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HomeMy WebLinkAboutStaff Report 2501-39951.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on February 5, 2025 Item No. 1. Page 1 of 1 6 2 8 5 Utilities Advisory Commission Staff Report From: Kiely Nose, Interim Director of Utilities Lead Department: Utilities Meeting Date: March 5, 2025 Report #: 2501-3995 TITLE Approval of the Minutes of the Utilities Advisory Commission Meeting Held on February 5, 2025 RECOMMENDATION Staff recommends that the UAC consider the following motion: Commissioner ______ moved to approve the draft minutes of the February 5, 2025 meeting as submitted/amended. Commissioner ______ seconded the motion ATTACHMENTS Attachment A: 01-07-2025 UAC Minutes AUTHOR/TITLE: Kaylee Burton Utilities Advisory Commission Minutes Approved on: Page 1 of 29 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF FEBRUARY 5, 2025 REGULAR MEETING CALL TO ORDER Chair Scharff called the meeting of the Utilities Advisory Commission (UAC) to order at 6:05 PM. Present: Chair Scharff, Commissioners Croft, Gupta, Metz, Phillips, and Tucher (6:07 PM) Virtual: Vice-Chair Mauter AGENDA REVIEW AND REVISIONS None ORAL COMMUNICATIONS None APPROVAL OF THE MINUTES ITEM 1: ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on January 7, 2025 ACTION: Commissioner Croft moved to approve the UAC meeting minutes for January 7, 2025. Commissioner Metz seconded the motion. The motion carried 6-0 with Chair Scharff, Vice Chair Mauter, and Commissioners Croft, Gupta, Metz, and Phillips voting yes. Commissioner Tucher was absent. UTILITIES DIRECTOR REPORT Kiely Nose, Interim Director of Utilities, delivered the Director's Report. On January 25, 2025, the City Council held its annual retreat to select their priorities for 2025 as well as review community input and key accomplishments for 2024. Council established the following four priorities: Implement housing strategies for social and economic balance, climate action and adaptation, natural environment protection, economic development and retail vibrancy; and public safety, wellness, and belonging. The Council approved the formation of the Utilities Advisory Commission Minutes Approved on: Page 2 of 29 following four committees for the 2025 calendar year: Climate Action and Sustainability Committee, Retail Committee, Rail Committee, and Cubberley. On February 24, 2025, the Council will discuss the objectives, projects, and work plans associated with their four priorities as well as the scope of the ad hoc committees. After February 24, 2025, committees and commissions will work on their 2025 work plans. The UAC’s 2025 work plan will go to Council for approval in March or April. NEW BUSINESS ITEM 2: DISCUSSION: Reliability and Resiliency Strategic Plan: Update on Studies Utilities Advisory Commission Minutes Approved on: Page 3 of 29 Karla Dailey, Assistant Director of Utilities Resource Management Division, addressed the UAC. The Reliability and Resiliency Strategic Plan (RRSP) was a collaboration between Utilities, Engineering, and Resource Management and was part of a larger interdepartmental team led by Jonathan Abendschein, Assistant Director of Climate Action. The Utilities leads on this part of the project were Shiva Swaminathan from Resource Management and Mohammad Fattah from Engineering. The RRSP goal was to improve reliability and resiliency for the community via upgrading distribution equipment and strategies such as distributed energy resources. Council approved the RRSP in April of 2024. In the fall of 2024, staff came to the UAC to obtain feedback on the scope for consultants. Staff returned today to provide an update per the UAC’s request and to request feedback on parts of the RRSP. Utilities Advisory Commission Minutes Approved on: Page 4 of 29 those technologies could contribute benefit to the community. In September, staff was asked whether energy efficiency could be included. Staff considered the idea but felt it was duplicative to have Buro Happold analyze energy efficiency because CPAU partnered with other publicly owned utilities (POU) throughout the California Municipal Utilities Association to do a study on energy efficiency measures. Utilities Advisory Commission Minutes Approved on: Page 5 of 29 Commissioner Tucher looked in September and December’s meeting materials and was unable to easily find if an assessment has been performed to identify areas of weakness in reliability and resiliency. Mr. Abendschein said the grid modernization study was a basic assessment that identified areas needing work. Mr. Abendschein suggested watching the February 2024 Council Study Session on reliability. Commissioner Tucher hoped to find a map showing the trouble areas in Palo Alto or a document explaining how reliability and resiliency were assessed and what the weak points were. Commissioner Tucher thought the grid was resilient, Palo Alto did not have a lot of outages, the duration of outages was not bad, and customers were generally satisfied. Mr. Abendschein encouraged Commissioner Tucher to email him so staff could share further information. Relative to the S/CAP and the list of technologies, Commissioner Phillips asked if climate change impact was considered or if it would be looked at separately. Mr. Abendschein explained that the carbon impact was integrated