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HomeMy WebLinkAbout2025-06-04 Utilities Advisory Commission Summary MinutesUtilities Advisory Commission Minutes Approved on: Page 1 of 10 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF JUNE 4, 2025 REGULAR MEETING CALL TO ORDER Chair Scharff called the meeting of the Utilities Advisory Commission (UAC) to order at 6:04 PM Present: Chair Scharff, Vice Chair Mauter, Commissioners Croft, Gupta, Metz, and Tucher Absent: Commissioner Phillips AGENDA REVIEW AND REVISIONS None ORAL COMMUNICATIONS Public Comment: Peter D. spoke about the One Water Plan saying it was based on a false premise. A letter had been sent to SFPUC with no response. The hope was that the BAWSCA Board Policy Committee would take up the issue at the next meeting. Public Comment: Dave W. mentioned sharing letters such as the response from SFPUC for transparency and good journalism. APPROVAL OF THE MINUTES ITEM 1: ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on April 2, 2025 Chair Scharff invited comments on the April 2, 2025 UAC draft meeting Minutes. Commissioner Gupta wanted an amendment to replace the current action section on packet page 42 in the minute with the proposed revised amendments on packet pages 44 and 45. A document was provided to show the transcript level support for the amendment. Vice Chair Mauter’s understanding of minutes is that they are supposed to be a direct recounting of what was actually said in the video and questioned the appropriateness of including an after the fact summary instead of representation of what was said. Vice Chair Mauter suggested adopting it as part of the work plan instead. Utilities Advisory Commission Minutes Approved on: Page 2 of 10 Kiely Nose, Assistant City Manager, explained the intention of minutes to be between a transcript and simple action minutes that summarizes the conversations that occurred. It was abnormal to include something like this but it was at the Commission’s discretion. Commissioner Gupta explained the amendment summarizes the steps that were taken with respect to the work plan in a minutes format. The provided extra document answers questions as to the backing of that and provide a transcript for those questions. Commissioner Metz wanted to replace “inaudible” on packet page 33, fourth paragraph from the bottom to say “option of a tie in as connected elsewhere than the transmission line along the Bay where CPAU currently ties in". Chair Scharff instructed that would be added since there were no objections. Commissioner Metz wanted to correct the sentence “he considered it to be a small part of 2 other topics” with “he recommended that it not be relegated to be a small part of 2 other topics” on packet page 38, fourth paragraph. Chair Scharff agreed to make that change since there were no objections. MOTION 1: • Vice Chair Mauter moved to approve the draft minutes of the April 2, 2025 meeting with attachment B. • Commissioner Croft seconded the motion. • Motion Carries 6-0 MOTION 2: • Commissioner Croft moved to approve the draft minutes of the April 2, 2025 meeting as amended. • Commissioner Metz seconded the motion • Motion Carried 6-0 UNFINISHED BUSINESS None UTILITIES DIRECTOR REPORT Alan Kurotori, Utilities Director, provided a highlight of some items that went to Council. On May 12, City Council had a study session on some of the S/CAP uses of potential funds for low carbon fuel standards, the electric and natural gas cap and trade and the public benefit funds. No actions were taken. This was informal sessions with City Council. On May 19, there was a contract with Anderson Pacific Engineering for the wastewater treatment plant advanced water purification system. It is about a $47 million contract to improve the water quality of recycled water, which will benefit the City of Palo Alto and Mountain View on recycled water quality to the customers. On May 27, there was a professional service agreement with Franklin Energy Services, LLC to do a turnkey home electrification program for advanced single family electrification funded through gas cap and trade reserves. This is one of the Sustainability Climate Action Plan goals and objectives to have this program move forward. Mr. Kurotori attended a data center Utilities Advisory Commission Minutes Approved on: Page 3 of 10 meeting at the City of Santa Clara. A study session was done with their Planning Commission on the large amount of data centers and growth within their city. They have 55 discrete data centers in their city limits. They are going through the impact of what that does to rates and how it impacts the connection fees. On May 22, the California ISO at the Board of Governors meeting approved the 2024-2025 Transmission Plan which included the new transmission line for the City of Palo Alto. That would connect PG&E’s switching station within the city limits to a substation in Mountain View at the