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HomeMy WebLinkAbout2024-12-30 City Council EmailsFrom:Deborah GoldeenTo:Transportation; Public Works Public ServicesCc:Star-Lack Sylvia; City Mgr; Council City; Nguy RogerSubject:Leaves in StreetDate:Saturday, December 28, 2024 9 08:18 PM CAUTION: This email originated from outside of the organization Be cautious of opening attachments and clicking on links > How is it even remotely acceptable for gardeners/home owners to sweep/blow leaves into the street and leave them in piles in the middle of the bike lane?! It’s a violation of city ordinance to do so, but it happens all the time These pictures were both taken today The first one is 1450 Page Mill The second one is 2011 Park Blvd You can see how in the second picture the leaves have been piled into the bike lane because they have been blown/swept out from under and around a parked car because it means the street then doesn’t have to be swept? Or the sweeper can now access the leaves without the car being moved? So a hazardous pile of leaves is nowgoing to sit in the bike lane for five days until the sweeper comes assuming that is the leaves have been moved far enough away from the car so that the sweeper can get at them, which is usually not the case This kind of obliviousness to the safety of cyclists is, I feel, totally unacceptable This has been a problem for years, but now that I”m retired I have the time to document it Deborah Goldeen, 94306> > > > > > From:Tavera, Samuel To:Shikada, Ed; Eggleston, Brad; Lait, Jonathan; Council, City Cc:ORG - Clerk"s Office Subject:Shell Pipeline Company Notice Sent to City Council Date:Thursday, December 26, 2024 4:31:38 PM Attachments:image001.pngimage002.pngimage003.pngimage006.pngimage007.pngShell Pipeline Company.pdf Greetings, Please find attached a notice from Shell that was sent to our City Council. Shell has also requested that we share these documents with our City Manager, and well as the Planning & Development and Public Works Department. If you have any questions, please feel free to reach out. Thank you! Samuel Tavera Administrative Associate III Office of the City Clerk P: 650.329.2882 E: Samuel.Tavera@cityofpaloalto.org www.cityofpaloalto.org ###. Slide 1 -- Time of Use Electric Rates Kaylee Burton: Kaylee Burton, Administrative Assistant. If anyone from the public would like to speak on Item number 3, please raise your hand or dial *9 now. No hands raised. 48:24: Chair Mauter: All right. We welcome Micah Babbitt to speak on this agenda item. Micah Babbitt: Thanks. Good evening, commissioners. My name is Micah Babbitt. I'm a Senior Resource Planner focusing on the electric rates. And I wasasked to provide an update on what we're doing with respect to time-of-use rates. 0:48:47: ###. Slide 2 -- Overview So, I'm going to give a little bit of a broad, high-level overview about all our experience with time-of-use rates in Palo Alto, work that we're currently doing to enabletime-of-use rates, our rollout plan, some existing time-of-use rates that we have, and some considerations around residential rate design. And share kind of anoverview of some of the things we're considering around how we roll this out. And really looking forward to the question and answer session, 'cause this is reallyfor each of you to, you know, express your questions and concerns, and provide guidance. 0:49:27: ###. Slide 3 -- What are time-of-use rates? So, just to set the stage so that we're all on the same page about what time-of-use rates are. They are pricing structures that vary based on the time of day. Andtypically, these are used to send customers price signals when energy is lower cost or higher cost. When -- during peak demand times, and you want to reduceusage during that time to reduce stress on the grid. That's really what these rates are designed to do. 049:57: ###. Slide 4 -- Time of Use (TOU) Electric Rates History in Palo Alto Specifically, in Palo Alto, we have had time-of-use voluntary rates for our E-4 and our E-7 customer classes. We have four different rate classes: E-1, E-2, E-4,and E-7. ### (E-1 = residential, E-2 = multifamily & small business, E-4 = medium/large commercial, E-7 = very large commercial) ### The slides talk about customer classes E1, E2, E4, and E7, but most documents on the City's website talk about customer classes E-1, E-2, E-4, and E-7, sothat's the notation I'll use. We've had these rates in place for over 20 years, and we've have basically no adoption of them. We don't actively market them hard, but they're available ifcustomers would like. We have never offered time-of-use rates to our E-1 and our E-2 customers classes, because we have never had smart meters in place tomonitor energy usage on an hourly or more frequent basis than when we go out and read the meter on a monthly basis. So that has always prevented us -- 0:50:44: I just wanted to provide some information on kind of the total number of customers that we have, or the total number of meters that we have in each of these rateclasses. We have over 26,000 residential meters. They make up the vast majority of our customer base. But they only account for roughly 20 percent of ourenergy usage. Over 80 percent of our energy usage is driven by large E-4 and E-7 rate classes. ###. Slide 5 -- Smart Grid Pilot/TOU Pilot 2013-2017 Lessons Learned We ran a smart grid pilot and time-of-use pilot between 2013 and 2017. And we gained a lot of practical experience around installing advanced metering infrastructure, and that impacted a lot of the decisions that we made in the way that we've rolled out the current AMI that we're putting in place. We also had roughly 150 residential customers enroll in our time-of-use rates during that time. And we gained some experience and insight, primarily that customers reallyvalued being able to see their usage data, and just interact with us and their data in that way." ### The customers who volunteered to participate in the pilot were not necessarily representative of customers in general. We saw a relatively small shift, in terms of customers moving their usage from on-peak into off-peak hours. ### During that pilot, I think the peak hours and off-peak hours were different from those that would be proposed today. That might affect how willing customers would be to shift their usage. ### Here's the rate sheet for E-1 TOU (the pilot) effective 01-01-15.https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-archive/2015/final-staff-report-id-5459_resolution-extending-time-of-use-rate-pilot.pdfThe summer peak rate was noon to 6:00 pm weekdays. But nowadays, we'd want noon to 4:00 pm to be off-peak, because solar power is (often) available andpeople (often) haven't come home from work yet. ### Also note that the E-1-TOU summer peak rate was 5.78 cents per kWh higher than the non-TOU rate, but the summer E-1-TOU non-peak rate was only 1.86cents per kWh lower than the non-TOU rate, and the summer E-1-TOU mid-peak rate was the same as the non-TOU rate. So, big penalty, small reward. ### In this 06-13-16 staff report about utilities rates,https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-archive/2016/6932-merged.pdfI found (page 109) a mark-up of a proposed E-1 (non-TOU) rate sheet for 2016. It showed that between 2009 and 2016, the E-1 Tier 1 rate (1st 300 kWh permonth) was 9.524 cents per kWh, the Tier 2 rate (next 300 kWh per month) was 13.020 cents per kWh, and the Tier 3 rate (everything else) was 17.399 cents perkWh. (So, for example, for Tier 3, TOU during off-peak would save only about 10.7 percent, but TOU during peak would cost about 33.2 percent more.) ### Wouldn't it be great if each rate sheet had a clickable link to its predecessor and also clickable links to the other rate sheets on which it depends? 0:52:07: One thing that's pretty unique about Palo Alto is that we have a pretty moderate climate. Some places see much greater variation in their daily temperature,where it starts out at 40 in the morning and can be has high as, you know, 90s to 100, depending on the season. We have a much more stable environment, and that's reflected in the way that our customers use electricity. So, that was another thing that we learned during the pilot. Next slide. Yup. 0:52:40: ###. Slide 6 -- Components Needed for Full TOU Deployment So, there's a couple of things that we need to have in place in order to offer time-of-use rates. And, first and foremost, is the metering capability, that's measuringthe usage data on a more frequent basis than once a month. And so, we're -- we've been undertaking our advanced metering installation project over the lastcouple of years. And I have some information on when when we'll have that finished. Another big thing that you might not think about is the billing system thatgenerates the invoice that all of our customers receive every month. So, that invoice needs to have the proper data feeding into it so that the customer is billedaccurately for their usage. We are upgrading MyCPAU, which is our customer portal, where they can access their bills, see their usage data. We did a soft launch of that system, so customers can actually go access their hourly usage today for all of their utilities. ### To clarify, I think staff has been saying that you can use MyCPAU to see your usage data for the previous day and previously. (If you could see today's datatoo, that would be great.) Also, later in the discussion, it was pointed out that the usage data you can see is for 15-minute intervals (residential) or 5-minuteintervals (commercial), (1:27:49). We have not advertised this a lot, because we're still doing some testing and improving the system. But that is live today. So customers that have smart metersalready installed can go see their usage data in the MyCPAU portal. We have some additional upgrades that we're going to need to be able to do, that we'reworking on, and hope to have done in the middle of 2025, to really get the customer experience where we want it to be. And then, we need to design and have Council approve whatever time-of-use rate that we put out. And so, this last rate cycle, we completed a full cost-of-service study, and we got maybe 50 to 80 percent of the way through the analysis to support a time-of-use rate. But we weren't in a place where we could offer the rate anyway. So, we've continued thatanalysis. Actually, today, we've got a little more analysis completed on what that rate will look like. I don't have a ton of details to share tonight -- on the details. But I'm open to your feedback and comments. 