into the supply cost analysis because markets were structured in California to have high costs when carbon emissions were high, so the supply cost included the carbon benefits on the grid in avoided gas generation. Commissioner Phillips asked if the cost was high because the marginal cost of gas generation was a proxy for or equaled the cost we would assign to the carbon emission. Mr. Abendschein stated that the market cost of carbon was included but staff will take Commissioner Phillips’s comment into consideration when looking at the supply cost analysis. When staff comes back to the UAC, they will address the question on whether a higher carbon cost should be allocated to avoided gas generation in the electric system. On Slide 5, Commissioner Phillips was surprised to see time-of-use rates and demand response did not impact resiliency because he thought it would make the system more resilient. Outages tend to happen at certain times of the day because of peaking, so charging higher prices for that time of day would dampen local demand and possibly cause industrial to shift away from those times to reduce the impact. Commercial was 85 percent of the load. Mr. Abendschein clarified that the resiliency column on Slide 5 was about what happened when an outage occurred. Demand response indirectly could contribute to reductions in outages, so it qualitatively improved reliability and resiliency of the system. Commissioner Gupta asked if the assessment of the technologies listed on Slide 5 might inform how we approach grid modernization. Commissioner Gupta recalled a member of the public commented about using meter socket adaptors as a means of reducing the need to increase the capacity to a home because it bifurcated the circuit from your electric vehicle (EV) and the rest of your house. Mr. Abendschein replied that meter socket adaptors would be talked about in Buro Happold’s presentation. The E3 analysis was to assess whether technologies or efficient electrification could allow for changes in the grid modernization implementation, which would be talked about in depth in Item 2C. Commissioner Gupta asked for definitions of the technologies listed on Slide 5. Mr. Abendschein responded that EV managed charging was a technology used to limit the Utilities Advisory Commission Minutes Approved on: Page 6 of 29 maximum draw from the distribution system at any one time. Demand response was when people stopped EV charging in response to grid events. Vehicle to home was the ability to back up a home using a vehicle. Vehicle to grid was the ability to have your EV discharge or charge in response to grid signals. Utilities Advisory Commission Minutes Approved on: Page 7 of 29 Commissioner Croft asked whether staff had looked at all the grids in Palo Alto, such as energy generators and arrays on schools. Commissioner Croft looked on Google Maps to see which companies or buildings had big solar arrays. Commissioner Croft inquired if there had been any consideration to negotiating with the owners of those arrays to have them be a backup source of energy to the City or perhaps connected to storage as part of the resiliency plan. Mr. Abendschein made note of Commissioner Croft’s comment for staff to consider. ITEM 2A: DISCUSSION: Supply and Resiliency Cost/Benefit Analysis and Program Ideas Utilities Advisory Commission Minutes Approved on: Page 8 of 29 Commissioner Metz asked about capacity cost, RA cost, and other CPAU costs. Mr. Miramontes replied that the cost per megawatt hour encompassed transmission and distribution but he thought the RA was built in. Mr. Miramontes offered to follow up with the exact parameters included. Commissioner Metz was interested in the financial cost beyond the kilowatt hour energy cost and the benefits beyond financial benefits. Mr. Abendschein explained that supply costs included energy costs and a renewable energy dimension, a greenhouse gas cost, losses, as well as transmission, distribution, and generating capacity, which were costs based on needing to meet a peak. Transmission was charged to Palo Alto on a kilowatt hour basis and spread across the year, so the summer peak was not as steep as the statewide model. Palo Alto buys generating capacity that other utilities do not need. Palo Alto does not build and own large, new generators. Other utilities may put the cost of new generation into their peak capacity value; however, that is not an economic value we can realize in Palo Alto. Statewide, the zero value on the chart due to new generation was hours of solar over-generation. The City’s avoided cost model did not show a zero cost because we pay to transmit energy and transmission is on an hourly basis. Commissioner Phillips inquired if it was possible to arbitrage, which would also capture some of the social value. Mr. Abendschein will get back to Commissioner Phillips with a response. Shiva Swaminathan, Senior Resource Planner, explained the disparity was primarily driven by transmission constraints and the State needing to invest in transmission. Transmission capacity was embedded into an easy-to-model framework but energy arbitrage was on an energy basis. You cannot arbitrage capacity in the market. The difference was due to transmission and generation capacity, not the energy component alone. Adding generation capacity through technologies could