTS None. UTILITIES DIRECTOR REPORT 1. PaloAltoGreen Gas Update: As of March 23, 848 Palo Alto Utility customers have signed up for PaloAltoGreen Gas. All City facilities will participate effective July 2015. 2. Communication Updates  Drought Update: The State Water Resources Control Board adopted new emergency drought regulations on March 17. The new regulations limit landscape irrigation to no more than two days per week and prohibit irrigation within 48 hours of measurable rainfall. Restaurants must only serve drinking water upon request and hotels must only wash towels and linens upon request. An implementation and enforcement plan for these restrictions is tentatively scheduled for City Council consideration May 11. Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 2 of 12 Communication and outreach about drought conditions will continue throughout the year, particularly in the warmer irrigation months. Staff is working closely with other SFPUC customers and the Santa Clara Valley Water District to coordinate regional messaging.  Palo Alto hosted the Silicon Valley Water Conservation Awards Ceremony at the Mitchell Park Library and Community Center on March 23 to honor businesses, public agencies, institutions and individuals who have made measurable contributions to water conservation. Last year, the City of Palo Alto won Water Utility of the Year Award for its progressive and robust suite of water use efficiency programs and services.  Utilities staff participated in national “Fix a Leak Week” in March to raise awareness about water waste from leaks. Staff shared videos and helpful tips online and in social media and set up a table on King Plaza to educate people about how to identify and repair leaks. To add humor and fun, staff donned a life-size high-efficiency toilet costume and super hero cape as “Superflush.”  In March, Electric Utility Technicians visited Fairmeadow Elementary School to educate fourth grade students about electric utility safety. Technicians used a miniature model of a home powered with live electricity and props to demonstrate the dangers of coming in contact with electric wires. Students learned valuable safety tips.  The City of Palo Alto has been selected as a 2015 Business Environmental Award winner and recipient of the Acterra Award for Sustainability. This represents Acterra’s highest award and recognizes businesses or organizations whose programs achieve significant benefits and advance the state of sustainability. Palo Alto was honored for innovative programs including an aggressive Renewable Portfolio Standard, efficiency programs, greenhouse gas emissions reductions, the Carbon Neutral Plan, the Local Solar Plan, and Zero Waste initiatives. Palo Alto will be honored at the 25th Anniversary Awards reception on May 28 at Intuit Corporation in Mountain View. 3. Community Outreach Events and Workshops Staff is coordinating a number of workshops for Earth Day, launch of new programs and to educate community about drought and resource efficiency.  This past Saturday we hosted a hands-on Water-Wise Edible Gardening Workshop  April 4 we will hold another Water-Wise Edible Gardening Workshop  April 22 – staff is tabling at Addison Elementary School’s Earth Day Festival  April 23 is the Greenlight Film Festival  April 25 is a residential solar photovoltaic workshop 4. Acknowledge Commissioners Waldfogel and Melton for their years of service: This is the last meeting for two long-serving Commissioners and I would like to take the time to acknowledge their years of service. Vice Chair Waldfogel has served on the UAC since 2008 and has provided a different perspective and out-of-the-box thinking that has stretched staff and pushed this Utilities by using his entrepreneurial approach and unique reasoning. Vice Chair Waldfogel supported transparent processes, which resulted in the development of the UAC’s bylaws and the standing agenda item to select topics for upcoming meetings. In that vein, he also Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 3 of 12 recommended that changes to policies underlying rate design be discussed in advance of the completion of Cost of Service Analyses so that the rate proposals presented were not “done deals.” Commissioner Melton has served on the UAC since 2004 and has been the Commission’s expert on the Utilities budget, tirelessly volunteering every year on the budget subcommittee and spending countless hours going over CIP plans and operations spending details. Commissioner Melton consistently offers well thought-through suggestions and espouses practical solutions. I also know that Commissioner Melton has offered his financial expertise as a member of other City committees outside of Utilities including the Infrastructure Blue Ribbon Commission, the Library Bond Oversight Committee and the Storm Drain Oversight Committee. Commissioner Melton is truly a treasure for the City of Palo Alto. I will miss both commissioners and their valuable input, and going forward, as we prepare agendas and staff reports for the UAC, I’m sure I’ll be asking myself: “What will Asher and John say about that?” Despite this being their last meeting, that question will still be on my mind. Commissioner Melton asked how the department will respond to the Governor's direction to conserve 25% of water use statewide. Director Fong said that staff is working to understand the executive order. Commissioner Melton asked how Utilities