0:54:46: ###. Slide 7 -- Advanced Metering Infrastructure Project These are a few details on how the AMI installation is going. So, by this December -- this month -- we expect to be complete with 90 percent of residentialcustomers. There's about 10 percent where we've had either obstructions or problems with the meters that we're needing to get fixed. ### How much is this expected to cost? When Council approved doing residential smart meters (10-18-24, Item 12), they were told that the financial case forthem was pretty weak. ### What is the problem with the meters themselves? ### What is the problem with obstructions? And we expect it will take us another year to address all of these concerns -- or issues. Commercial meters we expect to have completed by May 2025. Andthat's pending delivery of some meters. So, we've had challenges having all of the meters delivered. 0:55:25: ###. Slide 8 -- MyCPAU and Billing System Project Status As far as the billing system and the customer portal, MyCPAU, we've broken it up into a couple of phases. So, the first phase was to import this hourly usage data from our meter data management system. So, that's available for customers And we think that we -- this will basically allow us to offer early adoption tocustomers who are very interested in moving to a time-of-use rate, or, you know, want to start looking at their detailed usage data. ### In other words, customers who have smart meters can look at their usage data, whether they adopt anything or not, right? So why call this early adoption? Phase 2 of the billing system improvements is making some improvements for NEM ### NEM = net energy metered? customers and non-solar customers, so that, you know, depending on what your situation and what specific rate you're on, all the information will be presentedaccurately to you. ###. Slide 9 -- Preliminary Time of Use Electric Rates Plan So, our preliminary timeline of rolling out time-of-use rates -- In this last fiscal year, we updated our time-of-use rates for the E-4 and the E-7 customer classes. ### Utility Rate Schedule E-4 TOU, effective 07-01-24 https://www.cityofpaloalto.org/files/assets/public/v/4/utilities/rates-schedules-for-utilities/commercial-utility-rates/e-4-tou-effective-2024-07-01.pdf ### Utility Rate Schedule E-7 TOU, effective 07-01-24https://www.cityofpaloalto.org/files/assets/public/v/4/utilities/rates-schedules-for-utilities/commercial-utility-rates/e-7-tou-effective-2024-07-01.pdf And we made some pretty drastic changes to those rates, um, in terms of the time periods and the charges. We added a peak demand component. We added acustomer charge. Those were all really big changes that we had needed to make, to bring those rates -- kind of to better reflect our costs of service. 0:56:56: This year, in FY 2026, July 1st, we're planning to offer an early adopter option of the time-of-use rate. And we expect to have that draft rate schedule available inthe March UAC meeting. ### I suppose this means that the details will be available in a staff report cited by the March UAC agenda, which will be available something like six days beforethe March UAC meeting. ### What is the point of having an early adopter TOU rate? So, all of the details will be available hopefully at that meeting. And some of the corresponding backup documentation that -- the analysis that supports that. 0:57:19: And then, in fiscal year 2027, our plan is to make our standard offered rate to all our customers be a time-of-use rate. ### Will customers be able to choose a non-TOU fixed rate as an alternative? ### Will there be multiple TOU rates for a given class? For example, for E-1 customers, one for early adopters and one for everybody else? (That seems toocomplicated.) Um. It won't matter whether you're a NEM customer or not. All our billing system -- All of the meters will be installed, and we'll be at a point where we can offerthat to all customers. And then, maybe at that point in time, we'll start looking at our E-2 customer class as well. 0:57:46: ###. Slide 10 -- DRAFT E1 (Residential) Time of Use Periods This table that I'm showing is kind of where we had ended the analysis during the last rate cycle. And some of the things we were looking at, in terms of where alot of our energy usage occurs. What periods it's looking to -- um, where most of the energy is concentrated, and what some potential time periods could be forthese rates. 0:58:12: ###. Slide 11 -- Initial Outreach and Customer Service Plan As far as our outreach and customer service plan, we're anticipating that we'll have a very involved communication plan in the lead up to making time-of-use ourstandard rates. So, they're just a couple of the ideas that we plan to pursue over the coming 18 months. 0:58:40: ###. Slide 12 -- Industry Best Practices & Lessons Learned And then, finally, just in preparing for this, we've reached out to a couple other small municipal utilities -- small and large municipal utilities -- to get their experienceand kind of lessons learned with introducing or implementing time-of-use rates. So, we spoke with SMUD. ### Sacramento Municipal Utility District.https://www.smud.org/ We spoke with Fort Collins. ### Fort Collins Utilities https://www.fcgov.com/utilities/ And the American Public Power Association. ### American Public Power Associationhttps://www.publicpower.org/ And SMUD noted some things, that they really use time-of-use rates to achieve carbon reduction. Fort Collins thought it allowed them to achieve better equity within the residential rate class. And then, ultimately, it allows customers to manage their loads better. 0:59:26: So, that's all I have. And I'm happy to take any questions or comments. 0:59:33: Chair Mauter: Excellent. Thank you. Are there any questions from the commissioners? Commissioner Metz. 0:59:40: Commissioner Metz: Mr. Babbitt, thank you for presentation. I think the main question I had was, you know, what tools do you anticipate customers having -- andneeding -- to be able to, you know, take advantage, and also to serve the needs of the utility, if we move toward time-use rates? 1:00:01: Micah Babbitt: Yeah. It's a question that we talk a lot about internally. And there's maybe two components. The first thing about rolling out time-of-use rateswhen you don't have smart meter data or hourly data is, you have to make a lot of guesses around what customers' current usage is. And so, if you want toestimate here's what your bill looks like today versus what it would look like in the future, we're currently in a position where we don't have that data to be able toanswer that question accurately. I think one of the benefits of having this early adopter rate is that we'll have basically a full year of data, where customers will beable to look at their usage before we make it our standard rate. ### It's unclear to me why you need to have an early adopter rate to do this. But, I guess, backing up from that just a little bit, our hope is that this rate will effectively better reflect our cost of service to serve customers. And the rate change itself will be revenue-neutral. The impact that it will have on any given customer could change based on the way they use energy. But they'll at least be -- they'llbe exposed to the same costs that we are to run our business. 1:01:17: Commissioner Croft: Can I ask a question? Um. I'd like to hear about -- I'm glad to hear about the comparisons to other cities, and just, you know, comparing tofind out what they're doing, but when I just go back to the very beginning of what we're trying to achieve with this, to me, I feel like I'd love to see part of the time- of-use rate goal be to reduce carbon. And so -- I know we say our electricity is carbon-free, ### I think we say Palo Alto's electricity is "carbon-neutral," if you count the offsets we pay. but the sun is shining, blazing hot -- you know, blazing solar power from 10 am 'til 4 pm. But the time of -- you know, peak period starts at 4 'til 9. I'm justwondering, how does -- If our goal -- If our main goal is cost -- right? -- should our main -- should one of our goals reducing carbon, basically? And is thatsomething we can do in the time-of-use rate? That's question 1. And then, secondly, how does the cleanliness of the energy correlate with the cost of the energy? So, maybe it solves itself just with the cost working out. 1:02:35: Micah Babbitt: Maybe two different ways that I could answer that. But the first perspective that I'll give is around cost of service and rate design. And Prop 26 isan amendment to the California constitution that basically says that all rates need to be cost-based. And so, taking Proposition 26 into account in rate makingmakes it really hard to prioritize something like carbon ahead of cost. We're only going to be putting out rates that are cost-based, that are defensible from thatperspective. And so, if that doesn't align with carbon mitigation, then it's probably not going to show up in our rate design. 1:03:22: Chair Mauter: Have you done the analysis on the alignment in Palo Alto's grid -- or, generation supply? I mean, in many parts of California, it's very poorly aligned. Have you looked at it for Palo Alto's generation portfolio? 1:03:42: Micah Babbitt: My colleagues, Jim Stack and Lena Perkins, have both studied it much more than me. And, unfortunately, I don't think either of them are heretonight. But, yes. 1:03:57: Karla Dailey: And then, I think, this is important. We're in the process of trying to design this right now. And I -- There will be -- This early adopter rate that we'retrying to get out quickly -- you know, July 1st, 2025 -- will, between that time and the time that we do the full rollout, we'll have a new cost-of-service analysis, andwe'll have a little bit more time. And so, hearing your interest is helpful. And we can explore to what extent, you know, around the margins, adhering to Prop 26,we can take these other factors into account, and coordinate with our electric front office to see how that might work. 1:04:44: Commissioner Croft: Where was -- Sorry. Where is SMUD? 1:04:48: Karla Dailey: Sacramento. 