HomeMy WebLinkAboutRESO 10077Resolution No. 10077
Resolution of the Council of the City of Palo Alto Amending
the City’s Policy on the Use of Freely Allocated Allowances
Under the State's Cap-and-Trade Program and Authorizing
the City Manager to use $1.25 million from the Gas Utility
Cap and Trade Reserve for the Advanced Heat Pump Water
Heater program
R E C I T A L S
A. The Global Warming Solutions Act, also known as Assembly Bill 32 (AB 32), as
amended by Senate Bill 32 (2016), requires that California's Greenhouse Gas {GHG) emissions
be reduced 40% below 1990 levels by 2030, and authorized the California Air Resources Board
(CARB) to develop regulations to reach this goal.
B. Under the terms of CARB's cap-and-trade regulations, including Title 17
California Code of Regulations Sections 95892 (d)(2) and 95893 (d)(3), the City is required to
sell a portion of these allocated allowances in the auctions conducted by CARB and utilize the
auction sale proceeds “exclusively for the benefit of retail electric ratepayers” (for the electric
utility) or "exclusively for the benefit of retail ratepayers of each natural gas supplier" (for the
gas utility) and "consistent with the goals of AB 32".
C. On January 26, 2015 the Council approved a Policy on the Use of Freely
Allocated Allowances Under the State’s Cap and Trade Program (Resolution 9487).
D. The Council of the City of Palo Alto supports the state's AB 32 goals and intends
to implement the City's Policy on the Use of Freely Allocated Allowances Under the State's
Cap- and -Trade Program (formerly titled the Cap-and-Trade Revenue Utilization Policy) in
furtherance of these goals.
E. The Council has approved a Sustainability and Climate Action Plan Goal of 80%
emissions reduction from 1990 levels by 2030, a Framework, and an Implementation Plan. A
preliminary impact analysis reviewed by the Council on April 19, 2020 demonstrated that
building and vehicle electrification was a critical part of achieving these emissions reduction
goals.
F. The Council intends to establish various progra ms to promote building,
appliance and vehicle electrification, which will require significant funding. The Council wants
to amend the previously approved policy to clearly state its intention to use revenues from
the sale of City’s Gas Cap and Trade allowances for building, appliance and vehicle
electrification.
The Council of the City of Palo Alto (“City”) RESOLVES as follows:
SECTION 1. The Council finds that the use of revenues from the auction of freely allocated Gas
Utility allowances under the State’s Cap and Trade program to promote building, appliance
and vehicle electrification, when such conversions also reduce greenhouse gas emissions,
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provides a variety of benefits to the City’s gas customers, including:
a.furthering State and local climate protection goals by reducing natural gas-related
emissions due to the long-term and orderly transition away from natural gas to
carbon neutral electricity;
b.avoiding increasing environmental and transmission charges on gas use;
c.decreasing the energy cost of operating equipment, vehicles, and appliances due to
Palo Alto’s low electricity costs;
d.avoiding increasing natural gas distribution system maintenance costs.
SECTION 2. The Council finds that because nearly all members of the community use both
natural gas and electricity, fuel switching from natural gas to electricity reduces energy costs
and greenhouse gas emissions and facilitates an orderly transition away from natural gas at
the lowest feasible cost, it is of benefit to both gas and electric ratepayers to use revenues
from auction of both gas and electric allowances under the State’s Cap and Trade program to
promote fuel switching.
SECTION 3. The City's Policy on the Use of Freely Allocated Allowances Under the State's
Cap-and-Trade Program is amended as shown in Exhibit A.
SECTION 4. The Council grants the City Manager or his designee the authority to implement
the Policy on the Use of Freely Allocated Allowances Under the State's Cap-and-Trade Program
and to use allowances and allocate auction revenues to projects or expenditures as defined in
Exhibit A.
SECTION 5. The Council affirms the use of up to $1.25 million in revenues from gas utility
participation in the State’s Cap and Trade program to fund an Advanced Heat Pump Water Heater
Pilot, as described in Staff Report 14606.