will enforce the restrictions given that there will need to be employees dedicated to that effort. Director Fong explained that the program will grow over time and staff will need to work through the issue and find resources to comply. Chair Foster asked staff to provide information in a future report on the growth rate for the PaloAltoGreen Gas program compared to the PaloAltoGreen (electric) program. UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: PRESENTATION: Sustainability/Climate Action Plan Update and Implication for the City of Palo Alto Utilities Long Range Planning Chief Sustainability Officer Gil Friend provided a summary of the Sustainability/Climate Action Plan (S/CAP) noting that activities across the world are heating up and many cities have established aggressive goals. The goal in the S/CAP has not been established, but staff and the consultant are looking at alternatives including reductions of greenhouse gas (GHG) emissions by 80% by 2050, 80% reduction by 2030, and 100% reductions in 10 years. The City has made progress since 1990 and 2005, but still from a goal to reduce GHG emissions by at least 80%. Friend said that the key elements in the S/CAP include mobility (transportation), electrification, water, being a model and leader, and establishing the green alternative as the default for procurement. Electrification of natural gas is needed since natural gas use is 25% of the City's remaining carbon footprint. Transportation is the source of 60% of the remaining carbon footprint and reductions can come from conversion to electric vehicles as well as "Mobility as a Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 4 of 12 Service". The implications for Utilities include increased electric demand, ensuring available capacity and a shift in when energy is used. Friend noted that there are significant analysis and design challenges and that the system must be analyzed as a whole rather than piece by piece. He noted that much of the S/CAP strategies converge around Utilities. Friend discussed that the "Utility of the Future" may include greater expanded distributed generation and storage with the declining cost of solar energy and storage technologies. He advised that we should not wait until barriers fall, but plan for what to do when they do fall. He said that Utilities should determine the impact of these trends on the business model and on revenues. Friend suggested that environmental offsets could be used as a transition to a place with very low carbon footprint. Chair Foster agreed with the idea that the City be innovative and a leader in the area of sustainability so that others can follow. He asked if we have talked to thought leaders around the country to get some ideas. Friend replied that is being done informally and that these leaders are aware of Palo Alto and have their eyes on us for a platform to implement new ideas. Chair Foster noted that Palo Alto is in an advantageous position with its own utilities. Commissioner Hall asked if the cost of electric vehicles (EVs) declines over time, could the City set a target to require a certain fraction, say 50%, of all cars be EVs in the City. He said that there could be issues under Proposition 26 with respect to the electric utility offering incentives. Friend said that the City has control over its own fleet, but maybe not the private fleet. Friend added there are other ideas such as parking fees to raise money for alternative transportation methods. Commissioner Eglash commented that we don't want to be a city that is sustainable at any cost. He said we want to take a balanced and rational approach. He said that we do want to be a city with innovation. He said we want real value, not symbolic value. He supports a systems approach and offered an example for EVs where electricity comes from the Western grid, which is powered by natural gas at the margin. Commissioner Eglash added that we shouldn't view offsets and Renewable Energy Certificates (RECs) as a way to buy our way out of this problem— we need to explain to ratepayers that these RECs and offsets are truly effective and sustainable. He said we should focus on energy efficiency. He’s concerned with spending money and resources to get to fake targets that might be set. He suggested that we could establish a value for carbon when making decisions as other agencies and companies have done. Commissioner Eglash expressed concern with fuel switching as, again, the Western electric grid is powered by GHG-producing natural gas. He said that we may have an environmental problem, including at landfills, with trashing still useful appliances. Friend said that these were very good ideas to consider and incorporate. Vice Chair Waldfogel noted the potential for grid defection and wondered when we would inform customers what their responsibilities are with respect to grid assets. He strongly recommended that Friend work with the Utilities to identify how these trends will be tracked and when signals need to go to customers. Friend suggested that we need to think about it before it becomes a reality. Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 5 of 12 Commissioner Hall suggested that the systems approach should be used with respect to distributed generation including an evaluation of the lifecycle cost, cost of materials, and the cost of recycling materials. Chair Foster suggested that the UAC would like to continue to have periodic reports from the CSO and stated that more often than yearly would be valuable. Friend replied that he would work with Director Fong to determine the appropriate time to return to the UAC. ITEM 2: PRESENTATION: Update on Fiber-to-the Premise (FTTP) Master Plan Chief Information Officer Jonathan Reichental said that a vendor, CTC Technology and Energy, was selected to complete a Fiber-to-the-Premise (FTTP) Master Plan. The contract with CTC was approved in February 2015. Senior Management Analyst Jim Fleming explained that the scope of work for the FTTP Master Plan includes an infrastructure assessment, construction impacts on City-owned facilities and rights-of-way, network requirements, business models, vendors, services and technologies, and an engineering study, network design and cost model. The final outcome of the plan prepared by CTC is to provide the Council and UAC with findings and recommendations regarding the feasibility of building a network and the best business model to pursue that objective, and based on Council direction, CTC will assist staff in writing a Request for Proposal (RFP) to design and build a citywide FTTP network based on the City’s goals and objectives developed in the plan. Fleming said that the scope of work to develop a wireless network plan will involve defining the steps required to develop a wireless broadband initiative, user group needs assessment, wireless technology options and design considerations (including smart grid applications), and business models. Reichental added that technology rapidly changes in this area and the needs have changed to be very high speed. Fleming summarized the timelines for the plans development. Preliminary reports for the FTTP and Wireless Plans are expected to be available and a status update provided to the Council in June 2015. The plans are expected to be presented to the Council in August/September 2015. Depending on Council direction, the estimated start date to begin FTTP network construction is 2017 with wireless deployment in late 2016. Reichental emphasized that at this point, there is much that is unknown and that these timelines are tentative. Reichental said that Google has not yet selected Palo Alto for Google Fiber, but Google is announcing new cities over time and without much notice. They have said that they will announce additional cities before the end of 2015. Reichental thanked the Citizen Advisory Committee for its help in the vendor selection process and in providing their perspectives and expertise. He stated that staff will return to the UAC with an update following completion of CTC's work in the late summer. Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 6 of 12 Public Comment Resident Richard Brand, a member of the Citizen Advisory Committee, has been interested in fiber since Bern Beecham was Mayor. He said that with fiber, users can access all sorts of content via Verizon (FiOS) that’s formerly been in the stranglehold of Comcast and AT&T. He said there will always be an issue of funding. Should think about taking money we can use (next agenda item) or we will fall behind; the project is very sound and needs to be supported. He said that we need an innovative solution and recognizes that the solution needs to be economic. We need faster internet. Resident Jeff Hoel said he would like to have seen written materials on this topic in advance of this meeting. He said that at some point, it would be good to take a look at an intermediate stage. He continues to believe it best to do FTTP and not to do wireless first. Resident Herb Borack said that when this item returns to the UAC, it should be an action item so that the UAC is providing a recommendation to the Council on the issue as is in the UAC’s purview. He stated that if Google fiber chooses Palo Alto, the FTTP may not be constructed, and this should be a policy of the Council and the UAC should provide its recommendation. He said that the best role for FTTP is to be a common carrier for internet service providers. It should be something everyone can use, an active ethernet. He advised trading the cash balance in the Fiber Fund for physical assets in a Palo Alto network. Commissioner Eglash asked Fleming about a business model review. Fleming responded that part of CTC’s scope of work included reviewing the various business models for municipal broadband. Chair Foster noted that the UAC has been provided some information on this, but the item was first taken up by a Council committee, then the Citizens Advisory Committee provided input so the UAC has not been actively involved recently. He wondered what the UAC’s proper role should be. He said that he would follow up with the City Manager and Mayor to determine the involvement desired from the UAC. He requested that Mr. Reichental provide an update to the UAC prior to providing it to the Council after the CTC review is done. Commissioner Cook asked how an investment can be robust enough to keep up with the rapid technological changes. He asked how the City can avoid the problems that this project has gone through in the past when the FTTP was reviewed (and rejected) in the past. Fleming responded that cities have been interested in gigabit friendly strategies and defining the roles of infrastructure including poles, conduit, existing fiber asset, and other assets. Fleming said that CTC will do an analysis of the infrastructure, which has not been done before in the context of