HomeMy WebLinkAboutStaff Report 4343
City of Palo Alto (ID # 4343)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 3/4/2014
City of Palo Alto Page 1
Summary Title: Resolution Establishing PaloAltoGreen Gas
Title: Utilities Advisory Commission Recommendation that the City Council
Adopt a Resolution Establishing the PaloAltoGreen Gas Program Using
Certified Environmental Offsets and Approving Three New G as Rate
Schedules: Residential Green Gas Service (G -1-G), Residential Master-
Metered and Commercial Green Gas Service (G -2-G), and Large Commercial
Green Gas Service (G -3-G)
From: City Manager
Lead Department: Utilities
Recommendation
Staff and the Utilities Advisory Commission (UAC) recommend that the Finance Committee
recommend that the City Council adopt a resolution:
1. Establishing the voluntary PaloAltoGreen (PAG) Gas Program, which will provide the
opportunity for residential and commercial customers to reduce or eliminate the impact
of greenhouse gas (GHG) emissions associated with their gas usage, through the
purchase of certified environmental offsets; and
2. Approving three new associated gas rate schedules: Residential Green Gas Service (G-1-
G), Residential Master-Metered and Commercial Green Gas Service (G-2-G) and Large
Commercial Green Gas Service (G-3-G).
Staff notes one change to the UAC recommended Rate Schedules: Recent information
regarding the cost to market the program resulted in an in crease in the proposed PAG Gas rate
from the 8₵/therm that was presented to the UAC in December 2013 to 12₵/therm.
City of Palo Alto Page 2
Executive Summary
The proposed voluntary PAG Gas Program will provide residential and commercial customers
with the opportunity to “green up” their use of gas. Under the PAG Gas Program, the City of
Palo Alto Utilities Department (CPAU) will purchase high quality environmental offsets on
behalf of participants in order to reduce or eliminate the impact of GHG emissions associated
with each customer’s gas usage. CPAU will limit purchases under the PAG Gas Program to
specific categories of offsets from a preferred set of offset providers, and favor, wherever
possible and economic, offset projects based in California. The PAG Gas Program is exp ected to
increase costs for the average participating residential customer by about $2.20 per month in
the summer and $6.50 per month in the winter. Commercial customers will be able to
purchase blocks of offsets to “green up” gas usage to a level and eco nomic impact they deem
appropriate.
The proposed PAG Gas Program is modeled after the highly successful, voluntary P aloAltoGreen
Program for electric customers, which allowed participants to receive 100% renewable energy
and eliminate the GHG emissions associated with their use of electricity. In light of the fact
that electric supplies are now carbon neutral for all customers, the City Council suspended the
PAG Program and called for staff to develop a new voluntary PAG Gas Program to allow
participants to eliminate the GHG emissions associated with their use of natural gas.
Background
For 10 years, the voluntary PAG Program satisfied the community’s desire to support the use of
renewable electric power and reduce the carbon footprint associated with its energy use.
Participation rates in the program were the highest among similar programs throughout the
nation and earned CPAU recognition and multiple awards. In 2012, approximately 20% of
CPAU’s customers participated in the PAG Program, representing 8% of the City’s total electric
usage.
The success of the PAG Program was attributed to CPAU’s ability to provide a direct benefit to
participants in the form of reduced GHG emissions equivalent to all or a portion of their
electricity consumption in a simple and convenient manner. In addition, participating in the
PAG Program allowed CPAU’s commercial customers (including City facilities) to achieve
environmental recognition and certifications in line with their own corporate sustainability
goals, including participation in the Environmental Protection Agency’s (EPA’s) Green Power
Partnership Program and the US Green Building Council Leadership in Energy & Environmental
Design (USGBC LEED) Program.
In March 2013, Council adopted the Carbon Neutral Plan for electricity supplies (Staff Report
#3550) and customers no longer needed to participate in the PAG Program to eliminate the
City of Palo Alto Page 3
GHG emissions associated with their electric usage. In September 2013, Council suspended the
PAG program for residential and small commercial customers who purchased renewable energy
credits sufficient to cover all of their electricity use (Staff Report #4041). At the same time,
Council directed staff to develop a new program that would allow participants to eliminate the
GHG emissions associated with their natural gas usage.