1:04:48: Commissioner Croft: And that's in California. And they said it helped achieve carbon reduction. So, how were they able to do that, if they're under the same restrictions we are? 1:04:59: Micah Babbitt: So, I think one of the things I touched on is the impact that your climate and temperature has on your utility. And I think the variance that theyprobably see in the summer months is significantly greater. And the price signals that they can send, I think, are probably more closely aligned with carbon thanmaybe we might be able to. But we're also not SMUD. So, I can't answer that question for them. 1:05:34: Alan Kurotori: Alan Kurotori, Chief Operating Officer. So, in part of our outreach material, I think we can start informing the customer on how the use of energyhas an effect on carbon. Right? So, if they use it during those peak hours between 5 and 8, that's when a lot of the solar production comes offline. Some windgeneration does come online. But, you know, that also reflects in the market forces. In terms of SMUD cases, they're a much larger utility than we are. ### SMUD serves 644,723 customers (both residential and business).https://www.smud.org/Corporate/About-us/Company-Information ### SMUD says, "In 2023, our power was about 78% carbon free." (Click on "power content label.") https://www.smud.org/Corporate/Environmental-Leadership/Power-Sources#e28a3af8-d84b-4212-a9d7-ef44f5387500-3b585ecc-a2d5-4c8b-9713-356fa1916432More details here:https://www.smud.org/SMUDPCLNote that SMUD has some "Greenergy" plans that use 100% eligible renewables.https://www.smud.org/Going-Green/Get-Green-Energy/Residential/Enroll-in-Greenergy ### Google "site:smud.org TOU" Time of Day (TOD) rate details. (but it doesn't compare the TOU rate to the fixed rate.) https://www.smud.org/Rate-Information/Residential-rates/Time-of-Day-5-8pm-Rate/Rate-detailsThis does provide both TOD and fixed rates, so you can compare them.https://www.smud.org/-/media/Documents/Rate-Information/Residential-Rates/Residential-Rate-Guide.ashx They have their own generation ### SMUD owns four natural gas powered power plants, with combined capacity of 1 GW. (Click on "Natural gas power" here.)https://www.smud.org/Corporate/Environmental-Leadership/Power-Sources SMUD has a "2030 Zero Carbon Plan" -- Executive Summary version (March 2021) (23 pages)https://www.smud.org/-/media/Documents/Corporate/Environmental-Leadership/ZeroCarbon/2030-Zero-Carbon-Plan-Executive-Summary.ashxand full report (April 2021) (144 pages)https://www.smud.org/-/media/Documents/Corporate/Environmental-Leadership/ZeroCarbon/2030-Zero-Carbon-Plan-Technical-Report.ashxSome of the plants will be retired, and some will be retooled. ### Fortunately, CPAU doesn't have this particular problem. CPAU once considered building a natural gas electric power plant in Palo Alto, but decided againstit. https://www.cityofpaloalto.org/files/assets/public/v/1/from-archive/agendas-minutes-reports/reports/city-manager-reports-cmrs/2011/final-staff-report-id- 2071_exploration-of-local-gas-fired-generation.pdf and other resources. So, they can, frankly, cover a lot of their energy needs internally. But during the peak summer, as Micah was alluding to, they have to go tothe market. And that's where you see those market forces in hand. So, they have to come outside of what they can normally produce. Again, they're the second-largest public-owned utility in the state of California, with one of the largest service territories. So, they're a little bit different, in terms of how they operate. PaloAlto has deep resources. Deep hydro resources, that we can bring to bear. So, you'll see less -- We expect to see less variation in those time-of-use rates, because [of] the way that we procure power. So, it's -- 1:06:53: Commissioner Croft: Can we just drill into that comment that you just made? So, it's in Sacramento. OK? So, if it's super hot, in the middle of the day, andeveryone needs more power, and they have to go out and buy power, wouldn't that make it MORE expensive in the middle of the day? Whereas, you really wantto make it cheaper for people in the middle of the day, because the sun is shining and we have more solar assets, and -- Sorry if this is getting super simplistic -- 1:07:13: Alan Kurotori: Yeah. So, their peaks are -- As the market costs are higher in the 5 to 8 period of time during the summer. Right? That's when you have a lot of the excess use. 'Cause solar is -- solar is mostly available, obviously, when the sun is shining. And it's -- and sometimes, it even gets curtailed. So, you see the higher costs in the evening. 1:07:40: Commissioner Croft: I guess -- I mean, I would be interested in seeing whatever we can do to encourage people, through price signals, to behave in a way wewant them to for carbon reduction. So, for example, incentivizing some parts of the cheaper period more than others, for example. Not doing everything in themiddle of the night, when the sun is not shining, but rather maybe in the morning hours. You know, I know you -- we're being -- we're trying to be simple, and justsay, OK, 4 to 9 is peak. But in the off-peak, if there is opportunity to provide any kind of price signal to encourage people to use cleaner energy, I would like to encourage that. And I -- This is not seen. I'd love to see the price of energy, in -- it was another one of the questions I had -- the price of energy to the City of Palo Alto, by hour, by season. Just to see- It would be great to see a graph. Like, what is the price of energy throughout the day. So that we could understandwhat you're looking at, to determine, you know, how to pass on those costs. 1:08:45: Micah Babbitt: I expect that we'll have an attachment in the March financial plan that will address that. 1:09:01: Chair Mauter: Commissioner Gupta. 1:09:02: Commissioner Gupta: Thank you for the presentation. I'm very supportive of this time-of-use rates for our large E-4 and E-7 customers. They seem to make up asupermajority of our energy share in Palo Alto. I'm having trouble understanding what the impact will be for residential customers. Based on the data in thepresentation, it seems that the E-1 customers make up 20 percent of the energy share. It seems that peak usage is hovering around 10-12 percent of the energy share. ### Referring to slide 10. I don't know how staff came up with these stats. The City has not been measuring how much power (in kW) residential customers usefrom moment to moment. IF we could measure the power (in kW) of each commercial customer, then we could subtract that from the total power (in kW) to inferhow much power (in kW) residential customers use. But we can't measure the power (kW) of each commercial customer. Right? (See Karla Dailey's descriptionof the makeshift connections to commercial customers, at 1:25:12.) And it seems, based on our small pilot -- admittedly small pilot -- that most customers haven't seemed to change their behavior, as to when they use energy. Because I think one thing I'd like to see in future presentations is what will the impact look like to residential customers? Are we going to see a big impact? Is this a really small impact? Are we just complicating people's bills by having time-of-use pricing, where, you know, most bills might be the same for most customers. So, those are some questions I'd have in the future, as we drill down to the numbers. Thank you. 1:10:13: Micah Babbitt: Yeah. I think they're great questions, and we'll learn as we go, on part of them. And I think it's -- to the extent where there's tradeoffs ofcomplexity versus simplicity, that's helpful feedback to receive from you. So, we could easily do three periods in a rate, or we could do two, or we could do four. And the more complexity, the harder it is for customers to understand, the more variation, in terms of, you know, the duration of the time period might have less impact on customer behavior. So, there's a lot of tradeoffs in the rate design. And, you know, to the extent that you guys have strong opinions about what you think is best in the community, we can certainly try to incorporate those pieces. 1:11:08: Karla Dailey: If I might just add, one of the communities that we're trying to meet with this rate is for the customers who have really been out front electrifying. And those customers use a lot of energy. And it often pushes them into tier 2 rates. ### Years ago, then-Council Member Scharff asked whether, now that the City had carbon-neutral electricity, we should get rid of tiered rates? (The question might have been rhetorical rather than a real proposal.) ### Alameda Municipal Power increases the Tier 1 limit for customers that have electric heat.https://www.alamedamp.com/DocumentCenter/View/1258/D1-Rate-Schedule-Effective-2024-7-1The electricity for heat is not metered separately. ### Alameda has a special TOU rate for EV customers.https://www.alamedamp.com/DocumentCenter/View/1260/EV-TOU-Rate-Schedule-Effective-2024-7-1 It says, "At this time, customers are not required to install a separate meter to measure EV hourly usage, but this may change in future." ### CPAU meters electricity used for heating separately for some homes in the foothills where it does not provide gas service. ### IF CPAU started using multiple meters per home more broadly, that would increase capital costs. Who would pay for that? And so, this is a way for those customers to, you know, not feel like they're kind of being punished for doing what we're asking them to do, which is to move off ofnatural gas and use more of our clean electricity. And so, those customers, we imagine, will be some of the ones who will be interested in being early adopters. 1:11:51: Chair Mauter: Commissioner Tucher. 