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HomeMy WebLinkAbout2016-06-01 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: August 31, 2016 Page 1 of 14 UTILITIES ADVISORY COMMISSION MEETING FINAL MINUTES OF JUNE 1, 2016 CALL TO ORDER Vice Chair Cook called to order at 7:00 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Vice Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and Trumbull Absent: Council Liaison Scharff ORAL COMMUNICATIONS Resident Bob Lenox summarized the snags he has had getting solar on his roof, which caused the cost to increase by 40%, making the project not economically viable. The issue is that long driveway is beyond the maximum distance triggering the need to install a new utility pole according to City requirements. Interim Director Ed Shikada said that he heard about this issue and will follow up with the resident. APPROVAL OF THE MINUTES Commissioner Schwartz moved to approve the minutes from the May 4, 2016 UAC special meeting and Commissioner Danaher seconded the motion. The motion carried unanimously (7- 0) with Vice Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and Trumbull voting yes. AGENDA REVIEW AND REVISIONS None. REPORTS FROM COMMISSION MEETINGS/EVENTS Commissioner Schwartz participated in low income utility workshop in Pittsburg. While Palo Alto may not have an extensive problem in this area, the ideas discussed were valuable as rate increases expected this year will be an issue for some customers and she advised that the impact on low income customers should be part of the UAC’s discussion when discussing rate adjustments in the future. UTILITIES DIRECTOR REPORT 1. Finance Committee action: On May 17, the Finance Committee reviewed the proposed Electric and Gas Financial Plans and rate adjustments. The Finance Committee agreed Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 2 of 14 with the UAC and unanimously supported the plans and rate adjustment proposals. Council will make a final decision on all rate adjustments at the budget hearing on June 13. 2. Frontier Solar Project Ribbon Cutting: On May 18, the developer of the 20 megawatt Frontier Solar project hosted a ribbon-cutting ceremony at the project site near the town of Newman. Utilities staff attended and were given the honor of officially cutting the ribbon – giant scissors and all! The project is expected to begin commercial operations in early June. Frontier Solar will be the City’s third utility-scale solar project to begin operating. Two more solar projects are expected to begin operations by the end of 2016 and the sixth project is not expected to be operating until 2021. 3. City to Give $1 Million in Prize Money to School District if Palo Alto Wins Georgetown Competition: On May 9, the Palo Alto City Council approved giving $1 million to the Palo Alto Unified School District if the City wins the $5 million Georgetown University Energy Prize Competition. This national competition is set up to drive innovation in programs and education delivered by local governments to increase energy savings among residential, municipal, and public school utility customers. The City is hoping to increase its success by partnering with the school district to identify and prioritize energy efficiency and sustainability projects that involve students. The City hopes schools can include projects in class curricula, allowing students to come up with ideas to look for ways to save energy and win the "Million Dollar Challenge" for the schools. The school district may use the $1 million prize money for new educational programs for energy efficiency, putting solar on schools, or upgrading lighting and HVAC systems. The City is engaging a team of high school students through “Get Involved Palo Alto,” a City- sponsored internship program, to generate ideas to help students, staff, and family members examine more closely their home energy use and try to reduce consumption. 4. Events and Workshops: On May 21, the City hosted a free residential graywater workshop that taught close to 60 attendees how to simply and safely reuse water from sinks, showers and clothes washers to irrigate plants and trees. Attendees learned how to install a “laundry to landscape” graywater system, which qualifies for a rebate from the City. Installing such a system is a “do-it-yourself” type project, and is an easy way to reduce use of potable water in the landscape, while keeping our trees healthy and green! The July 1 UAC meeting has been cancelled. The next regularly scheduled meeting is August 3. Commissioner Schwartz asked if the schools will do what they plan to do even if the City doesn’t get the prize. Shikada said that they will try to help the City win the prize by improving energy efficiency regardless. COMMISSIONER COMMENTS Vice Chair Cook welcomed the three new commissioners to the UAC. Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 3 of 14 UNFINISHED BUSINESS None. NEW BUSINESS ITEM 1: ACTION: Election of Officers Commissioner Schwartz nominated Vice Chair Cook to be the Chair of the UAC. There were no other nominations for the Chair. ACTION: The UAC voted unanimously (7-0) to elect Vice Chair Cook to the position of Chair of the UAC with Vice Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and Trumbull voting yes. Commissioner Ballantine nominated Commissioner Danaher to be the Vice Chair. There were no other nominations for the Vice Chair. ACTION: The UAC voted unanimously (7-0) to elect Commissioner Ballantine to the position of Vice Chair of the UAC with Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and Trumbull voting yes. ITEM 2. ACTION: Utilities Advisory Commission Discussion on Alternatives to the Existing Voluntary Opt-In PaloAltoGreen Gas Program Including an Opt-Out Mechanism and a Carbon- Neutral Natural Gas Portfolio Senior Resource Planner Karla Dailey summarized the written report. Commissioner Schwartz asked why is was so expensive just to convert from opt-in to opt-out since the rate is not being changed. Dailey explained that changes to the billing system made up the bulk of costs. Dailey pointed out that, after the initial investment, administrative costs drop significantly for the opt-out program. Commissioner Schwartz stated that the cost estimate seemed very high and questioned the advisability of making changes to the billing system, which is planned for replacement. Interim Director Shikada said the timing of an opt-out program should take into account the legacy billing system. Commissioner Trumbull asked about the bill impact. Dailey confirmed the bill impact is only for those customers in the voluntary program. Commissioner Ballantine asked about the customer breakdown. Dailey said 50% is residential, 30% is small commercial and 20% is large commercial. Commissioner Forssell asked about the variability for a typical residential customer. Dailey said some residential customers probably have much higher bills. Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 4 of 14 Dailey described the types of customers with respect to an opt-out program structure: active supporters, passive supporters, unaware supporters, ambivalent customers, unaware opponents, passive opponents, aware opponents and active opponents. Dailey said staff is concerned about the customers who would be opposed to an opt-out structure, but do not opt- out right away for whatever reason leading to resentment and poor customer relations at a later date as well as issues around refunding the PAG Gas fee should a customer demand that. Commissioner Schwartz said that bill impact was so small that it shouldn’t cause harm to most customers and, if it was easy to opt-out, an opt-out program shouldn’t be a problem for anyone. If there were customers that found out later and were mad, the program could be designed to allow for refunding those customers. Dailey said that this is problematic. Commissioner Schwartz said that the risk to consumer attitude seems not to be a large issue. Continuing with the presentation, Dailey said that another option is to convert all, or a portion of, the natural gas portfolio to carbon neutral supplies. Commissioner Johnston asked if there would be any mechanical issues with running biogas through the pipeline. Dailey said that there would be no problem since biogas must meet the pipeline quality standards. Commissioner Ballantine added that the quality requirements depend on whether the gas is used for generation directly, or put in the pipeline—and the biogas can be mixed with natural gas to meet the pipeline quality standards. Chair Cook asked how the $1/therm incremental cost of biogas compared to the cost of natural gas. Dailey said that the current commodity cost of natural gas is about 20 cents per therm. Commissioner Johnston asked if there were limits to the number of offsets available. Dailey said that there would be sufficient offsets for our portfolio. Chair Cook asked staff to describe the offsets. Dailey said that the protocols for the offsets are all California Air Resources Board approved although the offsets themselves are not CARB certified. She explained the extra CARB certification would be needed for offsets used for compliance purposes rather than a voluntary program. Public Comments Sandra Slater stated that she and Lisa Van Dusen have prepared a letter with comments on the issue. She said that she supports the opt-out program, but her favorite is to have the gas portfolio carbon neutral. She said that climate change is a huge problem and time is getting short. She said that offset purchases can be a bridge in a plan to purchase biogas. She said that the success of the PaloAltoGreen program proves that there is large support for such a program. She also referenced the 80% GHG reduction goal by 2030 Council directive. She advised that we need to wean ourselves off of fossil fuels and move to electrification. She said there will be a few people, maybe as many as a hundred, who will be opposed, but a small number of people should not dictate the direction of the utility. She said that it would be nice to have local offsets, but supporting methane capture projects outside of Palo Alto is valuable since we have a global problem. Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 5 of 14 Lisa Van Dusen said that the main point is that there is fundamental responsibility to take control of the impact caused. She advised that the City should take a bold action, noting that nothing is perfect. The goal is to maximize carbon reductions, minimize the potential for grumbling customers, minimize the impact to ratepayers, and allowing customers to have a choice. She said that higher gas prices also acts to encourage additional gas use efficiency. Commissioner Johnston said that the City should move away from the opt-in program design and advised that it should be easy for customers to opt out of the program. Commissioner Ballantine supported the option of moving to a carbon neutral gas portfolio, rather than transitioning to an opt-out program. He said that during the rate adjustment process, the larger users had a smaller percentage impact than the lower using customers, which is due to the fixed costs to operate the system. He said that it is not free to have a carbon neutral electric portfolio. He said that the move to electrification may be problematic if the electric portfolio is carbon free, but the gas portfolio isn’t. Commissioner Forssell asked if he program would only apply to residential customers only. She asked if we first go to an opt-out program and allow customers to opt out, then transition to a portfolio could be a problem since you first allow them out, then force them in. She said that we could start with carbon neutral portfolio that is not 100%, but could transition there over time. Commissioner Schwartz said that all points of view are represented in Palo Alto. She said that she is in favor of an opt-out program since this is an opportunity to practice how to do that. If there is no way to opt out, this could be a problem for some customers who will create a large issue in the community as it has been elsewhere with respect to having smart meters. Commissioner Trumbull said he did not opt-in to the current program. He was also concerned about opt-out as a transition to carbon-neutrality. Vice Chair Danaher said he stated at the prior UAC meeting on the subject that he was supportive of a carbon neutral gas portfolio and, after seeing the analysis, he is even more supportive of that option. Danaher asked if there was any negative feedback for the carbon neutral electric portfolio. Assistant Director Jane Ratchye said that there was no negative feedback that she knew of regarding the carbon neutral electric portfolio. Vice Chair Danaher said that there could be a cost for morality and that he supports moving to a carbon neutral portfolio rather than moving to an opt-out program. Chair Cook asked Chief Sustainability Officer Gil Friend whether the choices would support the City’s carbon goals. Friend noted that natural gas represents 25% of the City’s GHG emissions. Interim Utilities Director Ed Shikada noted that there was no staff recommendation for this item and views this discussion as one of values. He said that a survey of the community could be done to determine the community’s view on the issue. Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 6 of 14 Chair Cook noted that staff did not provide a recommendation as it usually does and said he thought that this was appropriate in this case. He stated that we are talking about this at a time when gas rates are very low and also at a time when rates across the board are rising significantly this year. He said that he had not heard any protest regarding carbon neutrality for electric supplies, but says that a transition to carbon neutral gas can start and increase over time. It would be perhaps most advisable to start with offsets first and move to renewable biogas over time. He would recommend #3 and move to #4 by 2030. He would like to see the costs for these options. Commissioner Schwartz said that the issue with smart meter rollout happened when there were many missteps caused by a rate increase, very hot weather and the new meters were blamed. She said that rising rates are not a good time to introduce a new program that costs more. The downside is that the program could fail spectacularly if it becomes the rallying point for complaints. Commissioner Schwartz advised that a survey could be taken to determine the level of support. Chair Cook said he appreciated the additional options presented by staff. He pointed out that gas prices are currently very low and rates in the five utilities are increasing. Chair Cook said he was not prepared to adopt a carbon-neutral program supplied with only biogas. He said the rate impact would be less than the opt-in or opt-out options for a carbon-neutral portfolio. Dailey confirmed that administrative costs for the portfolio are near zero. He said he prefers starting with offsets and slowing adding biogas to the carbon-neutral portfolio. Chair Cook recognized that there will be some complaints but said the rate impact is low and the impact of a carbon-neutral portfolio is high. Commissioner Trumbull stated that he was supportive of having more detail available for a program before going to Council with a final recommendation. ACTION: Vice Chair Danaher made a motion that the UAC recommend that Council adopt a carbon neutral gas portfolio and direct staff to develop an implementation plan. Commissioner Trumbull seconded the motion. The motion passed (6-1) with Chair Cook, Vice Chair Danaher, and Commissioners Ballantine, Forssell, Johnston and Trumbull voting yes and Commissioner Schwartz opposed. Vice Chair Danaher left the meeting at the conclusion of the discussion of item #2. ITEM 3. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend the City Council Approve the Proposed Low Carbon Fuel Standard Credit Program, Including the Use of Revenues From the Sale of Low Carbon Fuel Standard Credits Senior Resource Planner Shiva Swaminathan summarized the written report. He said the overall proposal is to reduce greenhouse gas (GHG) emissions by increasing the use of Electric Vehicles (EVs) both by residents and by commuters. He noted that the majority of the City’s GHG emissions are related to transportation. He said the Low Carbon Fuel Standard (LCFS) regulations emanate from the Global Warming Solutions Act, AB32 in 2006 and aims to reduce Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 7 of 14 the carbon intensity of transportation fuels. Staff projects that the electricity used to charge EVs in Palo Alto is less than 1% of the total electricity used in the City currently, but is expected to grow to about 5.5% of total citywide use. These projections are based on the 1,300 EVs currently in the City (or 3% of the City’s vehicles) and the expectation that EVs will comprise 30- 60% of the total number of vehicles by 2030. Commissioner Schwartz asked if the City gets the numbers of EVs from the Department of Motor Vehicles (DMV). Swaminathan replied that the City gets the numbers from the California Air Resources Board (CARB), which gets them from the DMV so the City gets a total number of EVs registered in the City, but does not know where they are located. Swaminathan said that the number can also be obtained from the number of vehicles that got rebates from the State and that this is public information and available on the web. Commissioner Forssell asked if the number of EVs includes both plug-in hybrids and all electric (battery) vehicles. Swaminathan said that the numbers include all EVs that plug in. Swaminathan says that the value of the LCFS credits for EVs is about $500,000 in 2016 and is estimated to grow to $1 million per year in 2020. The credits for CNG use is expected to stay flat at about $30,000 per year. Swaminathan showed the usage of the City-owned 30 EV chargers noting that they are used by 4 to 6 charging sessions per year per charger and that the total cost to the City for the electricity is about $40,000 per year, but that the charging is currently provided for free. Commissioner Ballantine noted that the 30 City-owned chargers do not serve very many EVs. Swaminathan agreed and added that there are about 400-600 privately-owed chargers at businesses and other locations in addition to all the chargers in private residences. Commissioner Forssell asked if there is a time limit for parking at the City-owned charging stations. Swaminathan confirmed that there is a time limit. Swaminathan stated that the revenues from the sale of LCFS credits must be used to benefit current and future EV owners. He discussed the options examined for using the revenues. Several options were evaluated and the ones that are not preferred include providing a discount for permit fees for chargers, cash rebates to EV owners, and providing free electricity at the City’s charging stations. He noted that most of the investor-owned utilities including PG&E and also the Sacramento Municipal Utilities District are planning to provide one-time cash rebates directly to EV owners. Commissioner Schwartz said that she did not support providing a rebate to EV owners and asked if there was any justification for such a proposal. Swaminathan said that justification used by those utilities who are planning to provide rebates is that the credits were generated by those EV owners. Assistant Director Jane Ratchye added that the proposal is not to provide these rebates, but the regulations require that the funds be used to benefit EV owners and rebates do exactly that, which is why PG&E plans to do—a one-time rebate to EV owners who generated the credits. Commissioner Schwartz said that more EV chargers would benefit EV owners and it doesn’t make sense to give the money to those who already have made a Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 8 of 14 decision to buy an EV. Swaminathan added that the community stakeholders also did not support the proposal to provide rebates. Chair Cook clarified that the money is supposed to benefit both current and future EV owners so there is some reason to consider rebates. Chair Cook doesn’t necessarily support the idea, but understands that it is a viable option. Swaminathan stated that each EV owner generates 2 credits per year and that each credit is worth from $100 to $120 so about $200 per year is generated by each EV registered in Palo Alto. He said that another idea evaluated, but determined not be the best way to use the proceeds, is to provide the energy at City-owned chargers for free. Swaminathan described the items that are being proposed for the implementation in the near term. These include providing rebates for Electric Vehicle Supply Equipment (EVSEs, or chargers) for locations other than single-family residences, discounted Utilities fees related to any required service upgrades, discounting off-peak rates, incentives to EV owners that provide access to charging information, and education and outreach programs. Chair Cook asked if the City would be eligible for these rebates for EVSEs since it would benefit EV owners to have more chargers and noted that employment locations such as the schools would be good places for charger