NASA Ames substation. The city manager spoke at that meeting in support of this. The cost estimate for the project was between $42 and $84 million. That will be partially paid by Palo Alto as part of the transmission access charges and is also charged throughout PG&E service territory and northern California. It is a regional transmission project that benefits directly on Palo Alto. It reflects Palo Alto’s electrification, some of the growth in the data centers and technology centers in Palo Alto. It is estimated to come to Palo Alto in 2034. There will be discussions with PG&E on how to move that faster and other maintenance projects that could be fast tracked such that this project can move forward. Chair Scharff questioned why it takes so long. Mr. Kurotori explained transmission projects in California are challenging. This is actually very quick in terms of the approval process. Engineering evaluation of the existing towers has to be done. They have to go out and contract for this work for the improvements that have to be made on the switching station and the substation at NASA Ames. As part of the grid modernization, improvements will also be made to the Colorado receiving station to accept the new power. On behalf of the federal DOT, the CPUC did an audit of the natural gas distribution system. A survey was conducted onsite from May 12 to May 23. Palo Alto came favorably through the comprehensive review process. CPUC complimented Palo Alto on the preparation of staff, the availability and all the good work that was being done. Some preliminary notes were done that go to the federal government for them to evaluate and provide findings. No recommendations were found that were potential notice of violation. The Tower Well Park is going to be dedicated to Fred Eyerly on June 18. There would be opportunity for Chair Scharff to speak. There are a few other workshops on the Palo Alto website. Commissioner Tucher had questions about the second transmission line. Mr. Kurotori preferred to bring that back under grid modernization. Cal ISO authorized the project as part of the larger plan. Commissioner Croft had questions on the data center study session. Mr. Kurotori replied data centers are a flat and stable load. As part of the work plan, there was a specific question on data center competitiveness and ensured the Commission that outreach is being done to look at how it is affecting neighboring utilities, learning the best practices, how it is permitted and how it is approved. Commissioner Gupta asked questions about the subsidy for gas rates from the cap-and-trade reserve, fiber and the three consulting contracts before the City Council’s consent calendar on June 9. Mr. Kurotori responded it will go in front of City Council as part of the rate increase on June 16 per the direction of the Finance Committee. The report is one time and it is $1.1 million which is the assumption of completing a potential updated cost of service study that will come back to UAC for additional input to be finalized. The Colorado substation is in the floodplain. There is an issue in terms of keeping the height of the fiber hut outside the floodplain being looked at causing some delays in terms of the installation of the fiber hut. Information would be brought back on the timing and scheduling as it becomes available. A certain capacity of internal staff is provided that can do a lot of the distribution work to ramp up to do major capital projects. It is a series of projects not only in the distribution system but also in upgrading the key substations. Specialized consulting design services is used for that support. An RFP was done last year. A Utilities Advisory Commission Minutes Approved on: Page 4 of 10 robust selection process was conducted in concert with the administrative services department which came up with three consultants to serve some of those needs in terms of that consulting services who will do a myriad of technical engineering work associated with the grid modernization. It is typical of what is done in terms of hiring specialized consultants for this work and no different than the industry. (Update with Directors Report) NEW BUSINESS ITEM 2: City of Palo Alto Utilities Wildfire Mitigation Plan (WMP) 2025 Annual Update. ACTION 6:45PM – 7:30PM, Staff: Terry Crowley, Assistant Director of Utilities, Electric Engineering and Operations Terry Crowley, Assistant Director of Utilities, Electric Engineering and Operations, provided a slide presentation of the Utility Wildfire Mitigation plan including a background, required WMP contents, high fire threat district, 2025 WMP performance metrics, 2024 accomplishments and 2025 current year goals. In response to questions posed by Commissioner Croft about vegetation management and undergrounding equipment, Mr. Crowley explained with the investment of undergrounding, there would be a reduction in vegetation but there will still be