1:11:52: Commissioner Tucher: Hi. Yeah. I have a few questions about this. And the first one is kind of rhetorical. And that is, does it really matter to us to shift users'time-of-use? Personally, I'm excited by time-of-use. It seems like most of us up here are. I imagine a day where it's dynamic time-of-use, where you're getting atext message at 1 in the afternoon, where it's particularly sunny and windy and power is cheap. Please charge your car now. It'll be way cheaper -- just, if you act right now. Obviously, we're far away from that. But I think it's happening in places around the world. But my rhetorical question is, you know, do we care? Because our climate is temperate. OK? You know, we have a fairly steady load over time -- is what I think I've heard from some of you. And so, are there bigcost savings if we could get people to change their behavior? Does it really matter to the utility to do time-of-use? ### Google " 'time-of-use' dynamic" --11:23:20: "Time of Use and Dynamic Pricing Rates in the US" ---- cites SMUD, Fort Collins, Arizona Public Service Company and others.https://fsr.eui.eu/time-of-use-and-dynamic-pricing-rates-in-the-us/ ### If TOU is not dynamic, rates are predictable and people can develop habits so that they don't have to think much about when to use electricity. IF a home had a computer to do the job of watching dynamic TOU rates and making decisions based on them, that might make sense. 1:13:01: Chair Mauter: Can I elaborate on that just a little bit, and say, I think the other follow-on question to that is just, are there specific places where there's high valuein time-of-use, because it avoids an infrastructure upgrade, without complicating rate design? I mean, I can imagine, like, there being parts of the grid where thisis -- you might want to roll it out sooner. Or have, you know, a different approach than in other parts. 1:13:32: Micah Babbitt: Yeah. I don't want to give you an impression that time-of-use rates aren't an improvement. I think they certainly are, from representing our coststo customers. And I think the more that we can do that -- 1:13:49: Commissioner Tucher: Representing our cost? 1:13:54: Micah Babbitt: Charging customers exactly what it costs us to serve them. 1:13:56: Commissioner Tucher: Yeah. I'm sorry.. 1:13:56: Micah Babbitt: The better we can align that, the better, I think. Tiered rates have some different incentives around energy efficiency, which are good, butoftentimes, they're not always reflecting our costs.as well as they could be. 1:14:10: Commissioner Tucher: Um hum. 1:14:10: Micah Babbitt: And so, I think time-of-use rates just do a much better job of reflecting the time-varying cost of energy. And so, I think they're just -- they're a betterrate design. I think the challenge is just they're more complicated, and they make that customer engagement process slightly more complicated. And, you know,a customer just sees, why are you charging me more during the time when I come home from work? And that makes a challenging communication message. Butwe're just charging you what it costs us. 1:14:46: Commissioner Tucher: Yeah. But -- I mean, I think I know from you, Micah, that -- Or, first of all, I mean, maybe we're a victim of our own success. I was sayingbefore, temperate climate, the steady load relatively. But also, we have low kilowatt-hour prices. So, as I heard from you, half that is a fixed cost. If it's 20 cents,22 cents, half of that is fixed regardless. The other half -- you know, 10 or 15 cents -- I think you made the point -- it won't swing very far. If it's 5 cents when it'scheap, 2 cents maybe, 20, 25. It's not as if it's a dollar ever. So, my question is -- um, is Palo Alto a place well-suited to TOU? You know, in the deck, you talkabout the fact that we offer it to large businesses and they don't seem to react. We have one customer. In the deck, you talk about the pilot that we did 10 yearsago. It didn't change behavior. One thing you didn't say, though, is, what was the pricing? Was there any price -- was the price incentive of any significance? ### See comment at 0:52:07. A price reduction of only 1.86 cents per kWh doesn't seem all that significant. So, in all of that, I want to recap two questions. Do we really -- Do we care enough about TOU? And, perhaps the reason for past -- um, um, um -- poor uptake inthe past -- is that because we didn't price aggressively enough? ### Or, equivalently, was the reason for poor uptake that staff determined that the City couldn't offer much savings to customers who switched to TOU? 1:16:15: Micah Babbitt: I think we certainly care about it. And we've received feedback from customers and Council members and UAC in the past that this is something that we want. ### Did the customers and Council members and UAC realize how little the savings would be? So, that's, you know, part of the motivation of installing AMI is offering more advanced rate designs. So, I would say, yeah, it's something that we want. What wasthe second question again? 1:16:39: Commissioner Tucher: The deck doesn't say a thing about rates and prices. 1:16:42: Micah Babbitt: Oh, yeah. 1:16:42: Commissioner Tucher: So, what's the advantage to a business today to even pay attention to TOU? Same question for our residential pilot 10 years ago. 1:16:52: Micah Babbitt: To the extent that they want to try to control their energy costs, and shift their energy, they can do that. With our voluntary time-of-use rates, thecommercial customers can do that today. So, that's the advantage. 1:17:06: Commissioner Tucher: ',Cause they save 2 or, you know, 5 cents a kilowatt-hour? 20 cents a kilowatt-hour? How much do they save? 1:17:11: Micah Babbitt: The commercial rates are a combination of kilowatt-hours, demand charges, customer charges -- 1:17:16: Commissioner Tucher: Right. 1:17:16: Micah Babbitt: So, it varies a lot based on the customer usage profile. When we ran the pilot, the cost difference that we had between the peak period and theoff-peak period was about 5 and a half cents. ### But that's not the statistic of interest. See comments at 0:50:44. The TOU peak price was $5.78 cents per kWh higher than the non-TOU price, but the TOUoff-peak price was only 1.86 cents per kWh lower than the non-TOU price. What I'm looking at today in the analysis is potentially as much as 7 cents difference. 1:17:41: Commissioner Tucher: 7 cents. 1:17:41: Micah Babbitt: Yeah But, again, it's still preliminary. So -- 1:17:45: Commissioner Tucher: So that's a 20-30+ percent -- OK. That's something. ### Again, it's not the statistic of interest. Who on -- at the utility knows the most about -- Or, let's ask it differently. Do we know a good deal about best practices around the country? You mentioned Sacramento and Colorado. ### Fort Collins. But -- I mean, it's -- Time-of-use is happening all around us. I don't know to -- whether it's successful or not. But PG&E does time-of-use. ### California Public Utilities Commission REQUIRED investor-owned utilities to do TOU. That doesn't prove customers wanted it. San Jose Clean Energy does time-of-use. It seems to be happening in a lot of places. Do we have a good grip on where, you know, best practices are being proven, in terms of changing user behavior on time-of-use, or cutting costs, or having a carbon impact? Other than the two examples? Do we have a broad view? ### In choosing utilities to compare to CPAU, consider the following:* Does the utility have a TOU electric rate? If so, was it compelled to have a TOU rate?* Does it also have a non-TOU electric rate?* Is it a municipal utility?* Is it in California? If not, would its TOU rate meet Proposition 26 requirements if it were in California?* Does its TOU rate favor solar power? * Is its load profile similar to Palo Alto's?* What percentage of customers (for each rate class) has signed up for TOU?* Does it also have demand charges? As an option or mandatory? 1:18:38: Micah Babbitt: Karla, feel free to jump in if you want to. But I would say we've been trying to build that knowledge base over the last 6-12 months. Personally, Ithink it's a little bit of a mixed bag to go out and compare ourselves to PG&E on -- You know, they've had time-of-use rates forever. ### Not quite forever. ### 03-13-18: "California Statewide Opt-in Time-of-Use Pricing Pilot Final Report" (164 pages)https://www.cpuc.ca.gov/-/media/cpuc-website/files/legacyfiles/s/6442457172-statewide-opt-in-tou-evaluation-final-report.pdf"In Decision 15-07-001, the California Public Utilities Commission (CPUC or the Commission) ordered California’s three investor owned utilities (IOUs) to conductcertain “pilot” programs and studies of residential Time-of-Use (TOU) electric rate designs (TOU Pilots and Studies) beginning the summer of 2016, and to fileapplications no later than January 1, 2018 proposing default TOU rates for the majority of residential electric customers." ### 12-06-18: "California utilities prep nation’s biggest time-of-use rate rollout"https://www.utilitydive.com/news/california-utilities-prep-nations-biggest-time-of-use-rate-roll-out/543402/"Pacific Gas & Electric (PG&E) were given until October 2020 in order to prepare their billing systems." ### "Time-of-Use Residential Transition Frequently Asked Questions"https://www.pge.com/assets/pge/docs/account/billing-and-assistance/TOU-Transition-FAQs.pdf "Starting in October 2020 and continuing through 2022, many PG&E residential electric customers will begin automatically moving to the Time-of-Use ... rateplan." ### Summary: PG&E has time-of-use rates because the California Public Utilities Commission required investor-owned utilities to have them. They're twice the cost of us. So -- 1:19:01: Commissioner Tucher: Yeah. 1:19:01: Micah Babbitt: You know, are their customers getting a better deal because they have time-of-use rates? Not necessarily. So it really depends on -- 1:19:08: Commissioner Tucher: Are we the victim of our own success. We're in a good situation. Maybe it's less room to maneuver. I don't know. 1:19:15: Micah Babbitt: Oh. I think some of the benefits that I put in those slides are the things that SMUD and Fort Collins said that they feel they got out of it. So, one ofthe things that I consider a lot, or we consider when we're designing rates is trying to make them fair across customers within a rate class and across the differentrate classes, so you're not being scrutinized -- or you're not being penalized compared to your neighbor. So -- 1:19:44: Commissioner Tucher: Well, with 90 percent of AMI rollout -- residential -- done, it -- I'll just say, it does seem we could be moving faster on TOU than fiscal of '26 for residential. And I'm brand new to this, so it's -- I don't mean to be presumptuous, but I'm just wondering, why aren't we further along? And, you know, you can answer that now or -- 1:20:13: Micah Babbitt: Yeah. So, fiscal year '26 starts July 1st, 2025. So, we anticipate that this will be available in seven months, which feels like light speed from myperspective. And 18 months is our plan to have it be our standard rate. So, -- 1:20:34: Commissioner Tucher: Thank you. 1:20:37: Chair Mauter: And I have a couple of questions, just -- I want to say, in general, the Commission has really asked for time-of-use consideration, I think bothbecause of this issue with pushing customers into tier 2, but also because of the -- as I mentioned earlier -- the tremendous potential infrastructure avoidancebenefits. Right? The cost-saving benefits. And I'm wondering if some of both Commissioner Tucher's questions as well as questions from the community that arelikely to arise about WHY we're doing this might be valuably answered by a comparison of the avoided infrastructure costs, or the analysis of the avoid infrastructure costs, as a result of transitioning to, or participating broadly in these time-of-use billing structures. Have you had a chance to do that? Or have you considered that as part of the public outreach campaign that will inevitably need to be carefully developed for this effort? 