Discussion
Staff evaluated options for structuring the PAG Gas Program to achieve GHG reductions
associated with customer gas usage, including:
1. Direct biogas purchase to replace existing gas usage; or
2. Purchase of environmental offsets.
The additional cost for 100% direct biogas purchases for an average residential customer is
considered to be too high for customers to accept, especially with added costs for program
administration. Staff estimates the increased cost of these purchases would increase an
average residential gas customer’s bill by nearly $40 per month in the winter if 100% of the
customer’s gas usage was supplied using biogas. In addition, the long-term commitment
required to procure physical biogas is incompatible with a voluntary program that allows
participants to enter and exit the program whenever they wish.
By contrast, a PAG Gas Program backed by certified environmental offsets has a drastically
lower cost, and such a program can be implemented in a relatively short amount of time. The
impact on participants’ bills will depend on the type of environmental offset procured, which
can vary widely depending on offset program, certification, protocol and project source.
Environmental Offset Options
Offset Suppliers and Prices
Environmental offsets are certified by a number of offset registries, including the following:
1. Climate Action Reserve (CAR): CAR is the most popular registry for voluntary offset
programs.
2. California Air Resources Board (CARB): CARB certification is required for offsets used to
meet a compliance obligation under CARB’s cap -and-trade program. CARB offsets can
be guaranteed or non-guaranteed. Guaranteed means that the offset supplier accepts
the risk of CARB certification.
3. American Carbon Registry (ACR)
4. Verified Carbon Standard (VCS)
5. Gold Standard
6. Clean Development Mechanism
City of Palo Alto Page 4
Offset price can vary and will likely change in the future. Current prices are as follows:
1. CARB guaranteed offsets currently cost $10.50-$11 per metric tonne of carbon dioxide
equivalent (CO2e);
2. CARB non-guaranteed offsets currently cost $10 per metric tonne CO2e;
3. CAR livestock and forestry offsets currently cost $8-$9 per metric tonne CO2e ;
4. CAR landfill gas offsets currently cost $1-$5 per metric tonne CO2e; and
5. Voluntary offsets for other registries are in the same price range as CAR offsets.
Categories of Environmental Offsets
Each registry certifies a number of different offset protocols, which are ways the offsets are
generated, including the following:
1. Forestry
2. Livestock
3. Landfill
4. Coal Mine Methane
5. Urban Forestry
6. Ozone Depleting Substances
7. Rice Cultivation
The proposed PAG Gas Program would be supplied with environmental offsets certified by CAR
because this is the most commonly used registry in the country for voluntary programs. If
sufficient CAR offsets are not available, offsets registered though ACR or VCS would be used.
Purchasing offsets from the Gold Standard or Clean Development Mechanisms is not
recommended at this time because these are lesser known in the industry. Using CARB
certified offsets to supply the program is not recommended because they are more expensive,
and CARB certification is unnecessary for a voluntary program like the one proposed.
Moreover, since CARB has adopted CAR requirements, CAR-certified projects are identical to,
and eligible for, CARB certification under the applicable protocols.
In order to be certified, specific projects must meet the requirements of the applicable
protocol. Offset buyers, like CPAU for the PAG Gas Program, may specify the desired project
location in addition to the registry and protocol.
Offsets for the proposed PAG Gas Program are limited to protocols that have been approved by
CARB. At this time, CARB has only approved protocols for forestry and livestock projects, but
CARB may approve additional protocols over time. Since CARB uses the CAR standards for
project certification, CAR-certified projects under CARB approved protocols are the same
quality and only lack the CARB verification process, and hence are available at a lower cost.
Projects located in California are preferred because staff is confident that a program supplied
with these offsets will be most attractive to the PAG Gas Program participants. North American
City of Palo Alto Page 5
projects outside California will be considered as a second choice. Local urban forestry projects
will be considered when available and when that protocol is approved by CARB.
Rate and Bill Impacts
Direct Offset Costs
One therm of natural gas produces 0.0053 metric tonnes of CO2e1. Offsets costing $9 per tonne
of CO2e (CAR livestock and forestry offsets currently cost $8-$9 per tonne CO2e) add 4.8 cents
per them (₵/therm) to the gas purchased for PAG Gas Program participants.
