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HomeMy WebLinkAboutStaff Report 104-11 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: UTILITIES DATE: JANUARY 10, 2011 CMR: 104:11 REPORT TYPE: CONSENT SUBJECT: Utilities Advisory Commission Recommendation to Adopt a Resolution Approving the City of Palo Alto Utilities’ Legislative Policy Guidelines for 2011 RECOMMENDATION Staff and the Utilities’ Advisory Commission (UAC) recommend that the City Council adopt a resolution approving the Utilities’ Legislative Policy Guidelines for 2011. EXECUTIVE SUMMARY The Utilities’ Legislative Policy Guidelines for 2011 (Attachment B) have been developed by staff and reviewed by the UAC to: 1) provide direction to staff in evaluating and responding to legislative action involving utilities and utilities issues, and 2) clarify approved policy and advocacy direction when active involvement of Palo Alto elected officials is required. The guidelines are grouped in five sections: the first addressing legislative policy guidelines that are common to all utilities (electric, gas, water, wastewater, and fiber), and the following four sections addressing those guidelines that are specific to water, gas, electric, or wastewater collection. Each section includes a set of goals for the utility and guidelines for Palo Alto staff and elected officials when taking action to achieve the goals. DISCUSSION The utility industry is a high profile and heavily regulated industry that is subject to copious legislative actions at both the regional state and federal level. Such legislation can influence, among other things, the quality of supplies, reliability and security of the supply and distribution infrastructure; commodity procurement practices; customer service and billing; program design; rate design; and activities and costs associated with climate protection. Representatives of the City (elected and appointed officials and staff) participate in federal and state legislative forums to advocate positions on energy and water-related issues that support the City Utilities Department’s key objectives of providing valued utility services to customers while cost effectively balancing environmental solutions. The City Utilities Department also participates in joint action efforts to advocate for goals and objectives shared by other public owned utilities. CMR: 104:11 Page 1 of 3 At the state level, hundreds of bills focused on the utility industry can be introduced each year. The number of bills introduced, the pace at which bills change and new language is negotiated, and the often surprising speed at which bills can be placed for a vote during the legislative year requires Utilities Department staff and elected officials to respond quickly if the City is to have any influence on the resulting legislation. Often, a response to an amended bill is required in a matter of days. These timing constraints preclude a return to the UAC and Council for approval each time a response is required. Therefore, a set of policy guidelines is developed each year that identifies the goals and priorities for the Utilities Department to be applied by staff when evaluating and responding to legislation. While it is impracticable to return for approval each time a letter is sent in response to a bill amendment, the issues under debate are known to the UAC and Council through their participation in legislative committee meetings, the publications and summaries circulated from joint action agencies, and updates from the Utilities Director and her staff. Advocacy positions taken in alignment with these guidelines will be subject to the approval of the Utilities Director or City Manager per the City’s legislative advocacy process. BOARD/COMMISSION REVIEW AND RECOMMENDATIONS The Utilities’ Legislative Policy Guidelines for 2011 were presented to the UAC at its December 1, 2010 meeting. There was discussion about the new guidelines proposed and the UAC proposed some changes to make guidelines more generally applicable to legislative remedies. The UAC unanimously approved a motion to recommend that the City Council approve the Utilities’ Legislative Policy Guidelines for 2011 with the changes discussed. The motion carried unanimously (6-0), with Commissioner Keller absent. Draft minutes from the UAC meeting are included as Attachment C. Staff has incorporated the changes recommended by the UAC into the attached proposed Utilities’ Legislative Policy Guidelines for 2011. RESOURCE IMPACT There is no direct resource impact associated with adoption of the proposed legislative policy guidelines. However, actions taken that support the efficient use of the City’s assets and resources will help control costs, implement the Council’s policies and goals, and protect utility customers. POLICY IMPLICATIONS The recommendation is consistent with the Council policy and supports the Council’s 2010 priorities of City Finances and Environmental Sustainability. ENVIRONMENTAL REVIEW Approval of a Resolution Adopting the Utilities’ Legislative Policy Guidelines for 2011 does not meet the definition of a project pursuant to Section 21065 of the California Environmental Quality Act (CEQA), thus, no environmental review is required. CMR: 104:11 Page 2 of 3 ATTACHMENTS A. Resolution Adopting the Utilities' Legislative Policy Guidelines for 2011 B. Utilities' Legislative Policy Guidelines for 2011 ----C ··Excerpt-from-Dra±tUAC-MectingMinutesofDecemberl, 2010 PREPARED BY: DEBRA LLOYD VL Acting Assistant Director, Resource Management DEPARTMENT APPROVAL: VAL1r~~r-N-G---------- Director of Utilities CITY MANAGER APPROVAL: CMR: 104:11 Page 3 of3 * NOT YET APPROVED* 1 110105 dm 6051482 Resolution No. Resolution of the Council of the City of Palo Alto Approving the City of Palo Alto Utilities' Legislative Policy Guidelines for 2011 WHEREAS, the City of Palo Alto Utilities Strategic Plan (“Strategic Plan”), approved by the Council of the City of Palo Alto on March 7, 2005, [CMR 148:05] provides a set of Key Objectives for the City of Palo Alto Utilities Department (CPAU) to follow in the areas of customer satisfaction and utility infrastructure, employment of balanced environmental solutions, provision of competitive rates to customers through municipal