1:21:50: Micah Babbitt: We haven't done that yet, but I'll make sure that we focus on that. 1:21:54: Chair Mauter: Yeah. I think it would be tremendously helpful. Because as a utility operator, you're surely looking at the amount of avoided -- right? -- [laughs]transformer upgrades that you can get away with. And I think as we understand this as kind of a motivating factor, both in the process of electrification, as well asin the process of affordability, and affordably delivering on our carbon-reduction goals. I think that's a really important message to send. 1:22:27: I have a couple of other points I'd just like to make going through this presentation. The first is that, while I recognize that you did a valuable pilot study over adecade ago, I think that the degree of electrification is incredibly different. And I would just caution against a heavy reliance on data that's a decade old to rate design today, given the extent of, you know, EV charging and things. ### Also recall the 2013-2017 TOU pilot thought electricity was cheap at night and expensive at noon. I'm sure you know this, but I just saw this as a little bit of a red herring in this presentation deck. And I hope that you are relying much more extensively on ourneighboring communities' profiles, ### Most of our neighboring communities have PG&E. ### Santa Clara's municipal electric utility, Silicon Valley Power, has a TOU rate (as well as a non-TOU rate),https://www.siliconvalleypower.com/home/showpublisheddocument/6253/638399691029530000but it's not rewarding use of solar power. I don't know how popular it is. rather than an experience with time-of-use rate design than we are on our own pilot program. 1:23:16: I would also just say that I do think that a focus on residential is ultimately important, but I'm really, actually, quite concerned that our costs -- or, sorry, our E-4 andE-7 customers don't have higher rates of participation. It also -- If market forces aren't driving this, I wonder whether there are personalized outreachopportunities to help motivate that participation. And I also wonder whether there are any City utilities -- you know, City-owned buildings, City-owned assets -- thatare certainly falling into one of these two customer classes. Are we participating in our own time-of-use rate programs? And, if not, why not? 1:24:10: Micah Babbitt: We're not. I don't know the answer as to why, though. 1:24:15: Chair Mauter: That seems to me that it's a problem. Either in rate design or in, you know, the -- 1:24:24: Commissioner Tucher: Heating of dog food. 1:24:24: Chair Mauter: I -- I mean, I think it's actually worth the -- turning the lens on our own consumption as a City, to understand whether these rates are working for ourcommercial customers, and if not, why not. You know, we do have a lot of assets as a City. And it would be a good -- I think -- rollout and exercise to helpencourage broader participation. We might find barriers that we didn't know existed. And we could use that learning as an opportunity to disseminate some of this-- both improve our practices but also help share that experience with these commercial customers who ultimately -- Like, the value is in getting THEM to do this,not in the value of getting ME to do this. Right? 1:25:12: Karla Dailey: So, I might add that with AMI, there might be more commercial customers who are interested. The current program requires a special meter, with a cell service that's sending the data. It's not a slick, seamless setup. And I haven't been directly involved in it for a long time, but I was at one point, andremember problems with the cell service. and construction happening at sites, and then -- It's -- It wasn't -- It wasn't seamless. So AMI might help that. Andthen -- I just feel like I need to say it one more time -- that the rate design does have to be cost-of-service based. So, I just want to put that out there one moretime. 1:25:55: Chair Mauter: Absolutely. And, yes. And if there are barriers like -- I don't have any idea how to get this meter to work because -- you know, that's a huge problem. Right? I do think that we should be a kind of living laboratory, from our City assets. And at that -- We should be our own first customers. Absolutely. 1:26:26: The -- I had a question about this focus on hourly versus 15-minute interval data. I'm just much more accustomed to TOU pricing being on a 15-minute interval,especially for the demand charges. Is that not -- Is there a reason to go to hourly? Or is that -- am I incorrect from a residential perspective? 1:26:48: Micah Babbitt: Not ex- -- Oh. 1:26:53: **: [not amplified] 1:26:56: Dave Yuan: Dave Yuan, Utilities Strategic Business Manager. The hourly is only for the water and gas meters, actually. For electric, it's15 minutes for residentialand 5 minutes for commercial. 1:27:06: Chair Mauter: OK. That's just inconsistent with Micah's description. 1:27:11: Micah Babbitt: Could you ask the question again? 1:27:13: Chair Mauter : You said that the AMI data is available an hourly basis. But if the billing is going to happen, as David was saying, on a 15-minute interval, are wegoing to reconcile those two things? 1:27:25: Micah Babbitt: So, we have AMI data on a more granular basis than hourly. We have demand charges that are based on a 15-minute charge. ### How does that work exactly? Does the meter measure and record power (kW) directly? Or does it measure and record energy for an interval, and then thepower is calculated by dividing the energy consumed during that interval by the duration of the interval? Let's say a customer consumes 100 kW for 15 minutes. Ifit happens to coincide with one sampling interval, I suppose it will be assessed as 100 kW for purposes of calculating demand charges. But if it happens tostraddle two consecutive sampling intervals equally, will it be assessed as 50 kW for purposes of computing demand charges? 1:27:38: Chair Mauter: OK. 1:27:38: Micah Babbitt: We'll also have energy charges that are based on a time period of some set of hours. So, does that -- Is there something missing there? 1:27:49: Chair Mauter: Um. Well, you're just -- In your presentation had repeatedly said the billing system upgrades would start to present hourly consumption data. AndI guess my concern is that if the time-of-use rates are structured on a 15-minute basis, or a 5-minute basis, we need to make sure that the -- MyCPAU and thebilling system are showing that data on a 5- or 15-minute interval. 1:28:15: Dave Yuan: And yes, MyCPAU will be showing that. You can have the option of looking at 15 minutes, or groups of hourly or daily. So, that will be -- 1:28:23: Commissioner Tucher: You will or you do? 1:28:23: Dave Yuan: You do, right now. [If] you've got an AMI meter, you can see 15-minute intervals. !:28:27: Commissioner Tucher: IF you have it. 1:28:27: Chair Mauter: Great. That's great. You had said an hour, so I wanted to make sure there was alignment there. I do think that -- And I guess just one otherquestion on that front. Are you planning to also show peak demand and -- kind of, you know, hypothetically present a bill that is a TOU-based bill if you'replanning to have demand charges for our residential customers? 1:29:02: Micah Babbitt: Maybe a couple questions embedded in that. 1:29:04: Chair Mauter: Yeah. I'm sorry. I can break them out. 1:29:05: Micah Babbitt: So, first of all, are we talking about residential customers? 1:29:09: Chair Mauter: Now -- for -- I mean, I get that for E-4 and E-7, you have demand charges, of course. ### Is this really "of course," given Ms. Dailey's description of the state of the metering equipment for commercial customers (1:25:12)? I'm asking about are we anticipating having both demand and energy charges for our residential customers? 1:29:25: Micah Babbitt: That is to be determined. 1:29:27: Chair Mauter: OK. 1:29:28: Micah Babbitt: I would say that in a perfect world, yes. 1:29:35: Chair Mauter: Yeah. 1:29:36: Micah Babbitt: That won't happen in the next fiscal year, and it probably wouldn't happen in the following one. But that would be a more advanced rate design,that would send better price signals. 1:29:46: Chair Mauter: Right. I mean, I would say that that's true. And, again, I think a lot of this is in the rollout. We need to be educating our consumers in this process. And so, we should be presenting data on peak demand. Right now. That people can start to acclimate and familiarize themselves with this alternative set ofmetrics for consumption. 