Program Administration Costs
Palo Alto plans to engage a third -party contractor to assist staff in administering and marketing
the program. In December 2013, the UAC was presented with proposed rates that included an
estimate of 3₵/therm for program administration and marketing costs. Subsequently, a Request
for Proposals was issued and responses received indicated that marketing costs, at least for the
first several years of the program, need to be in the range of 7 ₵/therm. Like with the PAG
program, marketing costs for the PAG Gas Program are expected to decline over the life of the
program, at which point the rate, depending on the cost of the offsets, may be reduced.
Overall Cost to Participants
The proposed initial premium for the PAG Gas Program is 12₵/therm, which is expected to be
sufficient to cover the cost of the offsets as well as administrative and marketing costs. Once a
program administrator is engaged and the program has been operational for two to three
years, staff will have a better idea of actual ongoing costs and revenues. Staff will monitor the
costs and revenues of the program and return to Council, if needed, to request an adjustment
to the rates so that revenues equal costs.
The increased monthly cost for a residential gas customer with the 12₵/therm PAG Gas
Program premium is shown in Table 1.
1 1 tonne/2204.16 lbs * 116 lbs CO2
e /1 MMBtu CH4 *1 MMBtu/10 therms = .0053 tonnes/therm
City of Palo Alto Page 6
Table 1: Residential Natural Gas Bill Impact with Environmental Offsets
Gas Usage
(therms/month)
Current
Monthly bill *
Monthly bill
with a
premium of
12₵/therm
Increased monthly bill with
a premium of 12₵/therm
$/month %
10 $18.27 $19.47 $1.20 6.6%
18 (summer median) $24.99 $27.15 $2.16 8.6%
25 $33.44 $36.44 $3.00 9.0%
30 $35.06 $38.66 $3.60 10.3%
54 (winter median) $55.20 $61.68 $6.48 11.7%
100 $114.42 $126.42 $12.00 10.5%
* Assumes gas commodity cost of 40 ₵/therm
The increased cost to commercial customers will depend on the number of blocks purchased by
the customer. The price will be the same, 12₵/therm.
Potential Cost Variables
The total program costs and bill impacts calculated above are based on staff’s best estimates.
The actual cost of offsets and the administrative costs may vary. In addition, the number of
participants is unknown at this time. If the proposed rates result in excess revenue or cause a
significant revenue shortfall, staff will return to Council with a recommendation to adjust rates.
Proposed PAG Gas Program Design
The proposed PAG Gas Program uses certified environmental offsets to meet the community’s
desire to support further reductions in GHG emissions associated with gas usage in an
economic manner. Because the PAG (electric) Program was so popular, the proposed PAG Gas
Program contains many of the same elements, including:
1. Voluntary participation with ability to join or cancel at any time;
2. Simple, convenient program that covers 100% of a customer’s gas usage, thereby
eliminating all GHG emissions associated with their gas usage; and
3. “Block” purchase option for commercial customers allowing those customers to
designate the green option for a portion of their gas usage.
Proposed Program Summary
City of Palo Alto Page 7
In addition to the program design described above, the main components of the PAG Gas
Program include:
1. Environmental Offsets:
a. Offset protocols allowed are restricted to those that have been approved by CARB.
Currently, these include forestry and livestock protocols.
b. CAR certification required unless sufficient CAR certified offsets are not available. In
that case, offsets registered though ACR or VCS would be used.
c. Projects located in California are preferred, but North American projects outside
California will be considered as a second choice.
2. Price:
a. PAG Gas Program premium for “full needs” customers is 12₵/therm levied on the
customer’s entire gas usage.
b. PAG Gas Program premium for “block purchases” is $12 per 100 therms (12₵/therm)
for the portion of the customer’s gas usage designated to participate in the program.
This option not available to residential customers.
3. Implementation
a. PAG Gas Program to be implemented on July 1, 2014.
Other Voluntary Offset Programs
There are several voluntary offset programs offered by electric utilities across the country:
1. The Sacramento Municipal Utility District (SMUD) supplies a voluntary program with
CAR and VCS certified offsets and a variety of protocols;
2. Duke Energy offers CAR certified offsets using a variety of protocols to customers in
North Carolina, South Carolina, Indiana, and Kentucky;
3. Entergy offers CAR certified offsets to customers in the Gulf coast states; and
4. JustEnergy administers a voluntary offset program in the Northeastern US and Canada
using CAR certified offsets.