SECTION 6. The Council finds that the implementation of this Policy, including the use of
revenue derived from it, and the expenditures of funds necessary to implement it, represent the
City's cost of regulatory compliance with the state's cap-and-trade program and are consistent
with the goals of AB 32. Such costs therefore represent the reasonable costs of providing service
to CPAU's gas customers.
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SECTION 7. The Council finds that the amendment of this policy does not meet the definition
of a "project" under the California Environmental Quality Act, as defined by Ca lifornia Public
Resource Code Section 21065.
INTRODUCED AND PASSED: October 3, 2022
AYES: BURT, CORMACK, DUBOIS, FILSETH, KOU, STONE
NOES: TANAKA
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services
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Exhibit A to Resolution No. 10077
Adopted by Council on 10/3/2022
CITY OF PALO ALTO POLICY ON THE USE OF FREELY ALLOCATED ALLOWANCES
UNDER THE STATE’S CAP-AND-TRADE PROGRAM
This Policy applies to freely allocated greenhouse gas (GHG) emission allowances from the California
Air Resources Board (CARB) to the City of Palo Alto’s electric and natural gas distribution utilities
(“Allocated Allowances”). The City Manager or his designee is authorized to use Allocated
Allowances and any resulting revenue in any lawful manner consistent with this policy.
The City’s Policy on the Use of Freely Allocated Allowances for the Electric Utility is as follows:
1.The City shall abide by CARB’s regulations by using the auction proceeds and allowance value
obtained from the City’s allocated allowances for the exclusive benefit of the City’s electric retail
ratepayers, consistent with the goals of the Global Warming Solutions Act, also known as
Assembly Bill 32 (AB 32), and not for the benefit of entities or persons other than such
ratepayers.
2.The following uses of the City’s auction proceeds are permitted:
a)Purchases or investment in renewable resources (outside Palo Alto or locally) for the electric
portfolio;
b)Investment in energy efficiency programs for the electric portfolio and retail customers;
c)Fuel switching from other fuels to electricity that reduces greenhouse gas emissions;
c)d)Investment in other carbon reduction activities, including those required to achieve
a carbon-neutral electric portfolio; and
d)e)Rebates to electric retail ratepayers.
3.Allocated allowances may also be used to meet the City’s electric utility’s compliance obligations
for electricity scheduled into the California Independent System Operator Markets, should state
law eventually permit this action.
4.Council will receive annual reports on the allowance revenues and expenditures associated with
complying with CARB regulations and this policy.
5.Additional Council approval will be required for any rebates to electric ratepayers proposed
under this Policy.
The City’s Policy on the Use of Freely Allocated Allowances for the Gas Utility is as follows:
1.The City shall abide by CARB’s regulations by using the auction proceeds for the exclusive
benefit of the City’s natural gas retail ratepayers, consistent with the goals of the Global
Warming Solutions Act, also known as Assembly Bill 32 (AB32), and not for the benefit of
entities or persons other than such ratepayers.
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2.A portion of the Allocated Allowances can be used to meet the City’s natural gas utility’s
compliance obligations, and the remaining Allocated Allowances will be consigned to
auction.
3.The following uses of the City’s auction proceeds from the sale of Allocated Allowances are
permitted, with a preference that greenhouse gas reduction measures be pursued before
providing rebates:
a.Investment in energy efficiency programs for the natural gas portfolio and retail
customers;
b.Purchases or investment in cost effective renewable bio-gas resources for the gas
portfolio;
c.Fuel switching from natural gas to electricity that reduces greenhouse gas emissions;
c.d. Investment in other carbon reduction activities for the natural gas utility, including
system maintenance or replacement to reduce fugitive gas emissions;
d.e. Rebates to natural gas retail ratepayers. Rebates, if provided, must be allocated on
a non-volumetric basis as stated in Title 17 CCR Section 95893 (d)(3).