1:30:18: Dave Yuan: So, do you want me to add on? I would like to add on to what Micah just said. So, we ARE able to actually capture the peak demand for residential. I think we've been discussing internally whether we want to show that on the bill. Because it could cause confusion for customers, when they see that peak demand and it's not being billed. And the pricing of that, as Micah said, has not been planned yet or designed yet. So, we're kind of debating, should we show it, should we not show it? Will it cause more calls in for our customer call center, to explain what these are? So -- But I think the plan is to start showing them nextyear, on the portal, so people have that visibility. Like David Coale mentioned earlier. They can also use it for their panel upgrades -- that information. 1:30:56: Chair Mauter: Exactly. 1:30:58: Micah Babbitt: And customers will see their hourly data, so they will be able to approximate their peak demand over a 24-hour period, if they're familiar -- ### Small point: Mr. Babbitt continues to say "hourly," despite the preceding discussion about 15-minute and 5-minute intervals. 1:31:06: Chair Mauter: I would encourage us not to ask our consumers that have to approximate things. I think we should actually show them. And do our best to educatethem. Like, if we're providing a bill, we can also provide descriptions of what these billing terms mean. And it's an opportunity to educate our populace, not just about, you know, electric utility rates but more generally the goals of S/CAP. And, again, the benefits to the AFFORDABILITY goals that we have as a utility. I think the public -- I mean, I really appreciated Director Batchelor's videos in highlighting the really tremendously important work that all of you do, as well as thepeople that are out actually building. But I think that that kind of communications approach, where we're making videos and we're, you know, explaining things isactually a very nice -- I don't know if anyone has followed the Northeast Ohio Sewer District. ### Northeast Ohio Regional Sewer Districthttps://www.neorsd.org/ But it's a well-known Twitter feed at this point, ### This one?https://x.com/neorsd that has done a tremendous job in terms of public outreach and education of the Northeast Ohio population. So, I think that we could also be leaders in thatprocess. And I think this is a real opportunity, because it's such a substantive change, to engage around some of those S/CAP goals, in a way -- and affordabilitygoals that we have as a community -- in a way that we don't often have a lever into people's kind of attention span. It's a tremendously unique opportunity. 1:32:52: I would also -- I'm sorry, I'm rambling, but I have two more things. I do genuinely support Commissioner Croft's suggestion that we do a carbon analysis. I thinkthat, you know, there could be some significant tradeoffs that are worth quantifying. I'm not saying that that should inform rate design. Unless there are recs thatare -- And I'm not sure how that's factored in. But if there are carbon credits that we end up selling, can that be factored into rate design, as part of the net costsof service? 1:33:29: Micah Babbitt: It is. 1:33:30: Chair Mauter: It is. OK. Well, regardless, it may be helpful to also show a carbon profile on -- you know, if we're plotting -- here's your monthly consumption, or,you know, hourly consumption, here's also your hourly carbon intensity. Real time carbon intensity is totally feasible. ### Again, up to now, CPAU has said it's not feasible to use MyCPAU to view AMI data in real time. But maybe it should be. (Yesterday's data is not real time data. Even data from 5 or 15 minutes ago is not quite real time, but it's closer.) And if we can roll that out at the same time as we rolled out time-of-use prices, I think it could be tremendously helpful. Even if it's voluntary. Right? Set your carto charge during this period, not that period. Right? Like, the last thing we want to see is a bunch of new gas plants to be built as a result of large uptake. 1:34:16: The final thing I was going to say is that, you know, I do think that in a transition period, it might be really helpful to have a no-risk billing option, where you couldsave on time-of- -- And I don't know if this follows the letter of the law or not -- but, you know, having a no-risk billing option, where people could opt into time-of- use, but they wouldn't have to pay more than the base rate. ### Sounds strange to me. Would this be for a limited number of months? Instead, how about having an option where the bill shows you what both the TOU andnon-TOU bills would have been, but bills you only for the plan you chose? So that it helps people transition -- or make that transition process. You know, I think that it's just -- You might actually see significantly more early adoption. Andit might ease the adoption overall. 1:35:05: The final thing I would just say is that I think that as a City, as you -- you know, as a utility -- as you think about doing the broader affordability analysis, that -- and -- I shouldn't say just affordability analysis -- the BENEFIT analysis - what's the BENEFIT of moving to these time-of-use rates -- that's going to be as a function ofhow much load shifting you're able to accomplish. Right? And I think it would be really valuable to set quantitative goals around the amount of peak shaving thatyou're able to achieve, so that we can both motivate stronger outreach and educational activities and engagement especially of those E-4 and E-7 customers. Ithink it's a -- you know, if -- we are struggling to come with metrics all the time. And that seems like a really valuable one to set. 1:36:04: Commissioner Metz: I had two questions, one triggered by this discussion. Um. Are there major utilities that have demand charges for residential customers? 1:36:18: Alan Kurotori: So, I think we need to bring back ### information about residentials that have demand charges and, around us, they do not. So, I think when you -- When we bring back information to the Commission, I think there's alot of discussion on what information we give, what's going to be valuable, and what might be too much and confusing to a lot of the customers, because it may goback to -- you know, if I -- if we're going to go to time-of-use rates -- or, when we go to time-of-use rates -- what can I do -- for lack of a better term -- to game thesystem, and -- I mean, to control some of my costs, to maybe do different items where I can use energy at different time periods, and reduce, you know, my bill. And control your own destiny. Right? So, I think those are some of the discussions. When you go to demand charges, like, it creates a lot of complexity. 1:37:05: Commissioner Metz: So, it's different from ** 1:37:08: Alan Kurotori: It's significantly different from any of the ** 1:37:13: Commissioner Metz: But I was just asking a simple question. Are there utilities that have demand charges for residential? Because I've looked at a lot of tariffs. And I don't remember -- Not recently, but I don't remember ever seeing one. ### 02-27-24: "Demand Charges Explained: What You Need to Know" (randomly found by Google)https://www.energysage.com/electricity/how-do-demand-charges-work/"In the past few years, utilities across the country— from Indiana to Massachusetts to Arizona—proposed mandatory or voluntary demand charges for residentialcustomers." ### 07-**-18: "Communicating to fight demand charges" (randomly found by Google)https://solarunitedneighbors.org/wp-content/uploads/2018/07/Communicating-about-demand-charges-2-8-17.pdf "They [residential demand charges] ’ve never been approved for an investor-owned utility in the U.S." ### Google "site:publicpower.org 'demand charges' " found this: "What's in Your Electric Bill?" (1 page)https://www.publicpower.org/system/files/documents/whats_in_your_bill_infographic.pdfIt says demand charges are for non-residential customers. ### 11-**-16: "Rate Design Options for Distributed Energy Resources" (28 pages)https://www.publicpower.org/system/files/documents/ppf_rate_design_options_for_der.pdf ### Arizona Public Service Company -- "Time-of-Use 4pm-7pm Weekdays with Demand Charge" https://www.aps.com/en/Residential/Service-Plans/Compare-Service-Plans/Time-of-Use-4pm-7pm-Weekdays-with-Demand-ChargeDetailshttps://www.aps.com/-/media/APS/APSCOM-PDFs/Utility/Regulatory-and-Legal/Regulatory-Plan-Details-Tariffs/Residential/Service-Plans/Time-of-Use4pm-7pmWithDemandChargeR-3.pdf?la=en&sc_lang=en&hash=1A74C68FEF9F4289D95737D19CB15DA9 1:37:23: Alan Kurotori: Not for PG&E, or anywhere. SMUD, LADWP. They do not. 1:37:30: Commissioner Metz: I can see where if everything is electrified, maybe you -- 1:37:32: Alan Kurotori: Yeah. 1:37:34: Commissioner Metz: But I don't know of any. The other question I wanted to ask. CPAU makes a pretty good amount of money arbitraging energy, because ourdiurnal peak profile is different from Cal-ISO, ### A.k.a. CAISO.https://www.caiso.com/ and the grid in general. I think it's like $15 million in the past year. Some number like that. ### Is Commissioner Metz really saying that what CPAU got for electricity sold to the market, minus what CPAU paid for that electricity, amounted to $15 millionlast year? Perhaps a future staff report could provide more details. ### In Item 4 (2:35:00), Commissioner Croft asked about CPAU's electric utility's "rate of return," which was $15 million last year. But that's completely different. Right? It's what CPAU's electric utility transfers to the General Fund. So, is that a consideration in setting time-of-use rates? You know, for example, if we got people in the City to not use energy at 7 pm, you could sell it to somebody else for a lot. 1:38:16: Micah Babbitt: Depends on how complicated of an answer you want. I would say, not really. Our load is being charged to price every hour. And that's the pricethat we're trying to reflect. The revenue that we get from our resources is used for a variety of different uses. Some of it reduces our supply costs. And in thatway, it is passed on to customers. But we're generally reflecting the cost that we pay every hour to the customer. 1:38:54: Commissioner Metz: Right. But that exactly the point. That's sort of the tricky bit. Right? If we're paying so much because we have a contract to buy energy,and yet that energy at that moment, during that hour, is worth a lot more to somebody else on the grid, what's our real cost? 1:39:11: Micah Babbitt: Well, it's ultimately reducing the cost of our supply -- 1:39:19: Commissioner Metz: Right. 