Other gas offset programs include:
1. Puget Sound Energy in Washington allows customers to offset their natural gas carbon
footprint with CAR certified local dairy digester projects;
2. Northwest Natural Gas in Oregon and Washington administers a program using CAR
certified offsets with a wide range of protocols; and
3. Washington Gas in the District of Columbia utilizes CAR and ACR certified offsets with
train hauling (as opposed to truck hauling) and land fill gas projects.
City of Palo Alto Page 8
Environmental Impact
If the participation rate for the PAG Gas Program is 20% of residential customers and 5% of
non-residential customers (as it was for the electric PAG program in 2012), then about 10% of
the City’s natural gas usage (about 3 million therms/year) would be covered with
environmental offsets, resulting in a reduction of GHG emissions totaling 16,000 metric tonnes
per year.
Implementation Plan
If the proposed PAG Gas Program design and rates are approved by Council, staf f will make the
necessary modifications to CPAU’s billing system to allow for the implementation of the PAG
Gas Program by July 2014.
While the program may take some time to attract new participants and increase its
participation rate, staff expects that a large percentage of current PAG Program customers will
sign up for the PAG Gas Program.
Staff plans to contract with a green power program consultant to launch and manage the PAG
Gas Program by providing a turnkey service (providing both program marketing and offset
purchasing). Based on the outcome of negotiations, staff will develop a final implementation
plan and will return to Council for contract approval, as required. If, at the beginning of the
PAG Gas Program or sometime in the future, staff decides it would be beneficial to use a
consultant for marketing services only, new master agreements will be established with
wholesale offset sellers. Staff will return to Council for approval of master agreements and a
marketing consultant contract, as required.
Commission Review and Recommendation
On December 4, 2013, the UAC considered the proposed PAG Gas Program. All commissioners
liked the simplicity of the proposed program design.
Vice Chair Foster proposed that all current PAG customers be a utomatically enrolled in the PAG
Gas Program with the option to opt out of the program. Because this is a gas, not an electric
program, as well as a new program, that suggestion was not supported by the other
commissioners.
Commissioner Chang expressed a preference for CARB certified offsets citing that CARB offsets
are the only offsets vetted by a state government, and, in her opinion, CARB offsets offer a
higher environmental benefit because of their potential use in the AB32 compliance market.
City of Palo Alto Page 9
After discussion, the UAC voted unanimously (5-0) to recommend that the City Council adopt a
resolution: (1) Establishing the voluntary PaloAltoGreen (PAG) Gas Program, which will provide
the opportunity for residential and commercial customers to reduce or elimi nate the impact of
greenhouse gas (GHG) emissions associated with their gas usage, through the purchase of
certified environmental offsets; and (2) Approving three new associated gas rate schedules:
Residential Green Gas Service (G-1-G), Residential Master-Metered and Commercial Green Gas
Service (G-2-G) and Large Commercial Green Gas Service (G-3-G). Chair Cook and
Commissioner Waldfogel were absent.
Draft minutes from the UAC’s December 4, 2013 meeting are provided as Attachment C.
As a result of the UAC discussion, staff modified the proposed program to include CAR-certified
offsets but to have them restricted to only the protocols approved by CARB. More detail
regarding offsets and updated costs was added to this report relative to the staff report
provided to the UAC. Limiting the protocols to those approved by CARB will ensure high quality
offset projects and will, in effect, remove offsets that could be used from those projects from
the compliance market.
Several commissioners expressed an interest in using locally generated urban forestry offsets.
If those offsets become available in the future, staff will evaluate their use.
As stated above, recent information regarding the cost to market the program resulted in an
increase in the proposed PAG Gas rate from the 8₵/therm that was presented to the UAC in
December 2013 to 12₵/therm.
Resource Impact
As the proposed PAG Gas Program is a revenue neutral, voluntary program, there is no net
impact on CPAU’s financial resources. Staff anticipates that customers making up 10% of the
City’s total gas load will participate in the PAG Gas Program, leading to PAG Gas Program
revenues and matching expenditures of about $360,000 annually. Marketing and program
administration costs are expected to be covered by existing budgets in the near term, and self-
supporting from PAG Gas Program revenues in the longer-term. While the PAG program
became revenue neutral within five years, it is expected that this program will become revenue
neutral in a much shorter time period because the concept is not new.