costs related to managing the large urban forest of the rest of the city. The cost will be significantly reduced in the wildfire areas. The demarcation point between the utility and the customer is the meter so that would still be maintained. A visual patrol will still be needed for the undergrounding system. A detailed inspection of the undergrounding equipment is done every three years and vegetation still has to be cleared around those. There are plans to underground all the way to the meter and make sure the high voltage as well as low voltage secondary overhead is undergrounded. The goal is to have that finished by the end of this year. Additional capacity that would anticipate grid mod is being installed to accommodate future electrification. Commissioner Gupta had questions about vegetation management, the advanced distribution management system and the OES plan to which Mr. Crowley answered there are aesthetic and tree health concerns when trimming trees around lines. If a tree is directly underneath a power line, there is not a way to allow that tree to grow healthily around the power lines so it would typically be lopped off. If the tree is off to the side, they are going to cut a notch out of that tree to maintain that clearance. The City and the tree crews hired by the City have arborists who understand what the health of the tree requires. There is a balance between the health of the tree, the aesthetics and the public safety that tree trimming provides. The advanced distribution management system topic will come back to UAC in the future. OES works collectively with all the departments within the City. The Electric and Utilities Department is part of that. The plan before the Commission focuses on prevention, not reaction. There is collaboration within the City to manage the reactive portion. Mr. Kurotori added the departments were involved with OES in terms of the update to the Emergency Operations Plan. Utility provided comments to that. Internal comments were before it went out to the public. Commissioner Metz commented that CPAU should be a member of the Emergency Services Council. Mr. Crowley agreed to take that into consideration. Utilities Advisory Commission Minutes Approved on: Page 5 of 10 Commissioner Tucher had questions about the underground project in the foothills, transmission lines and tree trimming. Mr. Crowley explained city-owned utilities and fiber would be installed underground. PG&E and the phone companies will still have overhead lines in the area. Transmission lines in the areas would be PG&Es as well as there are other wood pole distribution lines in the area. Mr. Kurotori stated there are high-voltage lines and also some federal lines that go through there to serve Stanford. Mr. Crowley understood the City has an internal city crew that can trim trees but all of the high-voltage tree trimming is generally contracted out. Street trees in the downtown area would be outside the Utilities. Ms. Nose clarified it is one tree trimming contract that is used citywide; however, they do different services based on the needs of Utilities or Public Works. MOTION: The Utilities Advisory Commission Approves the 2025 Wildfire Mitigation Plan Vice Chair Mauter moved Commissioner Tucher seconded Motion Carries 6-0 ITEM 3: Resolutions Amending the Amended and Restarted Water Supply Agreement Between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County and Approving the Updated Tier 2 Drought Response Implementation Plan; CEQA Status: Not a Project ACTION 7:30PM – 8:15PM, Staff: Karla Dailey, Assistant Director of Utilities, Resource Management Division Karla Dailey, Assistant Director of Utilities, Resource Management Division, provided a slide presentation about amendments to the Water Supply Agreement with San Francisco Public Utilities Commission and a new and updated Tier 2 Drought Allocation Implentation Plan including an agenda, key elements of the Water Supply Agreement between San Francisco and the wholesale customers, proposed amendment to the WSA that modifies the minimum purchase requirement, 3 elements of the minimum purchase amendment, minimum purchase requirement amendment impacts, Tier 1 Allocation Plan, shortages on the Regional Water System governed by two plans, Tier 1 Family Plan, update to Tier 2 Drought Allocation Implementation Plan, Tier 2 policy principles, Palo Alto customer will experience same water use restriction with new Tier 2 Plan and the recommended motion. Public Comment: Peter D. encouraged the Commission to continue this item until the next meeting and commented that the Tier 2 is not necessary. Public Comment: Dave W. agreed with waiting until after the BAWSCA Board Policy Committee meeting to decide whether to approve the WSA. Public Comment: Tom S., General Manager of BAWSCA, clarified that Mountain View will be billed for the extra water they are not using as of July 1. BAWSCA is trying to get