installations since employees would be able to charge while at work and that would encourage them to purchase an EV. Swaminathan said that these would eligible and that the initial program restricts the rebates to 3 chargers per site, but that for schools, since they have many campuses, the initial program would allow schools to get EVSE rebates of up to $30,000 per year. He said that the schools indicated that EV chargers are viewed by the schools as a way of attracting good teachers since they may not live in Palo Alto. Swaminathan described the proposal to provide discounted Utilities fees related to any required service upgrades since sometimes, a new transformer may be required in a neighborhood as a result of a new EV charger being installed. Commissioner Ballantine asked if this would apply when the next EV charger installation would require a transformer upgrade. Swaminathan confirmed that this is exactly the situation that would trigger this upgrade and the proposal is to partially fund the additional cost. He agreed that this situation may be more prevalent in the future as the number of EVs rise. Swaminathan described the idea to use LCFS funds to give a larger off-peak price discount for EVs to charge at night. He said that there are billing issues with this, but it is an idea that will be explored more in the future. Commissioner Schwartz asked why we would want to discount non-solar electrons to encourage charge EVs at night since the carbon content of the electricity should be a consideration. Swaminathan said that the “off-peak” timing may change over time, but there could also be impacts on the distribution system that call for encouraging off-peak charging. He noted that the last customer installing a charger may trigger the need for a distribution system upgrade that could be avoided by shifting charging to night-time, or off-peak hours. He said Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 9 of 14 that energy storage is also coming and could assist in effectively moving solar energy to off- peak hours. Commissioner Johnson said that if a discount for off-peak energy use was provided, how would the utility know if the energy used off peak was for EV charging, or for any other energy use such as a clothes dryer used at night. Swaminathan acknowledged that the utility would not know that, or try to determine that, and it would consider the point when designing the discount. Swaminathan said that the utility does not want to install a separate meter for EV chargers. Swaminathan said that another idea is to provide an incentive to EV owners who are willing to share information about their EV charger profile. Commissioner Schwartz asked if interval meters would be provided to access that type of data. Swaminathan said that the information would come directly from the charger itself and interval meters would not be needed. Commissioner Johnston asked if a rebate would be provided for those buildings that are required to install EVSE. Swaminathan said that those would not be eligible for rebates. Commissioner Johnston asked if a building owner was required to put in 10 chargers, but decided to put in more, could the owner get the rebate for the additional chargers. Swaminathan said that additional chargers beyond what is required would be eligible. Commissioner Ballantine asked if there was any consideration to providing an incentive to direct DC charging, or at least providing some funds for research and development for such activities as vehicle-to-grid infrastructure. Swaminathan said that staff has not considered this for these funds, but there may be some funds for that type of work in the evaluation of storage alternatives that is currently being done. He added that there are a number of storage systems being installed at residences with the potential to use DC power. Swaminathan said that LCFS credits are also available for compressed natural gas (CNG) vehicles. Staff proposes to use those funds to fund improvements at the City’s CNG station or subsidize the CNG dispensed. Commissioner Johnston said that there is the potential to dramatically increase EV adoption with more chargers available. Commissioner Ballantine said that he likes the idea of supporting infrastructure build-out and providing more EV chargers where employees are. Commissioner Forssell supports the rebates for the EVSEs, especially for multi-family, mixed- use and commercial buildings. She asked if a requirement for receiving a rebate for chargers be that they be communication enabled to allow collection of data since it is important to understand EV charging patterns. Swaminathan noted that the cost for a “dumb” charger is about $200 and the cost for “smart” (communication-enabled) chargers is $2000 so we didn’t want to require them. Also dumb chargers, or even Level 1 chargers, may be very appropriate Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 10 of 14 in some situations such as a workplace or school where employees park and can charge all day and do not need Level 2 chargers. Commissioner Forssell said that discounting night-time rates for charging may not be the best message if off-peak times change since people have a tendency to learn a behavior once and there may be difficulty if the message about the optimal time to charge changes. She added that she supports