City of Palo Alto Page 10
Policy Implications
This recommendation is consistent with the Council -approved Utilities Strategic Plan,
specifically the objective to offer programs to meet the needs of customers and the
community.
Environmental Review
Council’s establishment of a PAG Gas Program does not meet the definition of a project,
pursuant to section 21065 of the California Environmental Quality Act (CEQA). However, the
City will receive environmental offsets from projects that will constitute a project for the
purposes of CEQA, or for projects located outside of California, the National Environmental
Policy Act (NEPA) or other applicable state environmental statute. Offset project developers
will be responsible for acquiring necessary environmental reviews and permits as offset
projects are developed.
Council’s establishment of new gas rates in support of the PAG Gas Program is not subject to
CEQA, pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the
California Code of Regulations Sec. 15273(a)(1) and (3), because the rates adopted by this
resolution are necessary to recover PAG Gas Program operating expenses.
Attachments:
Attachment A: Resolutino Approving Adoption of New Gas Rate Schedules (PDF)
Attachment B: Gas Rate Schedules G-1-G, G-2-G, and G-3-G (PDF)
Attachment C: Excerpted Final UAC Minutes of December 4, 2013 (PDF)
ATTACHMENT A
* NOT YET APPROVED *
140110 dm 6052006
Resolution No. _________
Resolution of the Council of the City of Palo Alto Establishing the
PaloAltoGreen Gas Program Using Certified Environmental Offsets
and Approving Three New Gas Rate Schedules G-1-G (Residential
Green Gas Service), G-2-G (Residential Master-Metered and
Commercial Green Gas Service) and G-3-G (Large Commercial Green
Gas Service)
A. In an effort to provide City of Palo Alto Utilities (“City”) electric customers the
option to voluntarily reduce greenhouse gas emissions associated with their electricity use, in
2003, the City launched the PaloAltoGreen Program.
B. In March 2013, the Council unanimously approved the Carbon Neutral Plan
(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. On September 9, 2013, this Council approved a resolution modifying and
suspending portions of the PaloAltoGreen Program, and directing staff to develop a
PaloAltoGreen Gas Program (Staff Report #4041).
D. Establishment of a voluntary PaloAltoGreen Gas Program (PAG Gas Program) will
provide the opportunity for residential and commercial customers to economically reduce or
eliminate the impact of greenhouse gas (GHG) emissions associated with their gas usage
through the purchase of certified environmental offsets.
E. Establishment of a PAG Gas Program also requires Council approval of three new
gas rate schedules to implement the PAG Gas Program.
The Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The PaloAltoGreen Gas Program is hereby established as of July 1, 2014.
SECTION 2. The PaloAltoGreen Gas Program shall adhere to the following principles:
a. Participation in the PAG Gas Program shall be voluntary for all CPAU gas
customers in good standing;
b. CPAU gas customers may participate in or opt out of the PAG Gas Program at
any time;
ATTACHMENT A
* NOT YET APPROVED *
140110 dm 6052006
c. The PAG Gas Program will use certified environmental offsets acquired from an
established offset registry and offer appropriate offset protocols, as
determined by CPAU staff;
d. Staff shall monitor and manage PAG Gas Program expenditures such that
revenues and costs are properly balanced, and shall return to Council as
needed to request any adjustments to PAG Gas Program rates.
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule G-1-G (Residential Green Gas Service) is added as attached and incorporated. Utility
Rate Schedule G-1-G shall become effective as of July 1, 2014.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule G-2-G (Residential Master-Metered and Commercial Green Gas Service) is added as
attached and incorporated. Utility Rate Schedule G-2-G shall become effective as of July 1,
2014.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule G-3-G (Large Commercial Green Gas Service) is added as attached and incorporated.
Utility Rate Schedule G-3-G shall become effective as of July 1, 2014.
SECTION 6. The Council finds that revenue derived from the authorized adoption enumerated
herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the
City of Palo.
SECTION 7. The Council’s establishment of a PAG Gas Program does not meet the definition of
a project, pursuant to section 21065 of the California Environmental Quality Act (CEQA).