all agencies to approve the Water Supply Amendment and the Tier 2 Plan as soon as possible. The end of the year is not the target. Commissioner Tucher wanted more information about Mountain View. Ms. Dailey responded they are one of the four agencies in the agreement that have this requirement to take a minimum amount of water because they are connected to Valley Water’s system. The minimum quantities were set at a time when they were using much more water. It is a take or pay provision in the contract. They are investing Utilities Advisory Commission Minutes Approved on: Page 6 of 10 in recycled water because they have a Council dedicated to sustainability. Despite the fact that they are paying penalties, they are still moving forward with their investments in recycled water. Commissioner Gupta had comments about supporting tabling this until more information is received on prior requests. Vice Chair Mauter emphasized that alternative water supplies come in many flavors and it was worth differentiating between alternative water supply projects seeking to produce potable water often at high cost and other projects producing non-potable water often at significantly lower cost. It is important to differentiate between longstanding efforts to negotiate this agreement and the more recent concerns the Commission and BAWSCA members hope to bring to SFPUC. She stated her opinion that holding this agreement hostage for the purpose of extracting information from the SFPUC is inappropriate. Not passing the agreement would be handing SFPUC a victory. Vice Chair Mauter encouraged the Commission to act on the agreement in a timely manner and did not think a delay would yield the outcome being sought. Commissioner Tucher took the positions that there was no urgency to make the decision. It is about signaling to BAWSCA the importance of getting BAWSCA-wide support for getting answers from SFPUC on these important things. Commissioner Metz wanted to understand why Palo Alto would vote in favor of this. Ms. Dailey replied it is a package of 3 components that have been negotiated over a 3-year period among 26 individual agencies. The minimal extra cost is justified because it alleviates millions of dollars being paid by Mountain View and partner in the plant for water they are unable to use and helps them move forward with their recycled water expansion which their Council has already committed to. That also helps keep nutrients out of the Bay. Mr. Kurotori added these are marginal cost expansions for Mountain View, Milpitas and Sunnyvale. They have already invested into these non-potable systems. They typically talk to developers to expand those systems. Using recycled water as an alternative supply they have been using for decades reduces the amount of a potential water they are taking from SFPUC which reduces the potable water coming from Hetch Hetchy for other uses. That is a net environmental and otherwise benefit to the customer base. Alameda, Milpitas, Sunnyvale and Mountain View also have connections to the Santa Clara Valley Water District and other water supplies. The district also has their rates proposed and they are doing significant investments on their system for Anderson Dam and others. Their rates are also increasing at a rate projected higher than SFPUC. The use of recycled water and having partners investing in those systems at those marginal costs provides value for the customers as a whole because it decreases potentially the need of SFPUC water for irrigation. Vice Chair Mauter clarified those regional investments are much cheaper than Palo Alto investing in the types of marginal water supplies seen in the One Water Report. Commissioner Croft supported the documents that had been submitted and the negotiation that had been completed but was unclear about the BAWSCA meeting. Chair Scharff assumed Staff did not believe the agreement should be held up which was confirmed by Ms. Dailey. The representative from BAWSCA confirmed the same. Chair Scharff associated with the comments made by Commissioners Mauter and Croft. The role of the UAC is not to play politics and decide to hold up some agreement on leverage. The role of UAC is to advise Council. The best alternative would be to recommend that Council agrees to this. Utilities Advisory Commission Minutes Approved on: Page 7 of 10 Commissioner Gupta moved to continue the item to the next meeting due to lack of information. Ms. Dailey added most agencies are seeking to approve the amendments and Tier 2 allocation before the end of fiscal year. Commissioner Tucher seconded the motion because it would send a signal to other BAWSCA members who may consider thinking about the lack of transparency from SFPUC. Chair Scharff made a substitute motion to approve the amendment seconded by Vice Chair Mauter. Commissioner Croft wanted to understand what the actions are by the people who want to hold this up. Commissioner Gupta