educational and outreach activities. Commissioner Schwartz said that the rebate offered for providing information may be unnecessary as most people would volunteer that information to the City to be helpful. She said that people will most likely do this if asked and would not be motivated to do so by a rebate and that the City can just appeal for the information and likely would receive it. She said that the money could be better spent on additional chargers for schools and non-profits organizations that could use them for their fleet vehicles. Chair Cook said that it may be difficult to spend all the money in a year’s time and expects that staff will return with additional ideas to spend the money generated. He suggested a group-buy could be used to reduce the cost of chargers for multi-family facilities, schools, etc. Swaminathan said that the underlying assumption is that the Utility will take a hands-off approach and does not intend to buy or own the chargers, unlike what PG&E plans to do by using ratepayer money to get into the business of building charger infrastructure. Chair Cook agreed that the City could facilitate the purchase of EVs without owning them. ACTION: Commissioner Trumbull made a motion that the UAC recommend that Council LCFS program and the use of revenues from the sale of LCFS credits and requested that staff explore the suggestions the UAC discussed for the program. Commissioner Johnston seconded the motion. The motion passed unanimously (6-0) with Chair Cook, and Commissioners Ballantine, Forssell, Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent. ITEM 4. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Amend the Net Surplus Electricity Compensation Rate (E-NSE-1) Chair Cook asked that the staff presentation on the item be kept to a minimum as he understands that this item is administrative in nature and has a very small dollar impact on the utility. Assistant Director Jane Ratchye confirmed that this rate affects a very small group of customers and that the annual impact is quite small. She said that basically the proposal is to increase the rate for surplus generation to use the same methodology that is used for the Net Energy Metering (NEM) successor rate and only impacts those customers who generate more energy on-site than they use on-site over a 12-month period. For most NEM customers are not affected by the change since they usually generate less energy than they use over a 12-month period. Acting Rates Manager Eric Keniston stated that the proposal is to increase the Net Surplus Electricity Compensation Rate (E-NSE-1) from 5.841 cents per kilowatt-hour (kWh) to 7.21 cents/kWh for the amount of energy that is generated that is surplus to a customers’’ needs over a 12-month period. The methodology is changed from the current rate, which is based on the cost of renewable supplies, to be consistent with the NEM successor rate, except that it Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 11 of 14 looks back 12 months using actual costs, while the NEM successor rate looks forward 12 months using projected costs. Commissioner Johnston asked how this program is different from the Palo Alto CLEAN program. Ratchye explained that the CLEAN program pays for 100% of the solar generation at the established price for the contract term, but that for customers with net energy metering, the majority of the generation is used onsite to meet the customer’s energy usage and this rate is only for buying the generation that exceeds the customer’s usage over a 12-month period. Chair Cook said that has a PV system on his roof and does not have surplus energy generation, but may in the future and asked the City Attorney if there would be a personal conflict of interest since he could be a beneficiary of this rate. Deputy Assistant City Attorney Jessica Mullan recommended that any potential conflict of interest be discussed in advance of the meeting. She said that the considerations include whether the actions would have an impact on a commissioner’s personal finances and whether that impact would be foreseeable and material and whether you would be impacted differently from any member of the public. ACTION: Commissioner Schwartz made a motion that the UAC recommend that Council amend the Net Surplus Electricity Compensation Rate Schedule (E-NSE-1) as proposed. Commissioner Ballantine seconded the motion. The motion passed unanimously (6-0) with Chair Cook, and Commissioners Ballantine, Forssell, Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent. ITEM 5. DISCUSSION: Cross-Bore Program Update: Phase 2 (Presentation) Assistant Director Dean Batchelor said that the UAC asked about the cross-bore inspection program during the budget process and this presentation was prepared to ensure that the UAC understands the program and to answer any questions about the program. Commissioner Trumbull stated the approach and delivery of this presentation should be taken from the perspective of having no previous or background information. Senior Engineer Romel Antonio said that the purpose of the presentation is to provide an update on the cross-bore efforts to date and have an open discussion at the end of this presentation with a goal to establish a solid framework of understanding about the program and consensus going forward. He said that