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HomeMy WebLinkAbout2025-04-02 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: June 4, 2025 Page 1 of 38 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF APRIL 2, 2025 REGULAR MEETING CALL TO ORDER Vice Chair Mauter called the meeting of the Utilities Advisory Commission (UAC) to order at 6:00 p.m. Present: Chair Scharff, Vice Chair Mauter, Commissioners Croft, Gupta, Metz, Phillips, and Tucher Absent: None Vice Chair Mauter announced that Chair Scharff may be joining remotely later. The clerk called roll. AGENDA REVIEW AND REVISIONS None ORAL COMMUNICATIONS There were no public comments. APPROVAL OF THE MINUTES ITEM 1: ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on March 5, 2025 Vice Chair Mauter invited comments on the March 5, 2025, UAC draft meeting Minutes. Commissioner Croft commented that the water letter stated that the drought happened every hundreds of years, but it should have read hundreds of thousands of years, which was on Page 18 of 27. ACTION: Commissioner Philips moved to approve the draft minutes of the March 5, 2025 meeting as submitted. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 2 of 38 Commissioner Metz seconded the motion. The motion carried 7-0 with Chair Scharff, Vice Chair Mauter, Commissioners Croft, Metz, Phillips, Gupta, and Tucher voting yes. UNFINISHED BUSINESS None UTILITIES DIRECTOR REPORT Kiely Nose, Interim Utilities Director, delivered the Director's Report. She stated that Council had successfully gone through the 2025 Council Priority Objectives and Committee Objectives and work plans. The final list had not been approved and would return on consent, but they had set the goals and objectives. The City had hired 4 new Utilities employees in the Electric Operations Division. There were still positions open and others at various stages in the recruitment process. The department currently had 45 vacancies, which was good news. She provided information related to the Gas Main Replacement Project 24B moving locations. They expected the project to last about 6 weeks. The Utilities team had begun the annual walking and mobile leak surveys, which was routine. The walking survey would cover the southern section of Palo Alto. She provided an update on the Gas Utility Federal Grant, which had been awarded to the City. The City received a new contract from the Federal government on the grant, which staff was reviewing and any necessary actions would be brought to the UAC upon completing the review. The State legislative committees were reviewing bills for this year’s legislative session, and staff was tracking SB 282 and 540, which she detailed. A number of details related to upcoming events could be found at cityofpaloalto.org/[inaudible 18:14]. On April 12, there would be a Landscape Conversation 101. The City of Palo Alto Earth day would be on April 22. On May 1 there would be a facility managers meeting for key account customers. Commissioner Tucher asked how the search for the director was proceeding and the process for the interim director, which he wanted monthly updates on. He asked if staff was satisfied and impressed with the choice of candidates and if there were good recruits for the Electric and the Director positions. Ms. Nose answered that they were nearing the final steps to recruit the assistant director over the Utility’s Electric operations and the engineering team. She expected to announce something at the next UAC meeting. They were in the interview stage for the Utility’s Director, and she expected that it would be another month or two before there would be any additional information. As for the choice of candidates and recruits, she noted that it would be inappropriate for her to speak about personal transactions publicly. They had ran competitive recruitment processes, so a lot of attention and engagement had been attracted. Commissioner Gupta inquired if staff had an initial gut reaction as it related to the Gas Utility grant. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 3 of 38 Ms. Nose replied that they did not has a gut reaction at this time. There were new T’s and C’s referencing some of the new executive orders, so they needed to look at the details of the orders, the contract terms, and State law and reconcile all obligations. NEW BUSINESS ITEM 2: Approval of Chair and Vice Chair to Serve a Short Term of April 2, 2025 through April 1, 2026 ACTION 6:45PM – 6:55PM Vice Chair Mauter asked for motions to nominate a chair for the term. Commissioner Croft asked if the selection could be pushed to the future to remedy the situation of 2 commissioners being past their terms now. Mayor Lauing discussed why that made sense, and he suggested moving it to the next meeting. Commissioner Philips queried if procedurally the terms of Chair Scharff and Vice Chair Mauter needed to be extended to do that. Mayor Lauing responded that the terms of Chair Scharff and Vice Chair Mauter did not need to be extended. Commissioner Philips moved that this Item be moved to the next meeting. Commissioner Gupta seconded the motion. Commissioner Tucher questioned why it was called short term. Mayor Lauing responded that it was always a 1-year term and that a person could run again and again. Commissioner Tucher seconded the motion. Motion carried 7-0 ACTION: Item 2 was moved to the next meeting. ITEM 3: Staff Recommend the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution Approving the FY 2026 Gas Utility Financial Forecast and Reserve Transfers, the Natural Gas Cost of Service and Rate Study, and General Fund Transfer. And Amending Rate Schedules G-1 (Residential Gas Service), G-2 (Residential Master-Metered and Commercial Gas Service), G-3 (Large Commercial Gas Service), and G-10 (Compressed Natural Gas Service) ACTION 6:55PM – 7:55PM Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 4 of 38 Lisa Bilir, Senior Resource Planner, displayed a slide summarizing the median bill projections. She noted that some of the rate increases were substantial, which staff did not take lightly. The proposals were the result of a detailed analysis balancing costs, safety, and maintenance risks. A Cost-of-Service Study had been completed in February, which led to significant increases for residential rates, particularly at the median usage levels, so staff was presenting an option for a 1-time climate credit, which she elaborated on. The overall system average rate increase would be 5 percent in FY2026, which would begin in July 2025. She outlined some of the drivers for the increase. They expected a Federal grant of $16.5M, which would in large part fund a main replacement project, Number 25. There would be a General Fund transfer of 18 percent of 2024 gross revenue, which was estimated at $9.735M in 2026. Since December, the gas increase had been reduced to 5 percent in this proposal, although the COSA meant a higher increase for the residential and large commercial customers. She furnished a chart comparing the amount of revenue that would be recovered in each of the categories based on the 4-year average in 2026 to what would be needed in 2026 to cover the estimated cost in the different categories and slides showing the costs and revenues for the Gas Utility and the Operations Reserve for the Gas Utility. She discussed the gas cost of service methodology. Prop 26 stated that gas and electric rates must represent the cost of service, and rates could not be established based on policy goals unless they were cost based and rates could not be phased in. She presented a slide focusing on the gas bill comparisons for residential and nonresidential customers as a way to represent the overall impact of the Cost-of-Service Study. She mentioned that the summer baseline usage for the seasonal rate would go from 20 to 23 therms for a 30- day billing period. Catherine Elvert, Utilities Communications Manager, highlighted the communications and outreach strategy for talking to the community about the utility rate changes. They wanted to ensure transparency and foster understanding about the reason why there would be increases and why it would be a benefit to customers, which she elaborated on. The goal was to manage the Utility services that would ensure safety and reliability. They wanted to communicate to customers what the City was doing to keep costs down and what the customer could do to keep their utility cost low. The City offered a number of programs and services for efficiency. The key messages would also focus on the competitiveness of the utility rates. They would reiterate happenings with the need to replenish the Utility’s financial reserves, rising supply costs, the program for safety and reliability, what would happen with the General Fund transfer, and the COSA. Ms. Bilir recapped that the Cost-of-Service Study resulted in reallocations across classes. They were asking the UAC to weigh in on the proposed strategies for replenishing reserves, the investment in the CIP, and the climate credit option. They included Council’s direction from last year regarding the General Fund transfer. They understood that the subcommittee had some ideas for discussion. Commissioner Philips noted that the Finance Subcommittee consisted Commissioners Gupta and Croft and himself. The residential rates would increase and the smaller G2 commercial rates would decrease primarily as a result of the reallocation of costs driven by COSA. They had Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 5 of 38 not been able to review the COSA until after the meeting. The 22-percent increase in the median residential rates seemed excessive. The subcommittee wanted to find a way to limit that, but they had not converged on the best way to do it. Staff had presented an option, which was the Cap-and-Trade alternative, which had not been uniformly supported by the subcommittee, so they wanted to bring it to the UAC. The other possibility would not do much to replenish reserves and the third possibility was to recommend and do a smaller transfer to the General Fund. The second and third possibilities would impact residential and commercial rates through COSA. He understood that COSA was more or less fixed and there might be some ability to give guidance for future cost-of-service allocations. He did not know if the $16.5M Federal grant was on track. Commissioner Croft stated that the initial impression was that shifting more of the cost onto a fixed versus a usage cost seemed to give the wrong incentive and that ideally folks should reduce usage. However, she stated that a high fixed cost might be helpful in folks discontinuing service. It was not clear how much guidance the Commission could give the consultant doing the COSA study, but they understood that there was an ability to give some, which they wanted to discuss. She asked if this study guided to increase the fixed costs versus the usage costs and if in future cost-of-service assessments guidance toward the goal of having people eventually discontinue gas could be done. The fixed costs going up did not seem to be productive. Commissioner Gupta added that the COSA had not been available for discussion during the subcommittee meeting with staff. When it became available, each committee member reviewed it, and there were questions regarding the drivers behind shifting cost from customer class G2 to the residential class G1. Vice Chair Mauter asked if the committee had reviewed only the initial proposal and not the proposal that would take funds from the Cap-and-Trade Reserve. Commissioner Philips responded that it had been presented but the group did not have consensus on it, so they wanted to go in front of UAC. Public Comment There were no public comments. Commissioner Gupta stated that with the gas rates the Cost-of-Service Study would be approved and that the new Cost-of-Service Study was cost shifting a large amount from smaller commercial G2 class to the G1 class. He noted that residential rates were not going up just because of increases in system-wide costs but also because of decisions made by the consultant on how to allocate the costs. He referenced Packet Page 106 and the General Fund transfer allocation, which had been changed to a revenue-based allocation, so customer class G1 would bear a larger proportion of General Fund transfer costs. He also addressed the rate-based allocation of the distribution assets, which had been updated to use a revised average and excess calculations, which would shift asset value