FTTP. Commissioner Cook wanted to make sure that any fiber installations were coordinated with undergrounding and other utilities infrastructure work. He added that he was not supportive of Wi-Fi, especially in place of FTTP. Commissioner Hall suggested that the UAC should offer to the Council that it could provide advice and recommendations and that the offer could be made at the upcoming joint meeting with Council. Commissioner Hall asked if the City knows what it will do if Google selects Palo Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 7 of 12 Alto and didn’t want to scramble to do the analysis, but that the City needs to know what we would and wouldn’t like. Vice Chair Waldfogel thanked Bob Harrington for sticking on this project for so long. He asked how the process for defining the needs assessment will be done. Fleming said that the consultant will determine if there is a need for more Wi-Fi or if there are gaps in service or existing City networks that could be improved. Vice Chair Waldfogel noted that there is over $20 million in the fiber reserve that could be used and must be used for fiber projects and, if Google funded a project, the reserve could be stranded. Director Fong said that there are not the same restrictions on the Fiber Fund as for the Electric, Gas, Wastewater, and Water Funds. ITEM 3: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Identifying Projects to be Funded by the Electric Special Project Reserve Senior Resource Planner Monica Padilla provided a brief history of the Electric Special Projects (ESP) Reserve, which was originally named the Calaveras Reserve and then used to collect stranded costs associated with certain assets including the Calaveras Hydroelectric Project. In 2011, Council changed the name to the ESP Reserve and changed the purpose to fund large projects. Padilla stated that the ESP Reserve has about $52 million and staff recommends that the funds be earmarked for smart grid and transmission upgrades. She noted that these projects would return to the UAC and Council prior to committing the funds to those projects and that they would not be funded if they did not make sense. Commissioner Melton asked if there would be an impact from changing the guidelines to move out the dates. Padilla said that would not be much different from the recommendation in terms of flexibility as to how the money could be used, but that the staff recommendation is consistent with the Council-approved guidelines. Commissioner Melton said that if we earmark funds now to the two projects, and one came to fruition, and the other had not yet, how easy would it be to make a change if the funds are earmarked. He asked if we would be able to move funds from one project to another, of add a third project. Padilla said that any expenditure of the funds would require Council approval and it could change depending on the merits of the projects. Public Comment Resident Jeff Hoel preferred that the dates be pushed out rather than the funds being earmarked for projects that haven't yet been proven to be cost-effective. He suggested another alternative that the funds be there perpetually for projects that may be needed and that the funds could be borrowed (and paid back to the fund) when needed. He said that before any money is earmarked for smart grid, there needs to be a report to explain exactly what the money will pay for and the same logic is true for a transmission line. Resident Herb Borack does not support earmarking the funds for projects that have not yet been shown to be beneficial. He said that there may be other projects that may prove to be more beneficial and it may be difficult to change the projects if they are not earmarked. He noted that the transmission line cost is unclear and the smart grid project may not make sense Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 8 of 12 without fiber-to-the-premise if the point is to affect peoples' behavior in their use of energy. He said that earmarking $20 million for smart grid without knowing how much the project may cost is ill advised. Commissioner Hall says that although the two projects identified sound pretty good, the UAC has not had the opportunity to evaluate either of the projects and he suggested deferring the decision until the end of FY 2017, rather than FY 2015. Commissioner Eglash commended staff for trying to be faithful to the deadlines in the guidelines, but did not agree with staff’s recommendation and noted that we should not commit the funds to projects that have not yet been evaluated. He said that, completely irrespective of whether smart grid is a good idea now or in the future, and regardless of whether you think an alternative transmission line is a good idea, we don’t know enough now to make a recommendation for either project. Commissioner Cook prefers that the funds in the reserve remain uncommitted at this time and he doesn't support committing the funds now to the two projects recommended. Commissioner Eglash supports pushing out the date to commit funds, or even to remove the deadline altogether. Commissioner Foster wondered if there was support to not have a deadline or to use the funds as a loan source for many projects that arise. Commissioner Eglash supported establishing a timeline to be consistent with the idea of eventually returning these funds to ratepayers rather than removing the deadline altogether. Commissioner Melton said that we should stick