avoid Utility costs. Palo Alto sells surplus generation into the market to make money but has to buy from the market at a higher price when we are short. The capacity was a transparent market. Mr. Abendschein remarked that the State’s valuation model looked at the cost of building a new transmission line or generator, which was more costly than the market value of capacity. Almost never was the price of building a new transmission line or generator reflected in the market, so it made arbitrage difficult. Mr. Swaminathan agreed with Mr. Abendschein’s explanation and added that the modeled results were for 2025, 2030, 2035, 2040, and 2045, which included new capacity needing to come online. Vice Chair Mauter asked if it was the marginal cost of acquiring a new unit. Mr. Abendschein answered yes for the long-term marginal cost, although the marginal price was not always reflected in the market. Vice Chair Mauter thought it might help for the Commission to know that this did not include local distribution avoided cost. For example, there could be a citywide variation in costs for a microgrid. Mr. Abendschein agreed and stated that the set of studies would capture supply, distribution, and resiliency benefits. Commissioner Croft queried what was the difference between 2025 and 2030, and if batteries coming online would reduce the statewide peak. Mr. Abendschein replied that the disparity would remain but would probably change. Mr. Miramontes remarked that in the 2035 and 2040 models, the peaks tended to shift further toward nighttime hours likely due to more EV Utilities Advisory Commission Minutes Approved on: Page 9 of 29 charging on the grid, so the pricing reflected additional demand. Different load shapes were presented in the forecasted years. The modeling process incorporated technologies when reflecting the current and future state of the grid and pricing structure. Mr. Abendschein asked whether the divergence between the Palo Alto and statewide models narrowed, widened, or stayed about the same. Mr. Miramontes thought it stayed about the same. Commissioner Metz commented that Palo Alto had a diurnal load profile that peaked earlier in the day than other parts of the state on average. Palo Alto could sell energy. Mr. Abendschein stated that Palo Alto had generation from hydro to put into evening hours. Utilities Advisory Commission Minutes Approved on: Page 10 of 29 On a scale from 1 to 10, Commissioner Gupta wanted to know the confidence level on the assumptions made about costs, which would be helpful for the Commission to keep in mind when assessing the benefits of these technologies at a later stage. Mr. Abendschein stated that all inputs were reviewed, staff provided a lot of the inputs, and these were the best estimates but there was always uncertainty. A change in market conditions could change the cost/benefit assessment. Because of uncertainty, the quantitative analysis was not meant to be the only consideration when deciding whether to run these programs. Utilities Advisory Commission Minutes Approved on: Page 11 of 29 sector referred to low-probability, high-consequence, disruptive impacts with a duration of hours to months, often had a much wider scale of regional or statewide impact, and often had cascading impacts in other parts of the economy. For this study, the scope was focused on outages in the range of two to eight hours, and the technologies typically provided outage prevention within 24 hours. Utilities Advisory Commission Minutes Approved on: Page 12 of 29 improve data accuracy. Depending on when it is released, Buro Happold can easily update it in their model. Utilities Advisory Commission Minutes Approved on: Page 13 of 29 however, the data in the current model was not recent. Commissioner Phillips asked for a list of what was included, such as if median income was split between residential and commercial. Utilities Advisory Commission Minutes Approved on: Page 14 of 29 much higher value of resiliency. Chair Scharff commented some qualitative benefits were comfort, the ability to take a shower and flush your toilet if you do not have electricity. Utilities Advisory Commission Minutes Approved on: Page 15 of 29 The C40 studies were quantitative but addressed financial and sustainability impacts. Commissioner Metz recommended evaluating resilience using a scenario approach starting with business as usual, a normal interruption from minutes or hours, and an emergency such as an earthquake with days or weeks of disruptive interruption. The analysis of emergencies needed to be coordinated with the Office of Emergency Services (OES). Commissioner Metz and Commissioner Gupta had some discussions with Ken Dueker and other folks at the OES. The OES had strong and well-informed opinions about design emergencies we should be preparing for and Commissioner Metz did not see those reflected in this study. Commissioner Metz believed it was important for CPAU and the City to coordinate its definition of and preparation for an emergency with the OES. Utilities Advisory Commission Minutes Approved on: Page 16 of 29 as low probability and the strategic plan was called Reliability and Resiliency yet it would not study resilience in that context. Utilities Advisory Commission Minutes Approved on: Page 17 of 29 found across the state. Programs with a component