explained there was no rush since they were the first of 26 agencies looking at this. It is a big change to regional water supply. It will have a cost component to Palo Altans. Commissioner Gupta asked Staff if a sensitivity analysis had been done to understand the cost impact for Palo Altans. Ms. Dailey replied the changes to the agreement would not be characterized as huge. The changes to minimum purchase quantities apply just to those four agencies who have been paying penalties for water that they cannot use. This has been a three-year negotiation built upon those policy principles that were agreed on. Staff has been involved in those negotiations and represented Palo Alto as best as possible. It is not up to Palo Alto to decide what is or is not in the final negotiated agreement with the two WSA modifications and the Tier 2 new allocation plan. The cost is in slide 7 and the impacts of the change in Tier 2 are highlighted on the slide that shows the Water Shortage Contingency Plan actions and the negligible impact on customers. The cost impact on slide 7 is forward looking. The agreement changes how minimum purchases by the four agencies are calculated based on the average usage of the last four non-drought years. [Daniel 1:54:25] added this is a one-time reset until 10 years from now when it might be reset again. The minimum purchase quantity will not be affected for these four agencies until the next go-round in 10 years. To the extent that any of the other agencies use less or more water, it can affect the rates. Commissioner Gupta had questions about the $293 million SFPUC is spending. Tom Smeagle, BAWSCA General Manager replied San Francisco has a very large budget. That is over a 10-year period, roughly $30 million a year focused on planning for water supply projects. That could be projects within the system itself to maintain and improve the system. It could be the alternative water supply program but it's a very small amount if it is because they do not have very many active projects working in that area. Commissioner Tucher was willing to attend the BAWSCA meeting the following Wednesday if the Commission wants and offered Alt Water as a reason to recommend this amendment saying the linkage seems clear. Vice Chair Mauter clarified establishing is important. These alternative water supplies have lower marginal costs than big new capital infrastructure projects. Most of the alternative water supply sources being discussed for enhanced use or potential expansion are very low marginal cost projects. Vice Chair Mauter inquired what additional information Commissioner Gupta sought in order to vote in favor of this. Commissioner Gupta replied the information requested about the design drought at SFPUC was needed. A fundamental understanding of the actual water supply situation for the regional water supply was needed. Vice Chair Mauter indicated the Commission was at risk of conflating their role as an advisory council with Staff's role as technical experts and Council's role as a political participant in a very complex negotiation. Chair Scharff added the Commission had to be clear on what their role is. Whether the amendment was supported or not, Council would not approve it until September. Not approving it Utilities Advisory Commission Minutes Approved on: Page 8 of 10 would have any affect on BAWSCA or anything else. There would be no more information on the item if it is brought back to the next meeting. Commissioner Croft wanted a representative to address the split vote to Council. Commissioner Gupta would be happy to address the Finance Committee and Council in public comment what resulted in the 3-3 vote. Motion: The Utilities Advisory Commission Approves the Resolutions Amending the Amended and Restated Water Supply Agreement Between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County and Approving the Updated Tier 2 Drought Response Implementation Plan Motion: Commissioner Gupta moved for the item to be continued to the next month’s UAC meeting. Commissioner Tucher seconded. Motion Fails 2-4 Substitute Motion: Chair Scarff moved Staff’s recommendation Vice Chair Mauter Seconded Motion Fails 3-3 Break @ 8:23PM Resume @ 8:33 ITEM 4: Residential Electric Service Time-of-Use Rates (E-1 TOU) ACTION 8:15PM – 9:00PM, Staff: Lisa Bilir, Senior Resource Planner Mr. Kurotori reminded the Commission there were two budget subcommittee meetings with the Commissioners. The last was on May 21, a day before the packet went out. Lisa Bilir, Senior Resource Planner, provided a slide presentation about Electric Time of Use rates including an overview, residential time-of-use rates, key factors considered in developing TOU periods and rates, marginal cost of energy, distribution system peak timing, average and marginal emissions intensity, proposed E-1 TOU periods and rates in winter (October-May), proposed E-1 TOU periods and rates in summer (June-September), potential for residential E-1 customers to save money, next steps and recommendation. Commissioner Metz asked about marginal cost of energy. Jim Stack, Senior Resource Planner, explained this is an average of the locational marginal prices on the grid that reflect the marginal cost of energy at those times. They are in Northern California, the MP15 market hub price. Public Comment: Hamilton supported the proposed voluntary opt-in residential electric time of use program. It was suggested to reduce the peak hour time. A recommendation was made to cancel the program if there is insufficient participation. Commissioner Metz made recommendations regarding financial impacts, sustainability impacts and emergency preparedness impacts. Commissioner Metz recommended continuing in this path but being more explicit about the goals. Utilities Advisory Commission Minutes Approved on: Page 9 of 10 Commissioner Croft had questions about why it is not fair to call middle of the day clean energy, how greenhouse gas intensity is priced in and if other periods were looked at. Ms. Bilir indicated the heat map was used to support the super off peak period being proposed. That is how that piece of information is being used as part of the cost of service. This information can be used to influence the periods picked for the off peak period. This is used to select the window and cost information to pick the price to charge during that time period. Different time periods were looked at but not with the goal of maximizing the differential. It did not change it very much. The most impactful thing would be changing the width of the peak period but that will also increase the rate in the off-peak period. Commissioner Croft observed the incentive to change does not give much return from a financial perspective. Ms. Dailey explained the intent was to balance what happened in the surrounding service territories. The subcommittee had a conversation about the opportunities to point out the benefits in addition to financial savings to use in communications and outreach materials. One idea was to label the super off peak with solar. There was concern that there was a lot of energy mixed in that time period. There was a conversation around eco but to some people it means cheap. When the marketing professionals get involved in the outreach effort, the concepts and spirit of the conversation with the subcommittee will be taken into account when the materials are developed. They were not at a place to rename them on the rate schedule and feel it had been vetted properly with professionals. Commissioner Gupta suggested studying the affect of time of use on seniors and potential options that could be offered. MOTION: The Utilities Advisory Commission recommend that the City Council adopt a resolution Vice Chair Mauter Moved the motion Commissioner Metz seconded Motion carried 6-0 COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS Commissioner Tucher spoke in protest in the way Chair Scharff conducted the nomination and election for chair and vice chair the prior month. FUTURE TOPICS FOR UPCOMING MEETINGS ON July 9, 2025 AND REVIEW OF THE 12 MONTH ROLLING CALENDAR Discussed on June 4, 2024 (Every Other Meeting) Commissioner Croft hoped to have a chance to weigh in on the portfolio as options are considered. Mr. Kurotori replied there are two power purchase agreements coming for consideration at the July meeting. Topics will include the IPA Energy Storage Service Agreement and IPA Energy. As part of that presentation, the plan is to include what the projections are and what the portfolio looks like. Commissioner Metz wanted to know when the work plan would be published. Mr. Kurotori will be updating Staff on the forecast of the rolling calendar. The intent is to bring that at the next available meeting for Council in August after the break. The direction from this Commission was that Staff should make the corrections noted. It will be published for the public to see with those changes. Ms. Nose pointed out the Commission would not be able to respond or provide feedback on that and advised to consider it a serial meeting. Commissioner Metz was not looking for opportunity to amend it. Mr. Kurotori agreed to provide it to the Commission. Utilities Advisory Commission Minutes Approved on: Page 10 of 10 Commissioner Gupta asked for information about cap and trade policy. Mr. Kurotori replied that was part of the S/CAP funding plan. There will be some items that will come before the S/CAP Committee. That would be the appropriate area for that discussion and information on that schedule will be brought back to the Committee. ADJOURNMENT Vice Chair Mauter moved to adjourn. Chair Scharff seconded the motion. The motion carried 6-0 with Chair Scharff, Vice Chair Mauter, Commissioners Croft, Gupta, Metz, and Tucher voting yes. Meeting adjourned at 09:17 PM Respectfully Submitted City of Palo Alto Utilities