1:39:19: Micah Babbitt: And that's -- That is the basis of the rate that we're passing through to the customer. But in terms of the hourly pricing, basically the ratio of the amount that we're passing through in any given hour, that's being set by our cost. 1:39:36: Commissioner Metz: So, you're saying the energy that we sell is not a consideration in determining our cost? 1:39:44: Micah Babbitt: It's a consideration in our total -- in the total pie. 1:39:49: Commissioner Metz: Right. 1:39:49: Micah Babbitt: In terms of how we set the pricing in the individual hour, it's not. 1:39:58: Commissioner Metz: OK. Like I say, I'm not sure I understand why. But -- Because the value of the energy is precisely because it's available during that hour. Right? 1:40:13: Micah Babbitt: Yeah. I think it's a -- it's a fairly detailed analysis, that I'm struggling to articulate in a concise way, I think. 1:40:24: Commissioner Metz: Yeah. If it's a difficult thing. I'd just like sort of to surface it as something to consider, because we have the luxury of having a load profilethat's so different from the rest of the state. [pause] [laughs] Thank you. 1:40:46: Chair Mauter: Are there any other commissioner comments or questions? Commissioner Croft. 1:40:50: Commissioner Croft: Yeah. I just wanted to ask. When I hear about pilots where people aren't signing up for them, it, to me, begs the question why aren't theysigning up. And then, I'm wondering what kind of resource we have TO sign people up. So, the question I had is, do we have any people whose functional goal isto sell our programs, especially to the larger commercial customers? Or, how do we even communicate to them what is -- Who's the messenger for those types ofprograms? 1:41:32: Micah Babbitt: We have key account reps that are assigned to our largest customers. I think one of the primary reasons that we haven't marketed the voluntary time-of-use rates is that, from our perspective, both rates are cost-based. You know, our -- The primary goal of setting rates is to recover the revenue that weneed to run our business. And we're more focused on that, and less focused on trying to push customers in to a specific rate, is what I would say. We've actually-- we've had a number of conversations with some of our key accounts that have expressed interest in time-of-use rates. And, for whatever reason, they haven'tadopted it. So, it really does hinge on your ability to control your energy usage. And a lot of these businesses are not interested in -- um -- making thosechanges, I guess is what I mean to say. 1:42:32: Commissioner Croft: I mean, I guess, have we done any kind of analysis of why they haven't? Is it -- Do we have like actual interaction with the customer to askthem why they don't do it? Or do we just look at the fact that they don't do it, and make assumptions that it's not compelling, so they didn't do it? 1:42:52: Director Batchelor: So, I think the main rea- -- So, yes, we do. So, as Micah mentioned, we have key accounts reps to go out and talk to these customers. Wealso have meetings with the facility managers in these large customers. But the main reason why we have not marketed any of this is that it's not in the billingsystem. All these bills that you see, and these numbers that you see, is actually generated BY HAND, 100 percent, every month. ### Aaargh! And so, right now, today, we're not looking to add too many more customers -- And especially the large industrial. You make an error in those, as you canimagine, what those errors look like. And so, that is not something that I've asked for our group to really take a whole hold on this. And this is why we're actuallyin the process of doing the testing. And we want to automate this first. ### Is the point that the billing system is too hard or too expensive to customize? Once we automate it, then we will market it to all those customers up there in the industrial areas. And then, the other area is then, of course, is the residentials. Because that's where the major impact is, of just number of the customers. So, to simply answer your question, is, no, we have not really PUSHED andmarketed. But we have learned an awful lot from the customers that we do have on TOU rates. But, again, um, it is teething and long process to do actually allthis by hand on a monthly basis for our CSRs that have to put this together. 1:44:18: Commissioner Croft: Got it. OK. Well, I guess I -- I just want to make a plug for sales as a function. I spoke with Jonathan. I have nothing against marketing. My background is marketing. But I work with sales people in the enterprise setting. And on the S/CAP items, where we have trouble with uptake, for example, of commercial customers with heat pump -- you know, heat pump systems, for example, we kind of would drill into, you know, who's selling it to them. And I knowwe have these reps who -- you know, key account reps. But a lot of times, their relationship manager is not a selling function. And I think, when I see a pilot thathasn't had any uptake, that's kind of where I go with my thoughts. Is, when you have a function of somebody whose job is to sell a program in, they DEMAND,you know, from marketing to use our marketing team to come up with compelling reasons why a customer should do something. And I think it kind of gets toCommissioner -- or, Chair Mauter's comment, which is, we absolutely need analysis. Like, if you can shift at 15 percent of your load, this is what it's going to resultin, whatever the very realistic scenario MIGHT be for a customer. To actually show them, for THEM, why they should do this. And make it matter. Because theyhave a lot of other things to do. Not talk to us. So -- or, depending on how much money you might save, you might really get their attention. But unless you reallytalk to them about their own situation, it's not going to really go anywhere. So I'm just making a plug for a sales function. And I know we get scrutinized on every single hire. But as we start having goals, and we're trying to hit goals -- on S/CAP, on this -- I could see somebody working in a sales function on this type of thing. Time-of-use, as well as maybe some S/CAP items, on trying to get people to move over and change what they're doing with us. 1:46:23: Chair Mauter: Commissioner Tucher. 1:46:26: Commissioner Tucher: I want to ask if there's a connection between all of this and grid mod. I'm assuming that in our grid modernization scenarios and plans and whatnot, we -- And let's focus mostly on residential. We have different growth -- peak load growth projections -- high-low. And I'm wondering -- this goes back tomy point earlier -- how much do we care? How much does it impact the utility to really affect TOU? I'm assuming that the grid mod scenarios would shine a lighton the importance and the cost impact of getting load balancing -- load shifting. Like, we're -- it's going to cost a neighborhood, you know, X amount to do thetransformers and do the grid mod, UNLESS we can get users to change the time that they charge their EVs. For example. And we probably have projections onthe number of level 2 EV chargers that are going in, here, there, and everywhere. So, all this is to ask, with those projections, I can't help but think that, regardlessof our temperate climate, things are going to get more challenging, and that TOU is going to become more crucial. And -- this relates to things that you've heardfrom others on the dais. But there's going to be a more compelling message to ratepayers, that if they pay attention to TOU, if they change their usage behavior,that will have a major impact on the utility's overall cost, and your rates. So, is there a question in all that? Yeah. It is, how is the TOU discussion connected to grid mod forecasting? [pause] Is it? 1:48:18: Alan Kurotori: I'm ** So, I think all the points are very well taken, in terms of will TOU, and customer controls, and preferences, and maybe even price signals,you know, change what -- how we proceed on grid mod. So, there's really a discussion of optimization. Right? And -- versus, frankly, some standardization. Standardization in terms of sizing the transformers of the -- you know, of -- when we put the poles in. So, there's some costs and benefits. And we also know thatas Palo Alto moves forward with electrification, if you look at our reach codes, that as new developments come in, they're going to need more capacity for EV charging. You know, we require EV chargers, or make-ready type situation. So, I think, when we look at that, it's not really -- TOU's really not going to DRIVE grid mod. You know, the -- our grid mod -- trying to look at efficiency in building out pilot areas and going efficiently from place to place. 'Cause as the system ages --right? -- grid mod is really, you know, putting that reliability first -- and the capacity first -- to allow Palo Alto to meet its carbon goals to electrify. So, I don't want tooverstate the value or perception that TOU rates are going to drive, maybe, significant reductions in our grid mod, especially when it comes to overhead. Right? Ithink Director Batchelor was talking specifically in regards to the undergrounding -- right? -- and some of those constraints. But grid mod for the overhead, there's-- you know, we're standardizing on, you know, overhead transformer size. We're standardizing on -- as we go through and replace the poles itself. So, I justwanted to, you know, kind of -- 1:50:12: Commissioner Tucher: I'm surprised. Because I would think that grid mod's going to be -- You know, the cost of upgrading transformers and poles is going to bemuch, much higher if we -- if people don't synchronize. And they're only going to synchronize if there are price signals. And so, I can't imagine that there wouldNOT be a connection -- a tight connection between time-of-use and price incentives, and what it's going to cost to modernize the neighborhood grids. ### The grid mod pilot is currently underway. Right? So it has already standardized on something. Right? 