However, the City will receive environmental offsets from projects that will constitute a project
for the purposes of CEQA, or for projects located outside of California, NEPA or other applicable
state environmental statute. Offset project developers will be responsible for acquiring
necessary environmental reviews and permits as offset projects are developed.
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ATTACHMENT A
* NOT YET APPROVED *
140110 dm 6052006
SECTION 8. The Council finds that the adoption of this resolution establishing new gas rates in
support of the PAG Gas Program is not subject to CEQA, pursuant to California Public Resources
Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a)(1) and
(3), because the rates adopted by this resolution are necessary to recover the PAG Program’s
operating expenses. After reviewing the this resolution and associated staff report, the Council
finds that sufficient evidence has been presented setting forth with specificity the basis for this
claim of CEQA exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
RESIDENTIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-1-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2014
New Sheet No G-1-G-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities under the PaloAltoGreen Gas Program:
1. Separately-metered single-family residential Customers.
2. Separately-metered multi-family residential Customers in multi-family residential
facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ..........................................................................................................$9.88
Tier 1 Rates: Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Administrative ................................................................................... $0.0074
3. Transportation ................................................................................... $0.0435
Distribution Charge:............................................................................................. $0.3883
PaloAltoGreen Gas Charge .................................................................................. $0.1200
Tier 2 Rates: (All usage over 100% of Tier 1)
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-2.00
2. Administrative.................................................................................... $0.0074
3. Transportation .................................................................................... $0.0435
Distribution Charge:............................................................................................. $0.9037
PaloAltoGreen Gas Charge .................................................................................. $0.1200
D. SPECIAL NOTES:
RESIDENTIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-1-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2014
New Sheet No G-1-G-2
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s meter. The
Commodity charge will fall within the minimum/maximum range set forth in Section C.
2. Seasonal Rate Changes:
The Summer period is effective April 1 to October 31 and the Winter period is effective
from November 1 to March 31. When the billing period includes use in both the Summer
and the Winter periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates for each period. For
further discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Calculation of Usage Tiers
Tier 1 natural gas usage shall be calculated and billed based upon a level of 0.667 therms
per day during the Summer period and 2.0 therms per day during the Winter period,
rounded to the nearest whole therm, based on meter reading days of service. As an
example, for a 30 day bill, the Tier 1 level would be 20 therms during the Summer period
and 60 therms during the Winter period months. For further discussion of bill calculation
and proration, refer to Rule and Regulation 11.
4. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions
associated with a Customer’s Gas usage, through the purchase of certified environmental
offsets, with a preference to projects located in California. Purchases are made to match
100% of the therm usage at the Customer’s premises every month.
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application
provided by the Customer Service Center.
{End}
RESIDENTIAL MASTER-METERED AND COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2014
New Sheet No G-2-G-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities under the PaloAltoGreen Gas Program:
1. Master-metered residential Customers in multi-family residential facilities.
2. Commercial Customers who use less than 250,000 therms per year at one site.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES:
1. 100% Renewable/Full Green option: Per Service
Monthly Service Charge: ............................................................................................$74.86
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Administrative ......................................................................................... $0.0074
3. Transportation .......................................................................................... $0.0435
Distribution Charge: ............................................................................................ $0.5638
PaloAltoGreen Gas Charge .................................................................................. $0.1200
2. 100 Therm block option: Per Service
Monthly Service Charge: ............................................................................................$74.86
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Administrative ......................................................................................... $0.0074
3. Transportation .......................................................................................... $0.0435
Distribution Charge: ............................................................................................ $0.5638
RESIDENTIAL MASTER-METERED AND COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2014
New Sheet No G-2-G-2
PaloAltoGreen Gas Charge (per 100 therm block) .............................................. $12.00
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s meter. The
Commodity charge will fall within the minimum/maximum range set forth in Section C.
2. Request for Service
A qualifying Customer may request service under this schedule for more than one
account or meter if the accounts are located on one. A site consists o f one or more
contiguous parcels of land with no intervening public right-of-ways (e.g. streets).
3. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions
associated with a Customer’s gas usage, through the purchase of certified environmental
offsets, with a preference to projects located in California. Purchases are made to match
100% of the therm usage at the Customer’s facility every month (the 100%
Renewable/Full Green option), or in 100 therm blocks.