from G2 to G1. He asked if the prior COSA was compliant with Proposition 26 and why there were 2 changes being made to the proposed Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 6 of 38 COSA. If the UAC did not agree with coding the General Fund transfer allocation, for example, he asked if such pieces could be returned to the consultant to obtain a revised rate schedule. Ms. Bilir answered that the prior COSA was compliant with Proposition 26. She explained why the 2 changes were being made to the proposed COSA. Concerning making changes, she outlined that the study was integrated and interlinked. It was possible to request that the consultant look at it, but they would most likely want to start fresh, which would require restarting the study and looking at the methods and reevaluating and taking an entirely new approach. She added that in that case the rates would not be available by July. Vice Chair Mauter asked how frequently cost-of-service studies were completed for Gas Utility and if there was guidance in Proposition 26 mandating the frequency of cost-of-service or if it was a Utility decision. Ms. Bilir answered replied that the last Cost-of-Service Study was in 2020, but there had been a few updates in 2021. The study would typically be done between 3 and 7 years. She did not believe that Proposition 26 mandated the frequency of cost-of-service, but it was typical do it every few years. Commissioner Metz asked if the CPAU had investigated operational expenses for the Gas Utility lately. Matt Zucca, Assistant Director of Utilities Water, Gas, and Wastewater Operations and Engineering, responded that operational costs would probably be largely driven by labor, which was split across 3 utilities. He was not aware of spending a lot of money on the operations side short of reducing the frequency of leak surveys performed in residential areas. They did the gas surveys more aggressively than required in order to be proactive and identify leaks earlier. They looked at the budget every year and tried to ensure that adjustments would be made accordingly. He did not know if there was a lot of opportunity to investigate operational expenses. Commissioner Tucher commented that the COSA was new to him. He asked what the consultant thought about Palo Alto financially and prudently managing the Gas Utility. He did not see a summary in the document. He could not get a sense for what the consultant was telling Palo Alto to do in assessing the utility. He added that it would be helpful to have a slide summarizing the high points of the COSA. Commissioner Gupta stated that he could not support cost shifting so dramatically from G2 to G1 residents. He moved to remand the COSA to look at cost shifting changes. Commissioner Philips inquired as to the potential legal risks of doing that. Karla Dailey, Assistant Director of Utilities Resource Management Division, stated that once a COSA was published, it would be the document defending how costs among customer classes Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 7 of 38 would be allocated. She opined that the best course of action would be to explore methodologies that might address some of the concerns when doing the next COSA. However, the concerns could not drive the COSA. Vice Chair Mauter inquired if the primary driver of the cost increase was excess or peaky demand by residential users on the system. Ms. Bilir responded that the consultant’s findings related to excess or peaky demand by residential users on the system. Commissioner Gupta discussed why he had issues with attributing a larger portion asset value to G1 based on seasonal usage variability, which he thought could introduce more volatility in rate calculation. Chair Scharff found cost-of-service studies to be frustrating. He believed that assumptions made by the consultants would drive it certain ways, so he did not think Commissioner Gupta was wrong. He supposed the Cost-of-Service Study could be redone/amended, although he did not see that happening, but if it was done it would need to be a Council-driven initiative. He remarked that the cost-of-service studies were basically the framework of the rates being defensible, and he thought the City would be open to risks if the study were redone. Ms. Dailey noted that staff had offered an alternative that could help the residential G1 customers with the rate impacts. She pointed out that the smallest of the G2 customers were small, multifamily complexes and the results of the COSA provided some relief to those customers. Commissioner Tucher inquired if the UAC had ever had a discussion related to the choice of the consultant, the directions given to the consultant, and the City’s expectations or steering of the consultant. He understood that it would be perilous to change the study. Ms. Bilir responded that an RFP had been done in 2021 or 2022, which went to Council with the consultants as part of the on-call contract. The study had not been discussed with the UAC prior to that. She clarified that the COSA was an assessment of revenue requirement and the costs imposed on the system by different customer classes. It was not an assessment of how well the utility was run. Commissioner Tucher stated [inaudible 1:14:05] that these were the costs and the revenue requirements [inaudible 1:14:08]. He understood that no special directives had been given on some of the concerns regarding customer classes or guidance in moving from class to class. Ms. Dailey confirmed that was correct. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 8 of 38 Vice Chair Mauter understood that a Cost-of-Service Study was an effort to equitably split the pie. It would be unfair to any customer class if the rates did not reflect the cost a customer class was imposing on the system. Commissioner Tucher stated that he would have appreciated the recommendations being more explicitly spelled out in a slide. He queried if staff agreed with the COSA recommendations. Ms. Dailey said staff agreed with the COSA recommendations. Ms. Bilir stated that staff took the work very seriously and they reviewed in detail all the data and the assumptions made by the consultant. Vice Chair Mauter wanted to close the open motion, which could be done by Commissioner Gupta withdrawing the motion or the motion could be voted on if there was a second. Commissioner Gupta wanted to vote on the COSA looking at cost shifting changes. Chair Scharff asked if the motion included the direction that should be taken in remanding the COSA back to the consultant. Commissioner Gupta answered that the direction would be to revert the changes it made from a prior COSA with respect to cost shifting, specifically on Page 1 of 6. Chair Scharff stated that the assumptions in COSA led to the rate design, which led to cost shifting. He questioned if the motion was to remand the COSA to use the previous assumptions. He added that legally the outcome of a COSA study could not be directed. Commissioner Gupta wanted to reject the changes related to how it would allocate current charges and revert to the prior COSA. Vice Chair Mauter asked if there were any seconds for the motion. Hearing none, the motion did not move forward. She asked Commissioner Philips to review the 3 options the Finance Committee studied. Commissioner Philips stated that the subcommittee looked at 2 potential options – the Cap- and-Trade Reserve and to do a transfer to the General Fund of less than 18 percent. The third was the original rate. Vice Chair Mauter questioned the intended purpose of drawing down the Cap-and-Trade Reserve Fund as it related to the legality and the appropriateness of it, how much had been spent and the amount of the standing reserve, and if adopting it would imply that it would continue to be adopted in the future. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 9 of 38 Ms. Dailey answered that the revenue from Cap-and-Trade was the result of free allowances allocated to the Gas Utility as a compliance entity under the Cap-and-Trade Regulation. The State had restrictions on spending the money, and Council had adopted a list of allowable activities to use the money on, which not much of had been spent. Council preferred to use the funds for greenhouse gas reduction activities, but it could legally be returned to the customers on a nonvolumetric basis, and it could be returned to one customer class and not all customer classes, so money could be directed to just the residential customers who would feel the rate change more than others. She added that it was a use Council had approved. The full Cost-of- Service Study would be adopted this year, and it would be in place until the event of another Cost-of-Service Study. Staff’s proposed alternative was a 1-year credit that would be accompanied by encouragement to electrify. Council could decide to continue/increase/decrease a climate credit in future years. Staff was not presenting that alternative today and they were addressing next year, but it did not preclude using that money in the same way in future years. Vice Chair Mauter asked if it was likely that more would be spent than what was received, such that it would not be sustainable, and what was expected to be spent from the Cap-and-Trade Reserve. Ms. Dailey stated that the City was having discussions on climate action, 80 x 30 goals, and keeping rates low, and there was a study session scheduled (possibly for May 5) for Council to address the choice. At some point, the money would run out, but there was quite a lot in there currently. Ms. Bilir noted that Packet Page 196 had a table with all the reserve balances. It was expected that the climate credit of $1.6M would be spent from the Cap-and-Trade Reserve. Kiely Nose, Interim Utilities Director, thought consideration should be given to the fund being sustainable. She stated that there may be an opportunity to look at further incentivizing folks to move toward electrification. Vice Chair Mauter inquired if in any way these would be used as a policy. Ms. Nose answered that they would not be used as a policy. The COSA was strictly based on the cost of providing service to customers. In this instance, there might be a chance to further help the parallel goals. She thought these were levers for the Commission and Council to consider how to spend the Cap-and-Trade funds and how to deal with the cost of providing the service in balancing rate affordability and sustainability goals. Ms. Bilir referenced Packet Page 72 and noted that the Cap-and-Trade Fund had had $13.5M at the end of FY2024. The projected balance at the end of 2025 was $16.9M, and the balance would decline over time as the Climate Action Budget was reflected in it. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 10 of 38 Alan Kurotori, Utilities Chief Operating Officer, added that Cap-and-Trade for investor-owned utilities received about 98 percent of all Cap-and-Trade for natural gas. Besides compliance, the funds were used for residential climate credits. They programmed in for a long-term view for Council to consider a balance of the use of the money for S/CAP goals and to consider helping customers given the larger increase for the first year. The UAC and Council could recommend continuing the credit if desired. Commissioner Croft inquired if it would be appropriate to take funds from the General Fund to relieve customers and if the funds could be used for a single customer class. Ms. Dailey answered that staff felt it was appropriate to include the General Fund transfer that Council directed staff to plan for in last year’s financial planning cycle. It was within UAC’s purview to make a recommendation to Council. She thought funds from the General Fund would apply to the full Gas Utility and that it could not be targeted for different customer classes. Commissioner Philips stated that about 45 percent would go to residential. He queried what reduction from the $18M would result in a 9-percent increase for the median consumer. He was concerned that the 22 percent assumed no increase in the price of natural gas and that the forecast models were predicting increases. He voiced that the 22-percent increase was a best- case scenario and that it could be more. Ms. Bilir replied that they had not looked at the amount of reduction from the $18M that would result in a 9 percent increase. They looked at continuing the 14.5-percent General Fund transfer from last year, which they had determined would be about a 2- to 4-percent reduction in the median residential Gas Utility bill across residential and nonresidential customers. Commissioner Philips queried if more than a 14.5-percent transfer would keep the increase to 9 percent. Ms. Bilir clarified that if the General Fund transfer was 14.5 percent instead of 18 percent it could achieve an approximately 4-percent reduction, so instead of 22 percent for the median residential customer, it would be 18 percent. Chair Scharff wanted to suggest to Council that they use the Cap-and-Trade funds. He was also amenable to suggesting lower than 18 percent, but he noted that Council wanted 18 percent. Mayor Lauing, Utilities Advisory Commission Liaison, stated that they had to be very cautious in budgeting. He thought Council would consider using part of this in something other than the general plan if it would positively affect utility rates. He did not think that had been addressed by the Finance Committee. Vice Chair Mauter reiterated that Cap-and-Trade reserves were predicted to be $13.7M at the end of 2026, that they were currently at $16.9M, and that in 2027 they would be at $11M. She Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 11 of 38 stated that a $3.5M increase was expected in the Cap-and-Trade reserves this year, and she queried how much of that would be proposed to be spent. Ms. Bilir clarified that the most recent recorded balance was at the end of FY2024 and was $13.5M. The other balances were projected. Of the $3.5M, the proposal would be to spend $1.6M. Vice Chair Mauter wanted to turn to potential recommendations, one of which was to use the Cap-and-Trade funds to offset, so increases to the G1 residential class. Vice Chair Mauter moved to give a 1-time credit, basically the $1.6M that would be spent, to the G1 customers on their bills. Commissioner Philips seconded the motion. Commissioner Gupta expressed that he would vote no on the proposal. He did not support the use of green funds to subsidize the use of fossil fuels. Commissioner Tucher asked what the downside would be in using the funds, what they had been used for in the past, and what they were hoped to be used for. Ms. Dailey stated that the downside was that Council had generally expressed a desire to use the funds for climate reduction activities, but staff felt it was a reasonable alternative given the rate increases. The funds were primarily used for electrification, such as for heat pump subsidies, etc. Commissioner Philips queried if the motion was to accept the recommendation at the level proposed. Chair Scharff affirmed that that was part of the motion. He added that it was important to note that the funds were accruing and being drawn down for the Climate Action Plan and that they were not all being used. He added that funds could be taken from the General Fund for the Climate Action Plan in the future. He thought the huge increases in rates should be mitigated. Commissioner Croft found the 11-percent residential increase to be striking. In principle, she did not agree with taking money from Cap-and-Trade. She stated that it was important to mitigate the increase. She would support it. Motion Carried 6-1, Commissioner Gupta Voted No Vice Chair Mauter asked if there were questions or comments related to General Fund expenditures in addition to Climate Reserve expenditures. Commissioner Gupta moved to adopt the rates as presented by staff in the Staff Report. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 12 of 38 Commissioner Metz questioned if there was a specific number moved. Vice Chair Mauter replied that there was not yet a specific number. She asked if there were questions on use of the General Fund and, if so, she requested a motion on a specific number to propose. She asked how last year’s proposal to reduce to 14.5 percent had been arrived at. Ms. Bilir detailed how the 14.5 percent gross gas revenue had been arrived at last year. Council had adopted the 14.5-percent transfer for FY2025 and had directed that in the future it return to 18 percent. Ms. Dailey recalled that staff had recommended a more gradual ramp to the full 18 percent and that Council did not adopt it. Vice Chair Mauter asked if there were questions related to the gas transfer. Commissioner Tucher remarked that there was strong opposition in the community to the structure in general, and he inquired how this would be defended. Commissioner Philips replied that the taxpayers voted for it. Commissioner Gupta commented that it would be useful to recommend to Council something lower than the full 18 percent, particularly given the high increase in gas prices for residents. He moved to maintain the 14.5 percent from last year, although the number could be amended. Commissioner Metz inquired what the 1-percent payout would equate to in terms of percent in increase in gas rate for residential. Commissioner Philips was not that interested in reducing commercial rates over where they would go with COSA. He expressed why he would probably not support a reduction. Although in general and in principle, he was against the tax on gas to support the General Fund. Chair Scharff was disappointed that Council had not followed what the UAC had recommended. He somewhat associated his comments with Commissioner Philips. He did not support the motion. Vice Chair Mauter invited a motion, which could be discussed. Commissioner Gupta motioned to recommend that Council keep the General Fund transfer to 14.5 percent. He thought the Cap-and-Trade allocation recommended by UAC would be a 1- time allocation, so it would not avoid the issues in the coming years. Holding the General Fund transfer to 14.5 percent might help with gas rates longer term. Commissioner Tucher seconded the motion. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 13 of 38 Motion: Keep GF Transfer to 14.5%, Commissioner Gupta moved Commissioner Tucher seconded the motion Commissioner Croft expressed that in general she did not support subsidizing gas from the General Fund. She only supported the Cap-and-Trade Reserve use for this purpose just to decrease hardship. Going forward, she thought the cost should be accepted and that perhaps it would incentivize people to electrify. She spoke of why she was disappointed that the fixed costs (not the usage costs) were going up. Commissioner Philips clarified that it was not a subsidy but a reduced tax. The Cap-and-Trade was subsidized. Vice Chair Mauter thought that the motion to reduce the transfer would further reduce bills for some customer classes and handicap the ability to use the transfer argument next year to further smooth rates going forward. She would not support the motion. Motion did not carry 3-4, Chair Scharff, Vice Chair Mauter, Commissioners Croft and Phillips voted no Vice Chair Mauter noted that she was looking for a motion to recommend to Council staff’s modified recommendation (Version 2) approving FY2026 Gas Utility. Commissioner Phillips moved to recommend to Council staff’s modified recommendation (Version 2) approving FY2026 Gas Utility. Commissioner Metz seconded the motion. Motion carried 5-1, Commissioner Gupta voted no, Commissioner Tucher abstained. ACTION: Recommend to Council staff’s recommendation approving FY2026 Gas Utility financial forecast, as modified to provide a one-time credit, of approximately $1.6M that would be spent from the Cap and Trade reserve, to the G1 customers on their bills. Break 7:50 p.m. Return from break 8:04 p.m. ITEM 4: Staff Recommends the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution, Approving the FY 2026 Electric Financial Forecast, including Transfers, Amending Rate Schedules E-1 (Residential Electric Service), E-2 (Residential Master-Metered and Small Non-Residential Electric Service), E-2-G (Residential Master-Metered and Small Non Residential Green Power Electric Service), E-4 (Medium Non-Residential Electric Service), E-4-G (Medium Non-Residential Green Power Electric Service), E-4 TOU (Medium Non-Residential Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 14 of 38 Time of Use Electric Service), E-7 (Large Non-Residential Electric Service), E-7-G (Large Non Residential Green Power Electric Service), E-7 TOU (Large Non-Residential Time of Use Electric Service), E-14 (Street Lights), E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation), and E-NSE-1 (Net Metering Surplus Electricity Compensation) ACTION 7:55PM – 8:40PM Vice Chair Mauter declared that staff would present and then she would read the entire agenda item when asking for public comment. Lisa Bilir, Senior Resource Planner, provided a slide outlining the electric rate proposal. She stated that the Electric Utility would be doing large projects and debt financing for grid modernization over the next several years, and this proposal would ensure that the most economical financing cost would be achieved. A driver for the rate increase was a significant investment in grid modernization, which would be funded through revenues and bond financing with the first bond issuance in FY2026. The reserves in the Electric Utility were recovering from a drawdown in 2020 through 2022. Although the supply costs were lower in the current year, in the longer term, the transmission cost and the renewable energy targets would rise. Since December 2024, staff had made updates to the proposal, which she elaborated on. She explained that the General Fund transfer estimate had been increased. The Climate Action Budget was reflected in the reserves and the supply forecast had been updated. She noted that the projected number for FY2026 had not been increased, but they were potentially looking at increases between 6 and 8 percent per year in 2027 through 2030, and they would continue to refine those every year. She shared a slide showing electric bill comparison with PG&E and Santa Clara and a cost and revenue projection chart. She discussed the large fluctuations in the chart. She furnished a chart showing the supply operations reserve, which she discussed. She displayed a slide showing the bill impact of the proposal. Catherine Elvert, Utilities Communications Manager, stated that the primary objective of the communications strategy was to ensure transparency, foster understanding behind the reason for the rate increases, engage with stakeholders, address concerns, and encourage public participation in the decision-making processes. The primary goal was to manage the utility services to ensure the continuation of safety, reliability, sustainability, and cost effective operations. They had communicated the need for the rate increases being driven by infrastructure, maintenance, compliance, and maintaining adequate financial reserves. She outlined how they had communicated with people in a variety of ways, which included digital, mail, etc. Even though the rates were increasing, Palo Alto remained competitive with other utilities. They wanted to communicate what the City was doing and the services offered to customers to keep costs low. She spoke of the benefits of grid modernization. Commissioner Tucher queried which outreach strategies were most important and effective. Ms. Elvert replied that they used a variety of communications because people received and processed information differently. Information was online and they used email, newsletters, social media, community message boards, direct mail, and engagement through community Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 15 of 38 outreach events. They provided a way for customers to communicate with them on a 2-way system, which she explained. Engagement with the local media was very effective, so their goal was to engage with media representatives. Commissioner Tucher mentioned that a future meeting he wanted to know the response from the local media and what goals or frustrations there might be and which digital communications were the most effective. Commissioner Philips stated that the Finance Committee’s conversation had been less extensive than the gas discussion. The forecasts had been revised slightly upward, but they were pretty flat and included EVs and electrification but not new housing from the Housing Element. There was a forecast that was much higher and included aggressive data center estimates. They were unanimous in considering the 5.1-percent increase reasonable. Commissioner Tucher asked if the subcommittee had looked at several growth forecast scenarios. Commissioner Philips responded that staff had presented several growth forecast scenarios to them. Commissioner Croft stated that the growth forecast