1:50:41: Director Batchelor: So, I think that we're kind of behind the eight ball, when you ask that question. Because I think if we had time-of-use rates out there today,we'd know EXACTLY what's going on with the neighborhood. You know, where we think that we need that 50 kV transformer, maybe we don't. Maybe what wedo is, it's OK the way it sits today. But we don't have that information today. We don't know what -- You know, we were kind of late to the game to actually getinto -- you know, into the metering portion of it. If we had this information, yes, I'd say that, you know, maybe there's a possibility that it's not a $300 million build-out. We know that in the next 10 years, we were going to spend about $150 million on just end-of-life equipment. So, maybe the two -- the 225 -- you know, if wewould have had that information. But we don't. And so, I think that as we learn moving forward -- ah -- because I think that what we build today could be totallydifferent from a load factor forecast in the next 5-10 years. But we would then have information that is exactly what you're saying is -- What is, and how do we --are able to sell this, and be able to tell customers, here are the advantages if you get into the TOU rates. And then, what is the time -- the right time -- for that neighborhood, so that we would be able to shift, if we need to shift capacity. Because right now, capacity is going to be even across the board. But maybe there's some neighborhoods that are going to need capacity, that are going to be up in this area [gestures], where this capacity over here [gestures] we could take and wecould shift. Because -- Again, because we know the rates. We also know about our meters. So, you know, I think that -- I don't have a good answer. Otherthan, you know, that we were probably not able to, right now, be able to go into the depth that you're asking for, and not knowing, just because we just don't havethat data out there. 1:52:50: Commissioner Tucher: Thank you. Well, next month, I think grid mod and AMI are on the agenda, so maybe this will roll into that a little bit. Just one quick, easy, light-hearted question. How do I figure out if I have an AMI -- if I'm one of the 90 percent -- or any homeowner? How does one know if one has a -- AMI? ### A smart electric meter looks like this (1:51 on this video).https://www.cityofpaloalto.org/Departments/Utilities/Customer-Service/Meter-Reading-Info-Schedule/Advanced-Metering-Infrastructure-and-Smart-GridAn analog (not smart) electric meter looks like this.https://www.cityofpaloalto.org/Departments/Utilities/Sustainability/Solar-in-Palo-Alto/Net-Energy-Metering/NEM-1 1:53:14: Dave Yuan: If you log into MyCPAU, the customer portal, you should be able to see if -- whether or not you can do hourly or 15-minute intervals. 1:53:20: Commissioner Tucher: OK. That answers that. 'Cause I was stumped when you said we can see hourly rates. 'Cause I can't. So, obviously, I'm not on it. Thank you. 1:53:28: Dave Yuan: OK. If you contact us, we can switch out your meter, if it's available. So -- 1:53:32: Commissioner Tucher: When you get around to our neighborhood, I will be in line. 1:53:34: Dave Yuan: OK. But I think we've done it for others. So, if you want it, we're happy to do so. To schedule it. 1:53:39: Chair Mauter: Commissioner Gupta. 1:53:42: Commissioner Gupta: Yeah. Thank you. I had a question on kind of the capital costs that we're talking about here. And I think this is going to be what -- kind of - - staff will look at, even the conversation of the Commission here. But I am curious if we break out capital costs, commercial versus residential. Viewing that residential makes up 20 percent of the energy share, commercial makes up 80 percent. If commercial isn't adopting time-of-use, or has these other sorts ofcharges along with their energy use, do we also divide capital costs of serving commercial customers differently than our residential customers? And that to meseems like something that would comport with Proposition 26. 1:54:30: Micah Babbitt: Yeah. So, we completed a cost of service analysis in the last year's rate cycle. It's a 50-page report that goes through all of our costs and our revenue requirement. ### 04-30-24: "Electric Cost of Service and Rate Study" (52 pages)https://www.cityofpaloalto.org/files/assets/public/v/3/agendas-minutes-reports/reports/city-manager-reports-cmrs/attachments/2024-rates/electric-cosa.pdf And breaks it down, and goes through how we charge each customer class. So, as part of that analysis, we look at all of our fixed assets that are in place, andassign and allocate those costs to specific customer segments. So, if you're curious in more detail on that, that report would be a great starting point. 1:55:06: Commissioner Gupta: Thank you. And then, also, on the data point that we talk about. Now that we have 90 percent of our customers on AMI, are we collectingthat data on energy use, on those more granular segments? And can that help us model -- predict customer behavior if we did adopt time-of-use? And can wealready start using that data, maybe in the next year or so, as we collect it, to help us plan grid mod? 1:55:33: Micah Babbitt: We can. And I expect our time-of-use rates to be refined over time, as we learn more about how our customers are using energy. We're -- It's a fun time to be an analyst here right now, as we have more data coming in and we can actually see how our customers are using energy on a more granular basis. So, it's -- we're building out those tool sets right now. And so, that's one of the challenges of doing this analysis before you have all the data. But we're trying toget all of that in place. 1:56:09: Commissioner Gupta: Thank you. And then, another question on kind of the capital costs for our residential customers. So, as I'm looking at this presentation, itseems residential customers are a 20 percent energy share. And then, we're talking about peak energy usage, which seems to be about a 10 percent share ofthat share. So, are we talking about kind of a 2-3 percent energy share? And if that's true, does that really factor into capital expenditure on the residential customer side? 1:56:42: Micah Babbitt: I'm a little bit confused by your question, and what you're -- 1:56:48: Commissioner Gupta: I could be multiplying numbers I'm not supposed to be. But if it's true, I understood that residential customers as a group are about 20 percent of the City's energy share. And then, from the chart on packet page 104, ### That is, presentation slide 9. But actually, peak shares are presented on presentation slide 10 (packet page 105). And the slide calls them "energy shares,"but they're really power shares. as to residential time-of-use periods, we're saying that the peak part of that share is 10 percent. 10 or 12 percent. So, I'm wondering -- multiplying the totalenergy share of residential customers, which is 20 percent times the 10-12 percent of peak share is -- are we really only talking about for residential customers atonly 2-3 percent share? And does that really factor into additional capital cost? 1:57:36: Micah Babbitt: I don't think that's the right math to get there. 1:57:44; Commissioner Gupta: Yeah. 1:57:44: Micah Babbitt: We can -- I can talk offline with you -- probably is the better way to address it, is I would say. 1:57:49: Commissioner Gupta: OK. Thank you. 1:57:52: Chair Mauter: OK. And -- Well, we have had a great discussion here. Thank you, Micah, for coming. And, you know, I think if it is at all possible to follow up onsome of this analysis in advance of the January meeting, where we ARE talking about grid mod, I'm sure the Commission would appreciate the continuity, and thekind of continuation of this discussion. ### Will the public have a way to access to this follow-up? 1:58:13: Alan Kurotori: I just wanted to add -- If you look at our Reliability and Resiliency Plan, ### 02-12-24: "Reliability and Reliability Strategic Plan for the City's Electric Utility" (10 pages)https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=1437d776-f5ce-4d15-82d0-ad5dca3861b0(This document is in a strange format that makes it hard to read. The document says it IS a study session. Huh?) ### Council approved the Reliability and Reliability Strategic Plan (RRSP) on 04-15-24 (on consent -- i.e., with no discussion).https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13500 ### UAC voted 7-0 to approve the "S/CAP Strategic Plan on the Reliability and Resiliency for the Electric Distribution Utility" at its 12-06-23 meeting.https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=12972The document (13 pages) for this meeting is not in a strange format, but it's not available as a URL. It doesn't mention "time-of-use" or "TOU." there's a lot of studies embedded in those, that we need to look at. Some good optimization, in terms of what the customers do -- distributed generation, storage,you know, vehicle-to-grid. Those are the types of the things that are being looked at. And in terms of what to look for distribution costs. So, there are manycomponents to the distribution system. So, it's not just the poles and the transformers. We'll also look at our substations. So, we're looking at our substations,receiving stations, trying to get a second feed into the City. ### That is, the City is trying to get a second transmission corridor. The City already has three feeds -- transmission lines -- but they're all in the same corridor. So, these studies will help us as we look at some of our -- as Director Batchelor [mentioned] -- Our feeders in our system. How we look at that type ofoptimization. And that's also where we can look to optimize some of our capital expenditures. 1:58:59: Chair Mauter: Great. Yeah. I mean, I guess I would just close by saying, I certainly don't think any of the Commission expects all this analysis to be DONE by next month. But, you know, I think for places where it's not done, or you don't have it handy, just clarifying like what is the analysis that you might plan to do wouldhelp bring confidence that the City utility is actually thinking through some of these things that are of concern to the Commission. 1:59:27: OK. I am sensitive to time. And so, I would like us to move on to our packet Item ### agenda item number 4, the review and discussion of Preliminary Fiscal Year 2026 Utilities Financial Forecast and Rate Projections. 1:59:48: END OF TRANSCRIPT