for Disadvantaged Communities (DACs) were denoted, such as higher incentive rates for low-income customers or customers residing in a DAC-designated area. The most common amongst Palo Alto’s peers was battery programs. This research will be used to inform program design. ACTION: None. ITEM 2B: DISCUSSION: Airport Microgrid (Burns McDonnell) Utilities Advisory Commission Minutes Approved on: Page 18 of 29 the airport and 200 vehicles/day, Outage Type 2 was a three-day December outage for the airport and 200 vehicles/day. Utilities Advisory Commission Minutes Approved on: Page 19 of 29 could be done as a behind-the-meter system, which he did not think was common when crossing parcels, so a Utility Power Purchase Agreement (PPA) was probably more appropriate for crossing parcels. Commissioner Tucher asked if staff was contemplating going to a partner or customer and saying the City wanted to install a microgrid for you. Mr. Abendschein stated that in Commissioner Tucher’s scenario it would be used fulfill part of the City’s energy portfolio. Utilities Advisory Commission Minutes Approved on: Page 20 of 29 outage and being able to run critical loads for a longer period. Mr. Abendschein stated he was told by Shiva Swaminathan that the airport did not have backup generation. Utilities Advisory Commission Minutes Approved on: Page 21 of 29 clear on their position on microgrids. Mr. Abendschein replied that a microgrid was a combination of generation and loads that can run off-grid for some period of time. One house, a small commercial building, and a campus can be run as a microgrid but Stanford University was not. Mr. Abendschein thought there were maybe one or two microgrids in Palo Alto but he was not aware of campuses or large facilities in Palo Alto being run as microgrids. Customers can have a microgrid but CPAU had connection rules and regulations. CPAU did not have a position for or against microgrids. Utilities Advisory Commission Minutes Approved on: Page 22 of 29 Abendschein replied that after the study was completed, they will tell the UAC the economics and whether it made sense. Chair Scharff was convinced cheaper EV charging could be done by using garages with solar panels so people can charge in an emergency. Utilities Advisory Commission Minutes Approved on: Page 23 of 29 delay using the available diesel through the use of solar and storage, although it had to provide other economic benefits. Utilities Advisory Commission Minutes Approved on: Page 24 of 29 Mayor Lauing, UAC Liaison, addressed Commissioner Tucher’s question about policies. There were no policies in most cases, which was why the UAC and staff were working on this. There were not a lot of climate policies in place, so the Climate Action Committee was working on creating policies, programs, and financing for everything that has to be done. Commissioner Tucher asked for an example of a microgrid policy. Mayor Lauing replied that they had a neutral policy but an example of a policy could be to actively subsidize microgrids or an incentive program to promote microgrids with a goal to have X number of microgrids or X megawatt capacity through microgrids built within a specified amount of time. Some of this will be addressed through the S/CAP committee to Council as well. ACTION: None. ITEM 2C: DISCUSSION: Distribution Cost/Benefit Analysis (E3) Utilities Advisory Commission Minutes Approved on: Page 25 of 29 being launched to help people electrify efficiently. Low-power EV charging was encouraged on our website and through our Qmerit service that helps people find contractors to install EV charging. ACTION: None. FUTURE TOPICS FOR THE UPCOMING MEETING ON MARCH 5, 2025, AND REVIEW OF THE 12- MONTH ROLLING CALENDAR Utilities Advisory Commission Minutes Approved on: Page 26 of 29 not guaranteed because it depended on staff’s time and the UAC’s agenda. Staff planned to present fiber rates and packages, and provide the UAC an opportunity to ask questions about fiber-to-the-premise. It was a three-month process to go from the UAC to the Finance Committee and then to Council. The goal was to have it done this fiscal year. The soonest that rates could be adopted by the Council was June of 2025, which meant a program would be instituted the following month. As part of the discussion with the UAC, staff will provide a broader and more firm response on the timing. Utilities Advisory Commission Minutes Approved on: Page 27 of 29 send a copy of Commissioner Tucher’s letter to the UAC and include it in the next UAC package. Chair Scharff stated there could be an agenda item about whether the UAC wanted to agendize it. Commissioner Croft pointed out there were four raised hands in response to the straw poll. Commissioner Metz verbally stated he would like to agendize the letter. It was the consensus of the Commission, so Chair Scharff asked staff to agendize it. Utilities Advisory Commission Minutes Approved on: Page 28 of 29 was needed, and recommended using the Director’s Report as a way to respond and maintain continuity going forward. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS Utilities Advisory Commission Minutes Approved on: Page 29 of 29 download more than what she saw on the screen although it said you could. Commissioner Croft had her feedback written out and she will send it to staff. ADJOURNMENT