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application
provided by the Customer Service Center.
{End}
LARGE COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-3-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2014
New Sheet No G-3-G-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities under the PaloAltoGreen Gas Program:
1. Commercial Customers who use at least 250,000 therms per year at one site.
2. Customers at City-owned generation facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES:
1. 100% Renewable/Full Green option: Per Service
Monthly Service Charge: $361.18 Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................................... $0.10-$2.00
2. Administrative ...................................................................................................$0.0074
3. Transportation .....................................................................................................$0.0435
Distribution Charge: .................................................................................................$0.5562
PaloAltoGreen Gas Charge: ......................................................................................$0.1200
2. 100 Therm block option: Per Service
Monthly Service Charge: $361.18 Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................................... $0.10-$2.00
2. Administrative ...................................................................................................$0.0074
3. Transportation .....................................................................................................$0.0435
Distribution Charge: .................................................................................................$0.5562
PaloAltoGreen Gas Charge (per 100 therm block): ....................................................$12.00
LARGE COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-3-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2014
New Sheet No G-3-G-2
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s meter. The
Commodity charge will fall within the minimum/maximum range set forth in Section C.
2. Request for Service
A qualifying Customer may request service under this schedule for more than one
account or meter if the accounts are located on one site. A site consists of one or more
contiguous parcels of land with no intervening public right-of-ways (e.g. streets).
3. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions
associated with a Customer’s gas usage, through the purchase of certified environmental
offsets, with a preference to projects located in California. Purchases are made to match
100% of the therm usage at the Customer’s facility every month, (the 100%
Renewable/Full Green option), or in 100 therm blocks.
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application
provided by the Customer Service Center.
{End}
EXCERPTED FINAL MINUTES OF THE DECEMBER 4, 2013
UTILITIES ADVISORY COMMISSION MEETING
ITEM 1: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
that the City Council Adopt a Resolution Establishing the PaloAltoGreen Gas Program Using
Certified Environmental Offsets and Approving Three New Gas Rate Schedules: Residential
Green Gas Service (G-1-G), Residential Master-Metered and Commercial Green Gas Service (G-
2-G) and Large Commercial Green Gas Service (G-3-G)
Senior Resource Planner Karla Dailey provided a presentation summarizing the written report.
She stated that the PaloAltoGreen (PAG) Gas program is a way to allow customers to reduce
greenhouse gas (GHG) emissions associated with their gas usage since the electric supply
portfolio is carbon neutral and the PAG electric program was suspended by Council.
Dailey discussed the different attributes of carbon offsets, including the certification protocol,
the type of project, and the price. She stated that staff reco mmended backing the PAG Gas
program with carbon offsets certified by the Climate Action Reserve (CAR) for forestry, urban
forestry, or livestock protocols with a preference for projects located in California. She said the
proposed PAG Gas program would be structured similarly to the successful PAG program with
the cost on a per therm basis and an option for commercial customers to participate in the
program for less than their full usage.
Commissioner Eglash commended the program for its simplicity in des ign. He asked if staff
envisions difficulties in marketing the program as far as communicating how purchasing offsets
make a difference. Dailey responded that the protocols chosen were well developed with
attributes that are relatively easy to explain. Dailey added that the Communications Manager
would help with the messaging about the program. She remarked that offsets are similar to the
Renewable Energy Certificates (RECs) used to back the PAG electric program.
Commissioner Melton asked how offsets are generated and how offset projects are developed.
Dailey replied that the project has to be a real project and that the registry certifies that the
project is real and meets its criteria. Commissioner Melton, noting that the draft Urban Forest
Management Plan was provided as an information item in the packet, stated that it would be
great if an urban forestry project could be done in Palo Alto so people could see the impact
locally. Senior Resource Planner Shiva Swaminathan responded that a local projec t would be
possible, but it would be in the longer term as it takes time to define and certify projects.
Commissioner Hall asked how stable offset prices are since it would be impractical to change
the program rate often. Dailey said that the offsets prices don’t appear to vary wildly and can
be purchased in blocks either during or after the program year to ensure that the correct
number of offsets was procured.