scenarios could be found on Packet Page 123. Commissioner Metz questioned what the impact would be and what would be done about it. He referenced Packet Page 123 and stated there was a reservation for a 60 gigawatt hour per year increase, which was more than 6 percent of the total, and he wanted to know what it would do the grid, finances, and the load profile and what would happen to rates, stability, and RPS targets if the high forecast should be reached. Karla Dailey, Assistant Director of Utilities Resource Management Division, stated that those questions were not addressed in the financial forecast. They were in the process of looking at dramatic load growth possibilities and the financial and physical impacts. For this forecast, they were using a relatively conservative load growth scenario so there could be confidence in recovering the revenue requirement. They were not depending on load that had not yet shown up. Commissioner Metz did not consider the impact of much bigger growth to be financially benign, but he thought it was being said that it would be. Vice Chair Mauter asked how growth would impact the direction of rates. Ms. Dailey stated that it was not a simple answer. Growth up to some point would probably have a positive impact on rates, and there would probably be a tipping point where it would Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 16 of 38 not, and staff did not know where that was exactly, but they were looking at those scenarios closely. Commissioner Gupta did not want to be concerned with the high part of the graph as the direction was not actually known. He thought it would continue to be studied and considered in the coming years. He wanted to stay the course in thinking through capacity. He did not consider growth through the Housing Element to be an issue in terms of capacity as he thought the capacity reservation would handle that. Commissioner Philips moved the staff recommendation. Commissioner Gupta seconded the motion. Motion carried 7-0 ACTION: The staff recommendation was moved. Public Comment There were no public comments. Chair Scharff declared that the Commission would have revoted if there had been public comment. ITEM 5: Review and Recommend Utilities Advisory Commission FY 2025 – 2026 Work Plan for City Council Approval ACTION: 8:40PM – 9:30PM Vice Chair Mauter recognized the tremendous effort and careful thought that had gone into the 14 recommendations provided by the Commission. She stated that there was a Work Plan and an agenda setting process and that it was important to not conflate the two. She understood that there were 2 options. One was approving the standing Work Plan and then turning individually to the 14 proposed items that would augment the Work Plan. As for the second option, Commissioner Croft had prepared alternative language to some of the standing topics and modified the description of those standing topics in such a way that they would mostly (with the exception of 4) include the proposed topics of the Work Plan under the existing standing topics, which did not mean they would not be agendized but they would not appear separately in the Work Plan. Staff prepared for Option 1, to approve all standing topics and then turn to each item individually. The Commission had a choice in the path to take. Commissioner Gupta asked which 4 work plans would not be included in Commissioner Croft’s proposal. Commissioner Croft answered that universal access (which she suggested discussing), regional collaboration on water supply, credit card fees, and, she thought, federal issues had not been specifically added to each item. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 17 of 38 Vice Chair Mauter confirmed that it was Work Plan topics 3, 4, 5, and 7. Commissioner Philips did not understand the proposal, and he asked what the advantage would be to doing this instead of what staff had proposed. Vice Chair Mauter stated that the proposal was to modify the language of the standing topics as opposed to adopting a subset or all of the 14 proposed topics submitted by commissioners. Commissioner Croft discussed why she had taken the approach she did. Commissioner Gupta found the approach to be efficient as long as there would not be a later argument that somehow a Work Plan that had been proposed was not included, other than the 4 exceptions. Chair Scharff found that it made it much cleaner and manageable. Kiely Nose, Interim Utilities Director, was not sure of the best approach. However, she felt there was a high likelihood for conflict in the future if taking the high-level approach, which she explained. She was not recommending going through a line-by-line list, but there were serious projects on the list of 14, outside of the 4 identified as exceptions, that would require a significant amount of resources and attention. She added that they were not in line with current direction from Council. She thought those items questioned whether to divert resources in those areas. She was concerned there may be tension in the coming 12 months due to not having the bandwidth to extensively discuss the 10 additional items. She explained that her department was in transition and that they were constrained in taking on new projects. As an example, Item 2, purple pipe, would be a new initiative to reinstate work. They did not have staff dedicated to data center competitiveness. She added that there were others. Vice Chair Mauter stated that several commissioners had not previewed Commissioner Croft’s modifications, and she suggested that they be displayed for the Commission. If there was general consensus to move forward with the modification to the existing standing topics, rather than the addition of new topics, then the proposed list could be used as an opportunity to discuss what the Commission wanted to agendize in the future, what staff did not have the capacity to handle, a Work Plan that may not align with the recommended direction of the Utility itself, and what there would not be time for in this year. She asked the Commission if that was a fair approach. Commissioner Metz wanted to see the list [inaudible 2:47:30]. Vice Chair Mauter stated that Commissioner Croft’s list was a modification of the existing standing topics. Modifications were noted in red, and the brackets indicated where she and Commissioner Croft believed some of the items submitted as proposed topics were being addressed. She suggested the Commission go through the proposed topics to ensure that they Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 18 of 38 would all be addressed, and she noted that displayed on the screen was how they would be represented. Commissioner Metz queried what the box with the number 1 under gas supply represented. Vice Chair Mauter referenced the table on Packet Page 226, and she stated that number 1 related to long-term strategy for CPAU’s natural gas utility. Commissioner Metz questioned if it was a new topic that had been listed. Vice Chair Mauter responded that the revision to the standing topic would cover the proposed new topic. Commissioner Metz understood, but he disagreed. Commissioner Croft asked staff to comment on how they used the Work Plan and how it would affect their decisions on what to bring to the Commission. Ms. Nose answered that the Work Plan helped guide resource allocations and the items brought forward to the UAC and included routine items. It was also intended that the Work Plan would identify areas that Council had asked the UAC for further guidance on or advisory work. She thought many of the 14 proposals could be further clarified in the language. She thought a new initiative might be an area of tension. Chair Scharff asked if 3 things should be chosen to add to the Work Plan instead of 14 due to staff resources. Alan Kurotori, Utilities Chief Operating Officer, stated that staff had tried to describe which of the 14 items were included as standing topics and they tried to bifurcate that with new items. Some items could not be addressed in the 1-year work plan, such as the microplastics, which might be a better item for future years. Staff would have to get approval from Council for new items prior to doing work. They could work on the items in the existing Work Plan. He wanted to get clarity on items and issues already being addressed and to have a deeper dive into some of the new items and determining if it would be a priority item for this year. Chair Scharff understood that staff did not have the bandwidth to work on the 14 items. He wanted to know if staff should comment on the feasibility of putting each item in the Work Plan and if there should then be a vote to follow the staff recommendation or if staff should comment on what they had the bandwidth to do and the Commission could then vote on not doing the other ones. Ms. Nose thought staff could identify a list that they had concerns with, and if the Commission could focus on those, she believed staff could edit the Work Plan for the rest of them. She suggested focusing on the 5 items causing pause. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 19 of 38 Chair Scharff wanted to address each of those 5 items and decide whether they would be included. Vice Chair Mauter strongly agreed. She wanted to address all of them so it would be understood where they would be addressed in the revised language. The 5 that staff was suggesting not be included could be addressed first and then the others could be addressed in order to revise language to standing topics or determine if a separate topic would be needed. Ms. Nose suggested that Items 2, 3, 8, 9, and 12 be discussed and that staff work on the placement of the others. Vice Chair Mauter agreed to proceed in that manner. Public Comment Hamilton Hitchings hoped there would be strong oversight of geographic failure and residential fiber. Regarding geographic failure, he suggested partnering with Stanford, although there were also other alternatives. He discussed the City not having a monopoly on fiber. He stated that the City analysis indicated that an absolute minimum of 27 percent of all homes needed to adopt the City’s fiber service to break even, which would be hard because he understood that AT&T fiber covered 71 percent of the city and was expanding. He asked the Commission to read the University of Pennsylvania’s Municipal Fiber in the United States, a Financial Assessment by Christopher Yoo. He stated that he had AT&T fiber and loved it. Vice Chair Mauter declared that Topic 2 would be addressed. Commissioner Philips asked if there would be a vote on each one. Vice Chair Mauter suggested voting on each item and the Work Plan as a whole. Chair Scharff suggested that staff speak to each item first and then whoever added the item respond and that each item be voted on. At the end of the vote, staff could voice whether they had the bandwidth to do it. Ms. Nose requested that Item 12 not be specific to Stanford but to discuss the prioritization and a second transmission corridor, which was part of staff’s Work Plan. Staff would be concerned if the Commission wanted to specifically explore a Stanford interconnect. Vice Chair Mauter declared that staff would start the discussion with each of the 5 items of concern and then the Commission could discuss them. She addressed Number 2, Feasibility Study of Purple Pipe Expansion. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 20 of 38 Karla Dailey, Assistant Director of Utilities Resource Management Division, stated that it had been studied extensively and was found to be expensive and not feasible as a water supply alternative. They wanted to focus on different types of projects moving forward. Commissioner Gupta noted that he was one of the commissioners who submitted it, and he agreed with staff. Vice Chair Mauter asked for a show-of-hands to vote to eliminate it. [____] [inaudible 3:06:34]. Vice Chair Mauter stated [inaudible 3:06:38]. She addressed Item 3. Mr. Kurotori stated that the universal access was to enhance accessibility on ADA compliance to ensure equitable service for all customers. He opined that it would better fall under the purview of the HRC rather than the UAC. Commissioner Gupta commented that he was one of the commissioners who had submitted the topic. He noted that the Work Plan was about how customers with disabilities accessed CPAU’s services, and he asked if the HRC could review that. Mr. Kurotori responded that to the extent it would be involved with the billing system would be under the UAC, but if it was looking at access for the community as a whole, unless it was very narrowly defined for the utility bill, then it should go to HRC. Commissioner Gupta asked that the table be furnished. When he submitted it, it was supposed to be fairly specific to CPAU. Ms. Nose stated that it addressed the billing portal, communications, and facilities and looking at best practices and universal design, including community engagement. Even if specific to the Utility, engagement was a large undertaking. If the Commission wanted staff to embark on it as a priority, it would require resources and it was not necessarily on the current Work Plan. Commissioner Gupta asked if, being specific to CPAU, it could be addressed by the HRC. Vice Chair Mauter stated that it did not seem to be fully specific to CPAU, so it needed to go to the HRC, which was staff’s recommendation. [____ 3:09:52] [inaudible ] facilities, which the CPAU did not have full control over. Commissioner Gupta was happy to amend [out 3:10:01] the physical sites, which was a small portion of the proposal. The chief concern was how folks requiring accommodations would access and understand the services. Particularly as AMI was added, he was curious how well those features would be usable to disabled customers. He had read that up to 47 percent of Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 21 of 38 residents across the Bay Area required accommodations, so he thought it was a significant issue and that it should be considered as a CPAU to ensure services would be available to all. Commissioner Croft inquired if the proposal was in response to complaints or if it was a proactive proposal. Commissioner Gupta responded that it was a proactive proposal, which he elaborated on. He understood that outreach had not been done to customers requiring accommodations. Vice Chair Mauter was concerned that the item did not fall under the purview of the UAC. She considered the timeline for conducting accessibility audits and launching customer surveys to be in the domain of staff rather than the UAC. She was struggling to understand what the Commission would do and where it would provide guidance. Given the limited bandwidth, she did not find the topic to be right for input from the Commission. Chair Scharff concurred with Vice Chair Mauter. He noted that he had not heard complaints regarding this, so he it was unclear why this would be launched at this time. Commissioner Gupta would be happy to remand it to the HRC if that was the consensus. His understanding of the Work Plan process was to help define where staff should spend their time. Vice Chair Mauter stated that the UAC would not and should not direct staff time and that the Work Plan was for the Commission, not staff. Ms. Nose stated that this was not intended for operations but for the UAC to help advise Council on policy items. Commissioner Gupta queried if the work plans would be advised forward to Council. He was trying to distinguish between the purpose of the Work Plan versus the direction of staff time. Mayor Lauing, Utilities Advisory Commission Liaison, stated that Council had to approve the Work Plan. Until approved, staff could not work on projects that had not been approved in the prior plan. Vice Chair Mauter understood that it was a Work Plan for the UAC in particular so the UAC could work on the topics only if approved by Council and that the Work Plan was not for the Utilities themselves but that the General Manager, Assistant General Manager, and the Utility’s Director direct work for the Utilities. Mayor Lauing confirmed that was correct. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 22 of 38 Ms. Nose stated that everyone was correct in their statements, that all things could be true, that there were nuances, that it was not one or the other, and that all helped funnel through at the direction of Council. Vice Chair Mauter stated that the UAC would not conduct an accessibility audit or launch customer surveys, so she wanted to know if it was a reasonable thing to have on the UAC Work Plan. Ms. Nose stated that staff would conduct accessibility audits and launch customer surveys, not the UAC. However, staff would bring forward policies or programs beyond ADA compliance to the UAC as a result of that work and then the UAC would recommend those programs or policies or adjustments to them to the full Council for their consideration. Staff’s work would be the inputs to get to those program or policy changes. She thought the question was whether this was an area that the Commission would like to recommend as a new area to dedicate resources to over the course of the next 12 months. Commissioner Gupta questioned if this should be remanded to the HRC because it would be a better place for the topic. Ms. Nose answered that if it was for universal access to the City’s programs, facilities, and systems, it would be an HRC topic. The UAC did not have authority to remand anything to another committee or commission. The UAC could identify additional important topics in the Work Plan, and the UAC could advise Council of it, but outside of an action by Council, it would not necessarily be remanded to HRC. She added that the HRC was also working on a Work Plan. Vice Chair Mauter requested that staff make a recommendation on the topic that the Commission could vote on. Ms. Nose thought the question was whether staff should spend time on analysis above and beyond what was required for ADA accessibility. She thought the vote by the UAC would be whether to recommend to Council spending time and resources to serve disadvantaged populations over the course of the next 12 months. Commissioner Gupta stated that the text of the proposal was more specific to the Utilities except for maybe the facilities point. He questioned if it could be requested that Council broadly view it and send it to HRC. Vice Chair Mauter asked if Commissioner Gupta was withdrawing the proposed topic and that it instead be submitted to Council separately for them to direct it the HRC. Commissioner Gupta confirmed that was correct but that maybe it be phrased that some commissioners were interested in the topic but maybe the more appropriate place would be to look at it citywide and that the HRC might be a better place to do that. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 23 of 38 Mayor Lauing suggested that the UAC staff liaison talk to the HRC staff liaison to see if there was interest in addressing it. Vice Chair Mauter recommended that Commissioner Gupta withdraw the proposed topic and that it be noted that the respective representatives would be in touch. Commissioner Gupta agreed to do that. Vice Chair Mauter addressed Number 8, Data Center Competitiveness. Mr. Kurotori voiced that they were very interested in exploring options for data centers to come to Palo Alto. However, he detailed why it was not a suitable item for a 1-year work plan, although there may be future discussion of incremental items related to it. He noted that the item may not be in the interest of daylighting, etc. Commissioner Philips mentioned that he was one of the sponsors for this. He understood that accommodating a large data center would be a substantial investment of staff time. He questioned if the City should be proactive in trying to attract data centers. He wanted to know at what point data centers would be good for rates and at what point they would not be. He understood that the City would work out the details if someone showed an interest, which he thought would put the City in an unprepared position. He asked if getting one would be good or neutral. Commissioner Metz understood that staff did not have the resources to address it at the speed portrayed. The solution may be to do the intro, and he questioned if that would be acceptable. He understood that there had not been preparation to deal with this. Vice Chair Mauter stated that data centers were one of many of future large loads that would come into the grid, and she thought there had been general and consistent interest by the UAC to have greater clarity of how load growth would likely impact rates, which would inform decisions about attracting load-consuming customers. Mr. Kurotori stated that it tied into the efforts the UAC were already engaged in. They were talking about the second transmission quarter bringing in additional capacity from theCAISO to Palo Alto. The City’s peak was around 170 megawatts, and the data centers on a smaller scale could be 10-20 megawatts, which would be a significant load, so staff would have to look at the transmission corridor and integrate it in the grid modernization. He thought it could be integrated as part of the grid modernization and looking at larger loads, not just data centers, which might be the size of impact they could evaluate as part of the workflow already occurring. Commissioner Tucher strongly supported Point 8, but he did not want to raise the bar too high. He voiced that data centers for the industry at large would drive electrification in America. On one hand, the UAC must be focused, knowledgeable, and fluent in the market potential of data Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 24 of 38 centers to drive the business. On the other hand, the City did not have sub 10-cent electricity, which was an argument for data centers being a pie in the sky. He did not know if the City should drive hard to attract data centers or if the City would ever have the wherewithal to attract them. He wanted assessment studies and he wanted to know why those interested in data centers in Palo Alto were interested in them being in Palo Alto. Mr. Kurotori understood that the UAC wanted a feasibility analysis, which would have to involve transmission planners, to look at the system and the ability to expand and the capacity the City could build. He thought that would be helpful for the UAC to understand the available capacity. He discussed Palo Alto having limitations. If there were to be data centers with AI or advancements in autonomous vehicles, Palo Alto would have to be close to the data. He believed staff could do a feasibility analysis to look at the size and scale that would fit in Palo Alto. Commissioner Tucher felt that a market demand assessment should come before that to identify potential customers. He wanted to know who had interest. Commissioner Philips asked if data centers would be a good thing for residential customer rates and if it would be good to a point and what it would take to do it. If it would be good and it could be done at a reasonable price, he wanted to know if there would be a market for it. He did not want a detailed technical study, and he did not think individual customers needed to be identified. Vice Chair Mauter inquired if the submitting commissioners wanted a special agendized topic on data centers or if staff should comment on the items raised in the context of grid modernization, time-of-use rate, electricity rate setting over the coming year, etc. Commissioner Gupta requested that the language he submitted be displayed. The purpose of it was the market analysis and comparing competitive advantages more than the technical side. He wanted to know if there was a class of customer Palo Alto could attract. He thought capacity should be reviewed second. He wanted to see a dedicated agenda item on the topic related to the market analysis, the technical options, and at what point it would be advantageous and at what point would it not be. Chair Scharff stated that putting something in the Work Plan meant the UAC would have the authority to work on it but not that it would be worked on. He found that Commissioner Philips narrowed the topic to doing a first step this year. He wanted to know if data centers would lower the rates for Palo Alto customers and, if so, how many megawatts of data center would not lower rates or if data centers would always lower rates. He asked staff if it would be too much work to start the process Commissioner Philips spoke to. Ms. Nose replied that the proposed topic had a 12-month detailed plan, which she outlined, and before embarking on those activities, staff wanted to understand if it could be supported with the current system. She thought Chair Scharff’s proposal was feasible. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 25 of 38 Mr. Kurotori confirmed that Chair Scharff’s proposal was feasible. They could go through the process. He had worked with several data center developers and the first question was power availability and when could it be obtained, so staff needed to do that homework in order to have effective communications. Staff could look at resources, system limitations, and if it would be of value to the City and bring it back to the UAC. Commissioner Tucher stated that when the time was right he would move to do more than just answer the question of data centers being good for consumers but to also do the market analysis. If Mr. Kurotori had had conversations with potential customers, he suggested that he summarize what he knew. He wanted to soon have an agenda item on what was known about data centers, specifically the market potential and how it would affect consumer rates. Commissioner Gupta expressed that Commissioner Tucher’s proposal was adequate to vote on. Vice Chair Mauter remarked that she had heard 2 things – a market analysis and the impact on consumers as a separate agenda item and whether it would be a separate Work Plan item could be debated later. Chair Scharff had heard from staff that they would be amenable to determining whether data centers would make financial sense and the impact on rates and that they did not have time to do the broad process outlined on the screen. He felt that Commissioner Tucher wanted to make a motion to do the broad process. Commissioner Tucher responded that he did not want to do the broad process but just the market analysis, which may be summarizing what the Utility team already knew. He wanted to understand the demand potential for data centers. Chair Scharff questioned if staff had concerns with broadening it to what Commissioner Tucher voiced. Mr. Kurotori replied that staff could support determining whether data centers would make sense. In terms of market availability, a consultant may be needed, which they saw as a separate item. He wanted to answer first whether it would make sense and, if so, then bring it back to the UAC to do the next step of the market analysis. Commissioner Tucher wanted to know what potential customers had voiced to Mr. Kurotori or others, which should not require additional market research. Chair Scharff noted that there should be a vote. He thought it would be fine to put data center competitiveness in the Work Plan and for staff to tell the UAC at some point during the year whether data centers would raise or lower residential rates and at what megawatt levels it would make sense and not make sense, and after gathering that information, the UAC could Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 26 of 38 determine whether staff should hire a consultant, etc. He would support that if that was what staff was referring to. Mr. Kurotori stated that staff could support the first and second one. It was necessary to determine whether it made sense to have data centers in Palo Alto and whether it would increase or decrease rates before pivoting to the short term. Commissioner Philips supported that and would love to put it in a motion. Vice Chair Mauter agreed. Chair Scharff wanted it to be put in a motion. Vice Chair Mauter called roll to get commissioners’ opinions, and all commissioners voted yes. She could not let the particular language move forward because there was a question as to how exactly it would be represented in the Work Plan. It was clear that an agendized item was desired. Information was displayed on the screen, and she asked if it was acceptable to everyone rather than trying to revise the Work Plan submission made and have it as a separate Work Plan item. Chair Scharff supported the language on the screen. Vice Chair Mauter suggested that while agendizing data centers, it would not include a separate data center competitiveness item in the Work Plan, so that proposal would be withdrawn. Commissioner Tucher asked if [inaudible 3:51:08]. Vice Chair Mauter answered yes. She addressed Number 9, Microplastics and Forever Chemicals in Water Supply. Matt Zucca, Assistant Director of Utilities Water, Gas, and Wastewater Operations and Engineering, stated that he shared the Commission’s interest in the topic, and it was being monitored carefully. They had sampled for PFAS, and PFAS had not been detected in any surface water, so there was no data to suggest that anything needed to be investigated. He explained that the microplastics topic was scientifically very much in its infancy. In 2022, the State of California issued an order for many of the Bay Area water suppliers to sample surface waters for microplastics, and the results were expected at the end of this calendar year. He thought information would be received within the next year that would inform what might need to be done going forward. Independent monitoring of the water would be redundant to San Francisco’s efforts and maybe premature. Staff suggested waiting for the data to come in and then to reevaluate. He would have to defer to Public Works regarding wastewater. Commissioner Gupta voiced that he had submitted it. He thought there was an interest in studying the issue. He believed the objective of the topic was to make sure the community Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 27 of 38 understood the water supply and the wastewater. He wanted to do testing to be able to consider new information as it came in. He noted that a lot of the infrastructure upgrades were introducing plastic components in the water and wastewater lines and there was growing science with respect to that. He wanted to get in front of the issues and understand them before they potentially became an expensive concern. Mr. Zucca remarked that generally water quality data was collected when there was a defined public health goal. There was no current public health goal for microplastics, and there was not sufficient science to develop one. They could collect numbers, but there was no ability to interpret them. Staff recommended waiting for larger players to collect data and for the science to evolve. Vice Chair Mauter wanted to know if water quality broadly remaining to be a key priority would be acceptable to staff. Mr. Zucca stated that was acceptable. If more information was received, they would be happy to return and present the findings. Commissioner Gupta was happy with the broader topic. He thought water and wastewater testing should start in Palo Alto so there would at least be data. Vice Chair Mauter was not comfortable voting on a direction to start testing now, but she was happy to include water quality as an item on the Work Plan and to revisit the need for that and the science data when it came forward. She stated that Commissioner Gupta could withdraw it or there could be a vote to include it in the oversight of the Water Utility. Commissioner Gupta inquired if the topic was included in the general topic. Commissioner Croft answered that it was a compromise staff was comfortable with. Commissioner Gupta wanted to vote because he had spoken to many residents who wanted the information. Commissioner Croft queried if Palo Alto’s water would be different than the water that had been tested. Mr. Zucca replied that conceptually Palo Alto’s water would not be different than the water that had been tested. In the absence of knowing exactly where they were sampling, he could not provide a specific opinion, but he assumed San Francisco would collect a representative sample of the watershed. He thought it would be a good starting point. He discussed the sampling for microplastics not being simple, and he did not think the City had the internal technical skills to do it, and they would have to determine how to start the sampling. He thought the forthcoming data would give them a good idea and that they could evolve from there. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 28 of 38 Vice Chair Mauter took a vote to recommend that proposed Topic Number 9 be adopted in the Work Plan. Commissioner Gupta clarified that it would not include wastewater. Vice Chair Mauter stated that wastewater was not in the domain of the UAC. She voiced that following the accessibility recommendation, there could be a discussion with the Public Works liaison. Mr. Zucca would be happy to interface with Public Works and report back. Vice Chair Mauter took a straw vote on Work Plan Item Number 9, Microplastics and Forever Chemicals in Water Supply and Wastewater. A yes vote would indicate a desire for the distinct Work Plan as currently presented. If voting no, Commissioner Croft’s recommendation would move forward to include the water quality component only into the standing topic. She declared that there was 1 yes vote, so it would not be on the Work Plan for this coming year in distinct form but water quality would be included in the oversight of the Water Utility. She moved to Number 12, Stanford Interconnection. Ms. Nose suggested moving straight to a straw vote. Staff had suggested changing the language of Commissioner Croft’s proposal to read second transmission corridor instead of reading second transmission line. Commissioner Croft’s language was furnished on the screen. Vice Chair Mauter requested that the second transmission line be modified to read second transmission corridor. Commissioner Metz, as one of the authors, addressed the second transmission line/corridor. He was amenable to including it with the insertion of specifically the Stanford corridor. He discussed the important technical reason for doing that. He wanted to explicitly consider the option of a transmission tie-in that is connected elsewhere than the transmission line along the bay (where CPAU currently ties in). Vice Chair Mauter disclosed that she was a faculty member at Stanford and at SLAC where the interconnect laid, so she had a potential conflict. She announced that she would not vote, but she thought she could still Chair. Commissioner Croft questioned why the Stanford item was strongly [inaudible 4:05:56]. Mr. Kurotori replied that the Stanford item had been pursued for about 10 years with Stanford. The item had been returned to Council in terms of not being able to move forward, and it pivoted to looking at a second transmission corridor in connection with CAISO, so they had done some studies and they were moving forward. They hoped it would be scheduled to go to the CAISO in the next month or so and that they would have good information to bring back. The study gave diversity in terms of the connection points, which he elaborated on. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 29 of 38 Chair Scharff stated that staff had been talking with Stanford for at least 20 years and Council had looked at it, and there was no deal to be had for years. It would be great to get a deal with Stanford, but it did not appear that it would happen soon. He commented that it should not be a separate callout. If the situation changed, he thought staff would address it. He expressed it would be great to get a second line and that staff was already working on it. Mr. Kurotori stated that it could be brought back into the 1-year time frame of the Work Plan. Vice Chair Mauter called for a straw vote. A vote of yes would maintain the Item Number 12 proposal as it was. A no vote would support using the language in Commissioner Croft’s revisions to the existing Work Plan. Commissioner Gupta noted that he was one of the authors of the Work Plan. He had looked into the timing of negotiating with Stanford, and it seemed that they suffered a fairly major power outage afterward. He remarked that maybe it did not need to be a dedicated callout. He suggested that staff reach out again to see if there was any interest on Stanford’s side. Ms. Nose replied that staff would be happy to raise the UAC’s interest with the Stanford liaison. Other than that, she did not see any further work being fruitful. Vice Chair Mauter called for a hand vote. A vote of yes would be for a separate dedicated work plan. A no vote would move forward Commissioner Croft’s specific highlighting of a second transmission corridor. Commissioner Metz thought the first option was to have a callout within the language of the Croft document. Vice Chair Mauter asked if it was adequate. Commissioners Metz, Croft, and Gupta answered that it was adequate. Vice Chair Mauter withdrew Item Number 12 and declared that a vote would not be held. She stated that 9 other items were submitted as discrete proposed topics, and the majority of those had been included in Commissioner Croft’s revisions with the exception of Items 3, 4, 5, and 7. She noted that 3 had already been covered. She requested that