with the original plan to have a deadline, but supported pushing out the timeline to commit funds for a few years when more information on the projects will be available. He said that he likes the alternate transmission project, but making no designation now and pushing the respective deadlines that were set previously out two years and giving these big, important projects time to gel is the right thing to do. ACTION: Commissioner Hall made a motion that the UAC recommend that the Council change the ESP guidelines by: 1) changing the date when commitment of funds must be determined to the end of FY 2017 (instead of the end of FY 2015); and 2) changing the date when any uncommitted funds remaining will be transferred to the Electric Supply Operation Reserve and the ESP Reserve to the end of FY 2022 (instead of the end of FY 2020). Commissioner Cook seconded the motion. Commissioner Eglash offered a friendly amendment to add that the UAC recommends that Council not designate the funds for specific projects now. He said that this amendment would make clear that not just the dates in the guidelines should be changed, but that the funds not Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 9 of 12 be earmarked for any projects at this time. Commissioners Hall and Cook (maker and seconder of the motion) accepted the amendment. The motion carried unanimously (6-0 with Commissioners Cook, Eglash, Hall, Melton, Foster, and Waldfogel voting yes and Commissioner Chang absent). ITEM 4: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Approving the Fiscal Year 2016 Gas Financial Plan, Including no Recommended Rate Changes for July 1, 2015, and Amending the Gas Utility Reserve Management Practices Resource Planner Eric Keniston summarized the Gas Financial Plan, which recommends no rate change for July 1, 2016, but includes a projected 7% rate increase for July 1, 2017. Revenues were currently below costs, but reserves were high enough to enable delaying any rate increases by one year. He also presented an alternative plan with a 3% rate increase for July 1, 2016 followed by a 4% rate increase for July 1, 2017. He said that not having a gas increase provided some relief given the significant water and wastewater rate increases being proposed. Commissioner Melton reported that the UAC subcommittee, Commissioners Cook and himself, had reviewed the Gas Utility budget and financial plan. He said they had discussed the two alternative rate plans. The overall bill increase for all utilities was projected to be higher in FY 2017 than in FY 2017, and having no increase this year would exacerbate this. However, the subcommittee had decided that there was no right answer and that either alternative was acceptable. Senior Resource Planner Jon Abendschein noted that there may be a need for a drought surcharge on water rates in the current year, which would increase the total bill impact in FY 2016, a possibility that argues for no gas rate increase this year. He also noted that with either alternative, the change in the bill impact was fairly small, less than a percentage point. Commissioner Cook noted that while typically he prefers not putting off increases, in this case, there were not enough compelling reasons to have the rate increase in the current year. Vice Chair Waldfogel said there was enough information to project a significant increase in FY 2017, and indicated a slight preference for having a rate increase in the current year. However, he thought the staff recommendation was acceptable. Commissioner Hall agreed. Commissioner Foster indicated a slight preference for no rate increase in the current year, but thought either alternative was acceptable. Commissioner Hall asked about the proposed Capital Improvement Program reserve changes. He asked why the utility needed capital reserves that appeared to be roughly twice the CIP spend rate. Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 10 of 12 Abendschein stated that that the proposal was preliminary, and that the reserve levels were set to match the historic levels of CIP-related funds in the Reappopriation Reserve. He said that staff would likely return with adjustments to the proposal with the next year’s Financial Plan after discussions with the City's Office of Management and Budget (OMB). ACTION: Commissioner Melton made a motion to approve staff’s recommendation that the UAC recommend that the City Council adopt a resolution approving the FY 2016 Gas Financial Plan, including no rate changes for July 1, 2015, and amending the Gas Utility Reserve Management Practices. Chair Foster seconded the motion. The motion carried unanimously (6-0 with Commissioners Cook, Eglash, Hall, Melton, Foster, and Waldfogel voting yes and Commissioner Chang absent). ITEM: 5: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Approving the Fiscal year 2016 Electric Financial Plan, Including no Recommended Rate Changes for July 1, 2015, and Amending the Electric Utility Reserve Management Practices Senior Resource Planner Jon Abendschein summarized the Electric Financial Plan. No rate increase was proposed for July 1, 2016. He noted that staff was working on an Electric Cost of Service Analysis (COSA) prior to a rate change effective in July 1, 2016. Abendschein noted that the forecast assumed that the drought would end in the winter of 2016/2017. He then presented a three year drought scenario in which the drought continued until the winter of 