4.Council will receive annual reports on the use of Allocated Allowances, including the use of
auction revenues and expenditures associated with complying with CARB regulations and
this policy.
5.Additional Council approval will be required for any rebates to natural gas ratepayers
proposed under this policy.
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Resolution No. 10078
Resolution of the Council of the City of Palo Alto Adopting a
Carbon Neutrality Goal to Further the Climate Goals of the
Sustainability and Climate Action Plan
R E C I T A L S
A.In December 2007, Council adopted the City’s Climate Protection Plan which
set a greenhouse gas (GHG) emissions reduction goal of 20% reduction by the year 2020.
B.In March 2013, Council approved Resolution 9322 directing staff to achieve
carbon neutrality for the electric supply portfolio by 2013 through the use of a combination of
hydroelectric resources, long-term renewable resources and short-term renewable energy
resources and/or renewable energy certificates (RECs).
C.In 2013, Council established the Office of Sustainability to work with other City
departments to bring a sharper strategic focus, better interdepartmental synergy, and greater
momentum to the City’s sustainability and climate initiatives.
D.In April 2016, Council adopted a GHG emissions reduction goal of 80%
reduction by the year 2030, relative to a 1990 baseline (the “80 x 30” goal). In 2016, the City
and Community reduced GHG emissions an estimated 37% relative to the 1990 baseline.
E.In December 2016, Council approved Resolution 9649 directing staff to achieve
carbon neutrality for the natural gas supply portfolio by 2018 through the use of high-quality
environmental offsets and physical “biogas” or “biomethane”.
F.In September 2018, Governor Brown issued California Executive Order B-55-18,
setting the goal to achieve carbon neutrality as soon as possible, by 2045 at the latest, and
achieve and maintain net negative emissions from that point forward. A s defined by the
California Air Resources Board, “Carbon neutrality means that all GHG emissions emitted into
the atmosphere are balanced in equal measure by GHGs that are removed from the
atmosphere, either through carbon sinks or carbon capture and storage”.
G.In 2020, the City and Community reduced GHG emissions an estimated 50.6%
relative to the 1990 baseline.
H.In April 2021, Council directed the Mayor to form a Sustainability and Climate
Action Plan (S/CAP) Ad Hoc Committee to guide the development, implementation,
communication, and future community engagement of the S/CAP. In April 2022, the S/CAP Ad
Hoc Committee began discussions on carbon neutrality. The “80 x 30” goal is an interim step
that supports California’s statewide goal of achieving carbon neutrality by 2045.
I.As a result, the Council wishes to adopt a carbon neutrality goal to further the
climate goals of the S/CAP beyond the “80 x 30” goal, and direct staff to evaluate how the City
would meet a carbon neutrality goal.
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The Council of the City of Palo Alto (“City”) RESOLVES as follows:
SECTION 1. The Council hereby approves a goal to achieve carbon neutrality by 2030.
SECTION 2. The Council finds that the adoption of this resolution is not subject to
California Environmental Quality Act (CEQA) review because it is an administrative government
activity that will not result in any direct or indirect physical change to the environment (CEQA
Guidelines section 15378(b)(5)).
INTRODUCED AND PASSED: October 3, 2022
AYES: BURT, CORMACK, DUBOIS, FILSETH, KOU, STONE, TANAKA
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services
DocuSign Envelope ID: 9CDCD8E9-478A-42EF-907F-75217AB6B1A8
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Vinhloc Nguyen
250 Hamilton Ave
Palo Alto , CA 94301
Vinhloc.Nguyen@CityofPaloAlto.org
IP Address: 199.33.32.254
Record Tracking
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Amy Bartell
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Assistant City Attorney
City of Palo Alto
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Kiely Nose
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Director, Administrative Services/CFO
City of Palo Alto
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Dean Batchelor
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Director of Utilities
City of Palo Alto
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Ed Shikada
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Ed Shikada, City Manager
City of Palo Alto
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Patrick Burt
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Mr
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Lesley Milton
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City Clerk
City Clerk
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