staff comment on Item 4, Regional Collaboration on Water Supply. She stated that staff had not provided guidance on their sense of resource adequacy within staff employee time and/or interface between this proposed recommendation and the role of [Rosqua 4:13:09] and Council. Ms. Nose stated that it could not be worked in because it was part of the work underway, which she explained. Staff would be forwarding to Council the work done by the UAC last month, and she thought that accomplished the step that the UAC could make at this time in alignment with what short term 6 through 12 was. To go beyond that work, she thought the Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 30 of 38 path direction the UAC had given to staff would be important, but otherwise that was why staff had said it was underway and why the UAC had taken the initial steps. Vice Chair Mauter inquired if it should be included on the Work Plan or if the UAC felt it was already adequately represented and could make its way onto the agenda through the general Water Utility topics. Commissioner Gupta mentioned that he was one of the commissioners who had put it together. He noted that there were longer-term elements that could be considered and discussed, but he was happy to wait to see how the current efforts progressed. Commissioner Tucher voiced that it would be interesting to hear Vice Chair Mauter comment on the importance of a regional approach. Vice Chair Mauter strongly believed in a regional approach. She opined that it was included by the Water Utility’s mission [space 4:16:14] and oversight. Responsible oversight over the Water Utility required taking the regional perspective. Calling it out separately was confusing, and she thought the letter by Commissioner Tucher and the letter by herself and Commissioners Philips and Gupta provided a nice set of action items that the UAC could continue to build on. She suggested that the topic be withdrawn, and she saw no objections, so the topic would not move forward. She addressed credit card fees. Ms. Nose recommended modifying the language provided by Commissioner Croft. When speaking about annual budget, it said to include time of use rates 10 and review credit card fees for FY2027. Vice Chair Mauter wondered if the time of use rates belonged under the electricity supply. She wanted to see time of use rates in water supply, but she did not think it would happen in her lifetime. Ms. Nose stated that they [could put 5 on that 4:18:13]. Vice Chair Mauter understood from the last meeting that there was a wholehearted embrace of opportunities to further pass along fees that were not helpful in rate setting. She wanted there to be, at least, a staff report on where they had gone with it. She asked if this was adequate coverage or if there should be a separate work item on credit card fees. Commissioner Croft inquired if there was an opportunity to do something sooner than 2027. Ms. Nose responded that the rates for FY2026 were being set now, which was why 2027 was referenced. Changes to the rate setting would likely not happen until the next cycle. Vice Chair Mauter thought off-cycle review was possible, and she questioned if a midyear review should be done. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 31 of 38 Ms. Nose answered that staff would likely do the analysis off cycle and return to the UAC for discussion, and then the UAC could choose to do an off-cycle rate change or roll it into the coming year. Commissioner Philips inquired if it would be a rate or a policy change. Ms. Nose replied that it could potentially be both. They could remove the dates. Chair Scharff understood that staff would do the work and that the UAC would vote on it at some point and possibly ask Council that people pay their own credit card fees. It made sense to add this separately since staff would do the work anyway, but he was not opposed to putting it in the way it had been done. Vice Chair Mauter wanted to take a straw vote, and she asked for expressions of strong opinions either way prior to the vote. Commissioner Gupta supported including it separately because it seemed to be a quick win and it was already being done. Vice Chair Mauter stated if it was to be included separately that it would be important to look at the language already in the Work Plan. In its current form, it suggested that it would be implemented in the next 3 to 6 months, although staff stated it was not feasible and, as a result, it was not possible to do the medium-term goal. She needed a proposal to revise it or to move forward with Commissioner Croft’s language. Chair Scharff proposed to revise it. He moved that it say staff would return and give an analysis with the necessary information to make a recommendation to Council that customers using credit cards pay their own credit card fees. Commissioner Philips argued for including it. It seemed unusual to have it singly called out. Chair Scharff agreed. He wanted it to return to the UAC. Vice Chair Mauter declared that it would be included. She trusted that staff, the Chair, and Vice Chair would make sure it would be agendized. She moved to Item 7, Federal Issues and Collaboration. Ms. Nose noted that it was Topic 7 in the UAC’s Work Plan. Vice Chair Mauter stated that it was specifically duplicated. She thought what the commissioners submitted contained more color. She requested that staff comment on the feasibility and appropriateness of the specific action items. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 32 of 38 Ms. Nose thought the additional information proposed was helpful feedback for staff to consider in the Federal and State legislative advocacy efforts. However, she thought it dipped into the operations of how business was done as opposed to the outcome, which was monitoring major federal items as they came down. A legislative session with the UAC may be helpful. She felt the topic as previously written was specific enough for the policy level work the UAC should do. Commissioner Gupta voiced that he had submitted it. He thought a legislative session with staff would handle the pursuits of the Work Plan. He would withdraw the topic unless commissioners felt it should be included. Vice Chair Mauter heard no requests to include it, so Item 7 was withdrawn. She did not believe Item 6 was subsumed, which was distinctly called out in Commissioner Croft’s proposed revisions. She requested that those proposed revisions be displayed. It appeared that the end of the document was a generalized version of the time line and priorities. Ms. Nose thought Commissioner Croft’s language was a better approach than wordsmithing the specific proposed topic. If the UAC chose that path, the only edit should be to specifically say metrics affecting City decision instead of details affecting City decision, which she elaborated on. She suggested using the higher-level one and staff filling out some of the additional details in the item to Council. Vice Chair Mauter commented that it was bizarre that there was not a specific Work Plan item for fiber. She appreciated the recommendation to have a specific standing topic for fiber, and she thought staff’s reflection on what that standing topic should include would be helpful. Commissioner Gupta was happy with the general language as long as it informed the approach moving forward. He noted that there was a lot of focus from the residents on the pilot and the metrics used to make a decision. Commissioner Metz asked when the Fiber Utility was last agendized. Ms. Nose did not recall when Fiber Utility was last agendized. The rates would be done in May or June. Commissioner Croft mentioned that fiber had been covered in the Budget Subcommittee meetings. They wanted to see the metrics from the pilot to justify it paying itself back. Vice Chair Mauter stated that she had heard from the Commission that staff should add a standing topic item related to Fiber Utility and that metrics from the pilot should be included to decide whether to move forward. She asked that the change in the wording be made on the other document. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 33 of 38 Ms. Nose stated that staff had 2 minor edits to what was before them. They would remove the second white section on the far right related to recycled water and the purple pipe. Ms. Nose suggested, under Reliability, Resiliency, and Adaptation under the CIP projects, that it specify that the emergency preparedness would be an emergency preparedness plan for Utilities as it would not be under the UAC’s purview to do the broader citywide EOC. Vice Chair Mauter requested that the section related to recycled water and the purple pipe section remain so they could be updated on recycled water but not purple pipe. She agreed with specifying that the emergency preparedness would be an emergency preparedness plan for Utilities. Vice Chair Mauter stated that the remaining items were 1, 10, 11, 13, and 14 and that many of the items were reflected in Commissioner Croft’s edits. She noted that staff had described Number 1 as being subsumed by Topics 8 and 9. Commissioner Metz felt that a detailed transition strategy and plan was needed for Topic 1, which should address a time line up to about 20 years. He recommended that it not be relegated to be a small part of 2 other topics. Vice Chair Mauter asked if it should be a distinct item in a Work Plan as a separate topic or if it should be prioritized to be agendized in the next 12 months. Commissioner Metz considered this to be one of the top 2 or 3 strategic items facing the CPAU, which deserved focus. Commissioner Philips concurred because there was not a current strategy. Vice Chair Mauter requested that staff look at the language and some of the time line things. Related to the gas standing topic, she stated that there was an objective to be 10 percent below PG&E, which the City was not. Mr. Zucca stated, regarding the gas item, that staff planned to bring an item before the Commission in the late summer or fall. He explained that they were currently doing a model of the system, which needed to be the first step. It was at the front of what they were working on. There was an item on the agenda this year to at least bring back the modeling results to show the physical side of the infrastructure. Vice Chair Mauter asked if staff would be willing to develop a distinct Work Plan item that would align with the modeling topic and/or a couple of the things listed. She did not find it realistic to cover all on the list. Mr. Zucca did not believe staff would be able to address all the items on the list this year. He added that some of the elements tied into the S/CAP, Cap-and-Trade money, etc., which was complicated, so staff was trying to divide it and start with the physical part of it and the Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 34 of 38 estimated cost to define different approaches. He thought staff planned to address all the items on the list but probably not on that timeline, at least not until there was more resolution of what the future system would look like and what the cost of it would be. It would be helpful to remove the time line. Commissioner Metz stated that there were important operational issues but that there were also important external forces that he did not hear addressed, and he found assessing such to be critical. Mr. Zucca agreed that it was a financial problem, not an engineering problem. He added that S/CAP and Finance would be involved in analyzing it. Ms. Nose noted that the UAC’s work should follow the S/CAP plan. She did not think staff had reconciled the necessary level of detail to see the congruencies or incongruencies between the S/CAP plan and this. Vice Chair Mauter asked if aligning it with the S/CAP plan could be deferred to staff. Commissioner Metz remarked that the long-term plan for the Gas Utility needed to take the S/CAP plan into consideration, although there were other important drivers that the City did not control, which were the worrisome ones in terms of the strategy. He did not agree with this being a subset of the S/CAP. Vice Chair Mauter wanted staff to determine if there was misalignment between the current text and the S/CAP goals. Commissioner Metz agreed with that with the understanding that the UAC and S/CAP could be aligned without the rest of the world liking what was being done. Vice Chair Mauter stated that in adding it to the Work Plan it could be more generally deferred to staff to populate it or all the detail could be included, minus dates, giving staff the liberty to align with S/CAP goals. Commissioner Metz would accept that or there could be a sidebar with staff in the next few weeks. He agreed with removing the dates. Commissioner Gupta suggested adding the text aligning with S/CAP and removing the time. Vice Chair Mauter suggested there be a vote while giving staff a little editing liberty. As yes vote would add it to the Work Plan, and a no vote would subsume it under topics 8 and 9. She declared that it passed as a distinct Work Plan item. She noted that Commissioner Croft had submitted Numbers 10 and 11 and incorporated it into her revised text. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 35 of 38 Commissioner Croft stated that she submitted the Time of Use rates suggestion. She suggested subsuming it. She voiced that it could read “Electric” Time of Use rates. She was interested in withdrawing Number 10. Vice Chair Mauter declared that Number 10 would be withdrawn. She addressed Number 11, Demand side management. Commissioner Croft stated that she submitted Number 11, and she was interested in putting clearer metrics around what was trying to be achieved with efficiency efforts and demand side management programs to handle peak rates. She wanted to see metrics and reports against metrics. She was amenable with subsuming the item under Reliability, Resiliency, and Adaptation, and she noted that she had included “and annual discussion of efficiency programs, demand side management, and performance against plan”. Vice Chair Mauter declared that the proposed revision to the standing topic was acceptable to staff and that it would be withdrawn. She addressed Number 13, Emergency Preparedness, which was included in Commissioner Croft’s proposed revisions. Commissioner Croft stated it was under Reliability, Resiliency, and Adaptation and that it had been edited to say “including Utility’s Emergency Preparedness Plan.” Ms. Nose preferred what Commissioner Croft identified and to include it as part of the Resiliency, Reliability, and Adaption item to appropriately align conversations and resources. Vice Chair Mauter asked for comments related to it being a distinct Work Plan item. Commissioner Metz explained why he was concerned with it falling through the cracks. He recommended that the CPAU work with the OEM on the EOP update and that the CPAU and UAC address CPAU preparedness as a separate topic, including getting on the same page with OES in defining an emergency and coming up with options for what CPAU’s response could be and letting Council decide what should be signed up for. He felt it was important to address it as its own topic. Vice Chair Mauter stated that it could be included as part of a reliability and resilience topic or separately included in the Work Plan. She wanted to vote on it being separately agendized if staff had no concerns with the language. Ms. Nose thought it was operational in how it was written. Ensuring that CPAU and OES were coordinating on the items was the responsibility of the City Manager, and different departments would have different plans to support different phases of an emergency. She thought interest in understanding the totality of the ecosystem bordered on not being within the UAC’s purview. As written, it provided a lens that dug into how the City worked operationally between departments. It was within the UAC’s purview to understand the plans, Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 36 of 38 how they would fit into the broader context of the organization, and the areas of risks that further investments needed to be made in. Commissioner Metz understood from the City Charter that this was an important plan and program of CPAU and appropriate for the UAC. Vice Chair Mauter agreed. She thought the language in the item may be causing Ms. Nose some anxiety. She voiced that Commissioner Metz had repeatedly requested the topic be agendized, which she did not want to discount. She inquired if it would be possible to include it in Reliability and Resiliency while recognizing that it would be important to agendize it this year and that when agendized there should be reference points to ensure that that key features would be covered. She inquired if it should be subsumed into Reliability and Resiliency while making sure that Emergency Preparedness would be agendized in the coming 12 months. Commissioner Metz wanted measures of success incorporated in that. Vice Chair Mauter requested that staff refer back to this discussion when agendizing it. She wanted to hold a formal vote to have a separate agenda item or to move forward with Commissioner Croft’s recommendation to subsume it into Resiliency and Reliability. Commissioner Metz agreed to subsume it with the understanding that the measures of success 1 through 4 would be added to Commissioner Croft’s submission. Ms. Nose stated that the 4 measures of success could be included as topics and areas that would be measured as a successful conversation and outcome. Vice Chair Mauter expressed that the measures of success would be added to Commissioner Croft’s language. Commissioner Gupta, as a fellow sponsor, agreed with that. Vice Chair Mauter moved to Number 14, Grid Modernization Strategy, which was a separate topic. She voiced that Commissioner Croft suggested it be represented as part of the electric supply. Commissioner Croft read a few more things that she had added, which would ensure that the City would think about and talk to the UAC about innovations to enable a smarter grid. Commissioner Metz felt it needed to go further and that it was important to specifically address outside factors and the specifics in the plan and that the UAC needed to be able to address the forces driving grid mod and the strategic and financial details, which he did not feel were adequately addressed in the document. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 37 of 38 Commissioner Croft stated that it may warrant its own item, but she was concerned about being too specific in what was being asked for, so she wondered if the topic could be generalized as a separate item if subsuming it did not call it out enough. Vice Chair Mauter called a straw vote and asked commissioners to raise their hands if they wanted to separately agendize the item and to not raise their hands if moving forward with Commissioner Croft’s revised text was desired. Commissioner Tucher wanted to agendize it but he was happy with the text, and he questioned if that was at odds. Vice Chair Mauter stated that inclusion in the Work Plan was distinct from agendizing. She stated that the Work Plan was complete. Review of the Gas Utility and Fiber had been added, and many of the existing standing topics had been substantially revised. She stated that there was a complete and thorough description of the topics that the Chair, Vice Chair, and staff could agendize over the coming year. She requested that staff pay attention to the content in the Work Plan so that topics brought forward would address the core issues the UAC cared about. She took a vote to approve the final plan, which she declared was unanimous. ACTION: Item 2 [inaudible 3:06:38]. Item 3 was withdrawn and the respective representatives would be in touch. While agendizing data centers, it would not include a separate data center competitiveness item in the Work Plan. Work Plan Item 9 would not be on the Work Plan in distinct form for this coming year, but water quality would be included in the oversight of the Water Utility. Item Number 12 was withdrawn. Item 4 would not move forward. Item 5 would be included and return to the UAC. Item 7 was withdrawn. Staff would add a standing topic item related to Fiber Utility, and metrics from the pilot would be included to decide whether to move forward. Item 1 passed as a distinct Work Plan item. Numbers 10 and 11 were withdrawn. Regarding Topic 13, measures of success would be added to Commissioner Croft’s language. Item 14 [____ 5:05:48]. The Work Plan was completed. Review of the Gas Utility and Fiber had been added, and many of the existing standing topics had been substantially revised. The UAC unanimously voted to approve the final plan. FUTURE TOPICS FOR UPCOMING MEETINGS ON (May 7, 2025) AND REVIEW OF THE 12 MONTH ROLLING CALENDAR Vice Chair Mauter stated there were many topics for upcoming meetings. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS Commissioner Tucher voiced that he had visited the Water Temple. Vice Chair Mauter commented that she would be in Sacramento tomorrow speaking on water desalination in the State of California. Utilities Advisory Commission Minutes Approved on: June 4, 2025 Page 38 of 38 ADJOURNMENT Vice Chair Mauter moved to adjourn. Chair Scharff seconded the motion. The motion carried 7-0 with Chair Scharff, Vice Chair Mauter, Commissioners Croft, Gupta, Metz, Phillips, and Tucher voting yes. Meeting adjourned at 11:00 p.m. ACTION: Regarding the Utilities Advisory Commission FY 2025-2026 Work Plan (Agenda Item 5), the following outcomes were determined for the proposed topics: •Work Plan Topic 1 (Long-term Natural Gas Utility Strategy): This topic passed as a distinct Work Plan item, with modifications to remove specific dates and ensure alignment with SCAP goals; sta> was given editing liberty while preserving the topic's intent. •Work Plan Topic 2 (Feasibility of Purple Pipe Expansion): This topic was eliminated by vote after discussion. •Work Plan Topic 3 (Universal Access): This topic was withdrawn by the submitter with the understanding that UAC and Human Relations Commission (HRC) liaisons would discuss the topic’s appropriate placement. •Work Plan Topic 4 (Regional Coordination on Water Supply): This topic was withdrawn by the submitter, as recent UAC e>orts had addressed much of its intent. •Work Plan Topic 5 (Credit Card Fees): This topic was subsumed into the revised Annual Budget standing topic, with the understanding that sta> would conduct an analysis and the item would return to the UAC for discussion. •Work Plan Topic 6 (Fiber Utility Pilot Review): This topic was approved to be a new standing Work Plan topic; the language will include 'metrics' for evaluating the pilot program to inform the City's decision to move forward with a full rollout. •Work Plan Topic 7 (Federal Issues and Collaboration): This topic was withdrawn by the submitter, with the understanding that a legislative session with sta> would occur to cover these matters. •Work Plan Topic 8 (Data Center Competitiveness): This topic will be addressed via a future agenda item but was not added as a separate Work Plan item; it was subsumed under the revised 'Electric system and supply' standing topic. •Work Plan Topic 9 (Microplastics and Forever Chemicals): This topic will not be a distinct Work Plan item. Its water quality aspect was subsumed into the revised Water Supply standing topic. Sta> will interface with Public Works regarding the wastewater aspect and report back to the UAC. •Work Plan Topic 10 (Time of Use Rates): This topic was withdrawn by the submitter and its focus on electric time of use rates was subsumed into the revised Annual Budget standing topic. • Work Plan Topic 11 (Demand-Side Management): This topic was withdrawn by the submitter and subsumed into the revised Reliability, Resiliency, and Adaptation standing topic, with its detailed points to inform future discussions. • Work Plan Topic 12 (Stanford Interconnection): This topic was withdrawn. It is understood to be covered under the 'second transmission corridor' language within the revised Electric System and Supply standing topic, and sta> will raise UAC interest with the Stanford liaison. • Work Plan Topic 13 (Emergency Preparedness): This topic was subsumed into the revised Reliability, Resiliency, and Adaptation standing topic. The four measures of success outlined in the original proposal for this topic will be added to the revised standing topic's language to guide future discussions. • Work Plan Topic 14 (Grid Modernization Strategy): This topic was subsumed into the revised 'Electric system and supply' standing topic, which includes grid modernization. The FY 2025-2026 Work Plan was completed. As noted, new distinct standing topics for the Long-term Natural Gas Utility Strategy and the Fiber Utility Pilot Review were added, and many of the existing standing topics were substantially revised to incorporate other proposed items. The UAC unanimously voted to approve the final revised Work Plan.