Commissioner Hall asked if the program could start sooner than July 1, 2014. Dailey replied
that the changes needed to implement the new rates in the billing system are the reason for
establishing the implementation date of July 1, 2014. Marketing and notification to customers
will start before that date.
Commissioner Hall stated that he likes the idea brought up by Commissioner Melton of using
local projects for the offsets and thinks that it would be highly supported by the community.
Commissioner Chang commented that the concept of offsets is more difficult to grasp than the
concept of RECs was for the PAG program. Commissioner Chang noted that we assume the
same participation rate as for the PAG program. She asked if we know the participation rate
other utilities have had with their green gas programs. Commissioner Chang noted that staff
recommended using CAR-certified offsets but asked about using the CARB offsets since they are
in a regulated system and have been vetted by a state agency. She added that CARB offsets
would be used as a way to reduce the number of offsets available in the cap-and-trade market.
Therefore, since CARB-certified offsets can be used for compliance in the cap-and-trade system,
if Palo Alto purchased CARB offsets, it would reduce the number of offsets available to others
who have to comply with their obligation under the state-wide GHG emissions cap.
Commissioner Change added that using CARB offsets would be more in keeping with being a
leader and raising the bar by using the higher standard. Director Fong stated that the CARB
market was not as developed as the one for CAR offsets.
Vice Chair Foster asked if the program can state that CARB-certified offsets are preferred, but
allow CAR certified offsets. Vice Chair Foster asked Commissioner Chang why she preferred
CARB offsets to CAR offsets. Commissioner Chang said that CARB offsets were the only ones
vetted by a state government. Vice Chair Foster asked if it was possible that the program start
with CAR offsets for the first year and possibly move to CARB offsets after a year of experience
with the program. Director Fong said that staff intends to return to the UAC and Council after
having one year experience and it can review the program and the offset requirements at that
time.
Vice Chair Foster stated that the incremental cost for the proposed PAG Gas program is less
than the cost for the average customer for the PAG electric program. He stated that he would
prefer that the program be an opt-out for current PAG electric program participants. Director
Fong stated that not all electric customers are also gas customers and vice versa. On the issue
of local offsets, Vice Chair Foster is supportive of local programs, but believes that there is more
"bang for your buck" for offset projects in certain locations than in others and that restricting to
California may not be the best way to go. He also recommended that staff look at projects in
Palo Alto's sister cities around the world. Assistant Director Ratchye explained that offsets are
traded on a per ton basis.
Vice Chair Foster stated that Commissioner Waldfogel has raised the issue of fracking and
would want to determine if it was possible to buy non -fracked gas. Dailey says that this is an
offset program, not a physical gas program, but, setting that aside, there's no non -fracked gas
product available She stated that pretty much every molecule of gas is fracked in some form
and that it is not possible to buy a non-fracked product except for biogas.
Commissioner Hall said that with respect to having an opt-in or an opt-out program, he'd prefer
to make a new decision and opt in to the program. He also commented that the
Communications Manager will have her work cut out for her in describing this program.
ACTION:
Commissioner Melton made a motion to support the staff recommendation. Commissioner
Eglash seconded the motion.
Vice Chair Foster made a substitute motion to support the staff recommendation, but with an
opt-out for current PAG program participants. The motion failed for lack of a second.
Commissioner Chang proposed a friendly amendment to request that staff consider CARB -
certified offsets in the future. Commissioner Melton did not accept the amendment. He stated
that Council can re-consider the registries and protocols in the future when staff returns with a
report after the first year of the program after it has a year of experience administering the
program. Commissioner Chang stated that staff could use the first year to gain a better
understanding of the differences between CAR and CARB certified offsets.
Compliance Manager Debbie Lloyd explained that under CARB's cap -and-trade program it is the
allowances that are capped, but she is not aware of a cap on the number of offsets that can be
made available. Offsets are available (in addition to allowances) to provide flexibility for
participants to meet their compliance obligations, and there is a limit on the number of offsets
that a participant can use to meet their compliance obligations, but not necessarily a cap on the
number of offsets that could be made available. Therefore, it wouldn’t necessarily be true that
using CARB offsets would be a way to reduce the number of offsets available in the cap -and-
trade market, if supply could just be in creased to meet the increased demand.
The motion passed unanimously (5-0) with Chair Cook and Commissioner Waldfogel absent.