2017/2018. He showed that electricity costs increased due to an increase in market power purchase costs as staff purchased more electricity as a result of the low hydroelectric generation. These increased costs could be covered with larger than expected rate increases, or with a rate adjustment mechanism that would be put in place to cover the increased costs due to the droughts. Costs (and rates) would have to be 10% to 12% higher during an extended drought. Reserves would be drawn down significantly, but not enough to present a danger to the utility’s financial position. Commissioner Eglash noted that it was appropriate to draw down reserves in the event of a major contingency like an extended drought. He asked if the cost of maintaining a carbon neutral supply portfolio would increase in a drought. Abendschein stated that the increased cost of buying Renewable Energy Credits to match increased market purchases was small and much lower than the limit of 0.15 cents/kWh. Assistant Director Jane Ratchye added that the City’s future cost of Renewable Energy Credits purchased to achieve carbon neutrality would be lower than it is currently due to new solar contracts coming online. Even in this drought, the cost was much lower than the carbon neutral spending limit. Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 11 of 12 Commissioner Hall recommended that the chart showing the Supply Fund reserves not show the Electric Special Projects reserve. He said it makes it look like that reserve was available for operational spending. Abendschein said he would take that comment under consideration, but explained that the presentation was intended to show all available unrestricted reserves to present a complete picture of the utility’s financial position. ACTION: Commissioner Cook made a motion to approve staff’s recommendation that the UAC recommend that the City Council adopt a resolution approving the FY 2016 Electric Financial Plan, including no rate changes for July 1, 2015, and amending the Electric Utility Reserve Management Practices. Commissioner Eglash seconded the motion. The motion carried unanimously (6-0 with Commissioners Cook, Eglash, Hall, Melton, Foster, and Waldfogel voting yes and Commissioner Chang absent). ITEM 6: ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting Chair Foster stated that the joint UAC/Council meeting is on April 20 and he asked if Commissioners have any topics to suggest for the meeting. He said that Vice Chair Waldfogel met with the Mayor and Vice Mayor to discuss the joint meeting. He said that the Mayor would like a summary of issues. At the meeting, the Council may ask each Commissioner to summarize an issue or concern. Chair Foster said that the Utilities issues on top of Mayor Holman’s mind include rate increases, sustainability activities, and sustainability activities in light of rate increases. Commissioner Cook would like to hear what the Council sees as the UAC's role on fiber-to-the premise (FTTP). Chair Foster added the governance of CPAU and role of UAC could be discussed since the City is unusual in the governance structure of Utilities. Commissioner Cook added electric undergrounding as a topic. Commissioner Hall would like to know whether the UAC should support the Chief Sustainability Officer (CSO) with respect to electric transportation. Commissioner Eglash stated that it would be good to determine if the CSO should come to UAC first before going to the Council since so many sustainability related issues are in the Utilities domain. Commissioner Melton said that the City needs to make a decision on FTTP – either do it, give up on it, or let Google do it. ACTION: None. Commissioner Hall left the meeting at this point (9:56 pm) due to a self-identified potential conflict of interest on water issues due to his employment. ITEM 7: DISCUSSION: Update and discussion on Impacts of Statewide Drought on Water and Hydroelectric Supplies Assistant Director Jane Ratchye provided an update on the ongoing drought and its impact on the water supply and electric supply costs. She said that many things are happening on the Utilities Advisory Commission Minutes Approved on: May 6, 2015 Page 12 of 12 drought front at this time. There has been no new word from SFPUC beyond the 10% voluntary reduction, but last week, the Santa Clara Valley Water District adopted a 30% reduction goal— up from 20%. She mentioned that the governor issued an Executive Order today that directed the State Water Resources Control Board to develop regulations to achieve a 25% statewide reduction in potable urban water use. It is unknown at this time how this will affect Palo Alto since the order states that per capita use be a determinant of how much reductions will be required of each agency. She said that Palo Alto is currently on target to meet a 10% savings overall and expects more savings in the summer months. Rainfall is below average, but snow pack is historically low and almost non-existent. She added that the impact on the electric portfolio of the drought is increased costs of about $10 million for FY 2015. COMMISSIONER COMMENTS Chair Foster acknowledged the service of outgoing UAC members Vice Chair Waldfogel and Commissioner Melton. He reminded that they will still be commissioners until the end of April and attend the joint UAC/Council meeting on April 20. Meeting adjourned at 10:07 p.m. Respectfully submitted, Marites Ward City of Palo Alto Utilities