the three key-takeaways are 3-fold: 1) Understand the significance in why we’re doing what we’re doing; 2) recap where we’ve been and where we’re at with evaluating and quantifying the risks to the Phase 1 work; 3) present a roadmap for Phase 2 of where we’re heading. So, what’s a cross-bore? (material props were referenced and provided to the commissioners); a cross-bore is a condition which exists when a new pipe such as a gas main or service is installed by trenchless construction methods through an intersecting different utility line, as shown by the sewer main example on Channing Ave. shown on the slide. Trenchless construction methods for utility service lines and mains installation has been employed since the 1970s, nothing new. The touted benefits to trenchless installation techniques are that they’re less expensive and require minimal surface disruption in comparison to traditional open-cut construction methods. Antonio reviewed the City’s cross- Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 12 of 14 bore safety program. He said that since 1989, polyethylene gas service lines have been installed in the City through horizontal directional drilling installation methods and that other utilities such as water followed suit in 1996. He said that gas service pipe cross-bores through wastewater laterals can cause backups and that efforts to clear these blockages with mechanical equipment, commonly used by plumbers, may damage cross-bored gas lines causing natural gas to leak and migrate up the sewer lateral, possibly leading to property damage, injury, and or even death. Antonio said that the City issued a request for proposals in April 2011 along with extensive communications and public outreach. In July 2011, Council awarded a contract to Hydromax USA, Inc. for Phase 1 of the Cross-Bore Investigation Project with a total budget of $3.8 million. The project was designed to ensure the safety of the City’s customers and residents, reduce risk and liability, find and eliminate legacy cross-bores and repair damaged facilities, and create a searchable video record system for all inspections. Antonio said that of Palo Alto’s approximate 18,040 total sewer laterals, 13,022 sewer laterals were inspected as of the end of 2013. He said that 26 gas cross-bores and a few cross-bores for electric, water, storm drain and telecom were discovered and corrected. The inspected sanitary sewer laterals were categorized into the “Completed” or the “Efforts Exhausted” categories. Of the 13,022 inspected laterals, 7, 166 were Completed—they were fully investigated and cross- bore was not found and property clearance form was filed. The 5,856 sanitary sewer laterals in the Efforts Exhausted category, were not fully inspected due to either maintenance or construction issues. To complete the inspection of laterals in Efforts Exhausted category, construction or maintenance work is required to remove the impediment conditions encountered which may include buried cleanouts, roots, offset (angled) pipes, and no access in the private and public segments of the laterals, thus preventing proper inspection completion of the laterals. As of December 31, 2013, approximately 28% of the total laterals were not investigated (5,018), giving rise to the current Phase 2 efforts. Antonio said that staff has prioritized evaluations of the sanitary sewer laterals based on the following Prioritization Criteria: a) installation date; b) high priority/occupancy properties such as schools and hospitals; c) Excess Flow Valve (EFV) for gas services. CPAU began installing excess flow valves in 1999 which can stop the flow of gas when the volume increases beyond a pre-set rate, which would occur if a service pipeline is severed during an event such as a dig-in or an earthquake; d) gas service and horizontal separation distance between the sanitary sewer lateral; e) gas main crossings of sanitary sewer laterals; and f) gas service material made of PE as it was typically installed through trenchless construction methods. Using this criteria and lessons learned from Phase 1, staff determined that the highest priority laterals for Phase 2 fell into four groups: 1) Gas mains crossings; No EFV; high priority properties; PE gas service crossings; 2) EFV; high priority properties; 3) No EFV: PE gas service up to 10 LF (linear feet); and 4) EFV: PE gas service crossing. Staff performed a risk analysis on the sanitary sewer laterals that were not completed during Phase 1, including prioritization of the sewer laterals identified in the “Not Completed” category, to establish the Phase 2 road map. Upon Phase 2 completion, staff will re-evaluate the risk analysis of sanitary sewer laterals for Phase 3 implementation, which is expected in FY 2020. Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 13 of 14 Antonio proceeded to state that this recommendation is consistent with the Council approved Utilities Strategic Plan, consistent with Rule and Regulation 23, and with the Finance Council approved budget. Quote which captures the entire efforts to date and in going forward is from Winston Churchill, “It is not enough that we do our best; sometimes we must do what is required.” This concludes the presentation and welcome the Commission for further discussion. Commissioner Ballantine inquired the City of San Jose is moving to prohibit directional drilling. Is this something we are looking at? Engineering Manager Robert Item stated San Jose is in the PG&E territory. PG&E has been looking at ways to replace their pipes in the same location by bursting them. We looked at this methodology too. Typically we replace blocks at a time during our CIP projects, which would be difficult to keep our customers from losing gas service. It would work for short blocks. To get back the original question directional drilling is cheaper and we will check that laterals to confirm that there is not a crossbore. During Phase 1 of the project we found 2 instances where the gas line was ‘cross trenched’. Assistant Director Dean Batchelor further expounded that typically gas mains are placed on one side of the street. The longer side services would require us to trench the full cross section of the street and into their property, which can be very disruptive and costly. Utilities Director Ed Shikada said that he has discussed this project with Dean and have asked the Auditor’s office to review the last contract to improve it. Commissioner Ballantine said that he understands the need for automatic closing valves (EFV) on gas services. Robert Item discussed the issues that occurred during the investigation. The liability associated with gas crossbores can be very high. As you may have heard about some of the gas explosions around the US the liability can be in the millions of dollars. Unfortunately there is a value placed on human’s lives. We learned from the Phase 1 portion of the project that we were a little too idealistic thinking that we could clear most of the laterals by CCTV. Even with the multiple levels of QA/QC there is still a slight chance of missing something. There was a picture that shows a sewer lateral with two bends and the gas service crossing underneath it in two spots. When it was identified the contractor had three people review the video and found that only 1 of the three spotted the gas service due to a sag in the line. There was only one frame where the yellow was visible. We might have 99.99% certainty on the completed laterals, but that is not 100%. To get to the next level 99.999% the costs rise exponentially. As we looked back on the project to decide how to move forward we found that the cost of construction and inspection to complete the remaining laterals was extremely high, about $18 million. We decided to prioritize the remaining work. From Phase 1 we found that the contractor pressed their equipment more than had been done anywhere in the US at that time. We were making long lateral launches and the camera manufacturer came out several times to make additional improvements to their product. We found that approximately one of every two laterals requires some sort of construction. Phase 1 was an inspection only project and did not include Utilities Advisory Commission Minutes Approved on: August 31, 2016 Page 14 of 14 construction. As you can imagine there are all types of situations out there. From the picture of the two kids on a blanket with an ‘X’ marking the crossbore in front of them an assessment of lining up the gas meter and the main and the sewer shows that they have a significant distance between them. The crossbore is actually on a branch from the sewer that goes to a neighboring house. We found one house that the sewer wrapped around three of the sides of the house. ITEM 6. DISCUSSION: Update and Discussion on Impacts of Statewide Drought on Water and Hydroelectric Supplies For the benefit of the new commissioners, Senior Resource Planner Karla Dailey explained that staff has provided updates on the drought since it intensified and the State took several unprecedented actions and imposed emergency water use regulations. She explained that this year has had above average precipitation and that San Francisco has received much more water in storage than in the past several years. Assistant Director Ratchye pointed out that San Francisco has been able to capture two years of supply this year so far which far exceeds the water captured in recent years. She noted that the reservoirs and groundwater in the state are in different positions depending on the location with the southern part of the state in poorer position than the north. Dailey said that the State Water Resources Control Board adopted a new regulation on May 18, 2016 removing the mandatory water use reduction targets imposed by the State. Each agency will now self-certify a water use reduction target based on a methodology outlined by the State. Using that methodology, Palo Alto will have a 0% water use reduction target. San Francisco, however, uses a more conservative water supply planning model and will ask customers for a 10% voluntary reduction in water use. Dailey reminded the UAC that an Ordinance will go into effect around July 7, 2016 expanding the number of permanent water use restrictions. She said other restrictions mandated by the State are also in effect. Dailey showed the analysis of the cost of carbon neutrality for the electric portfolio and pointed out the cost of that program is still well below the rate cap. ITEM 7. ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting ACTION: None. Meeting adjourned at 10:05 p.m. Respectfully submitted, Marites Ward City of Palo Alto Utilities