ownership, and assurance of a safe and engaged workforce; and WHEREAS, CPAU annually identifies Utilities’ Legislative Policy Guidelines that facilitate the Strategic Plan’s Key Objectives; and advocates for utility-related issues at Federal and State legislative forums in furtherance of those objectives; and WHEREAS, in November 2010 CPAU staff updated the Legislative Policy Guidelines to respond to recent legislative and regulatory trends; and WHEREAS, the 2011 Legislative Policy Guidelines also support the City Council’s inclusion of “City Finances” and “Environmental Sustainabilty” in the 2010 Council Top 5 Priorities, and the recommendations of the Mayor’s Green Ribbon Task Force on Climate Protection; and WHEREAS, action on some of these issues may require active involvement of Palo Alto elected and appointed officials; and WHEREAS, the Utilities’ Legislative Policy Guidelines for 2011 were presented to the UAC at its December 2, 2010 meeting, and the UAC voted 6 to 0 (with Commissioner Keller absent) to recommend that the City Council approve the Utilities’ Legislative Policy Guidelines with the changes recommended by the UAC. NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. The Council hereby adopts the resolution approving the Utilities’ Legislative Policy Guidelines for 2011. SECTION 2. The Council finds that any 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 Alto. // // * NOT YET APPROVED* 2 110105 dm 6051482 SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under Section 21065 of the California Environmental Quality Act (CEQA) and the CEQA Guidelines, and therefore, no environmental assessment is required. 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 ATTACHMENT B Utilities’ Legislative Policy Guidelines for 2011 Advocacy positions taken in alignment with these guidelines will be subject to the approval of the Utilities Director or City Manager as per the City’s legislative advocacy process ALL UTILITIES Goals 1. Preserve/enhance local accountability in the control and oversight of matters impacting utility programs and rates for our customers while balancing statewide climate protection goals. 2. Support legislation that makes bold progress in cost effectively reducing greenhouse gas emissions, and recognizes early voluntary action. 3. Support efforts to maintain or improve the reliability of the supply, transmission, storage and distribution/collection infrastructures. 4. Maintain the City of Palo Alto Utilities’ (CPAU’s) ability to provide safe, reliable, sustainable, and competitively-priced utility services. Legislative Policy Guidelines Venue Goals 1. Local Accountability 2. Climate Protection 3. Reliability & Infrastructure 4. Service & Cost Control 1. Advocate goals through active participation in joint action efforts. Federal, State, and Regional     2. Communicate the City’s record on environmental and energy efficiency programs with Legislature, California Energy Commission (CEC), California Air Resources Board (CARB), and Natural Resources Defense Council (NRDC) via California Municipal Utilities Association (CMUA), Northern California Power Agency (NCPA), and the Bay Area Water Supply and Conservation Agency (BAWSCA). State    Utilities Legislative Policy Guidelines for 2011 1. Local Accountability 2. Climate Protection 3. Reliability & Infrastructure 4. Service & Cost Control 3. Support legislation that will result in the most cost-effective reduction of GHG emissions, recognition of early action, and inclusion of more efficient solutions, such as cogeneration, distributed resources, and demand control programs, in integrated resource plans. Federal, State, and Regional     4. Promote utility legislation and regulation that support reasonable reliability standards and compliance requirements, and effective and consistent reporting requirements, customer communications, and goal- setting. Federal, State, and Regional Reliability Councils    5. Oppose cost shifts from Federal or State budgets and California Public Utilities Commission (CPUC) jurisdictional utilities through active participation in CMUA and NCPA legislative activities. Federal, State, and CPUC   6. Advocate for State and Federal grants for local and regional applications of energy efficiency, conservation, renewable resources, fiber, wastewater collection systems and recycled water projects. Federal and State    7. Maintain right of way access for utility infrastructure. Federal and State   8. Protect the value of existing contracts and local regulatory approvals of such contracts. Federal and State    Page 2 of 10 Utilities Legislative Policy Guidelines for 2011 WATER Goals 1. Increase the security and reliability of the regional water system owned and operated by the San Francisco Public Utilities Commission (SFPUC). 2. Maintain the provision of an environmentally sustainable, reliable supply of high quality water at a fair price. 3. Support ability of municipal utilities to develop and manage their own conservation and efficiency programs and retain authority over ratemaking, including the ability to optimize volumetric and fixed charges to balance the goals of revenue certainty and water use efficiency. 4. Support efficiency and recycled water programs in order to minimize the use of imported supplies. Legislative Policy Guidelines Venue Goals 1. Reliable infrastructure 2. Supplies at fair cost 3. Local Authority 4. Minimize imports 1. Advocate goals through active participation in the Bay Area Water Supply and Conservation Agency (BAWSCA) and California Municipal Utilities Association (CMUA), with support from Palo Alto staff for BAWSCA and the San Francisco Bay Area Regional Water System Financing Authority (RFA). Local, Regional & State     2. Participate in California Urban Water Conservation Council (CUWCC) Best Management Practice (BMP) revisions and development to ensure that aggressive and cost-effective efficiency goals are incorporated and operating proposals are reasonable, achievable, and cost-effective. State     3. Advocate to ensure that legislative actions regarding the Hetch Hetchy Reservoir and conveyance system include the following requirements:  timely rebuilding of the regional water system;  maintains the quality of delivered water;  minimizes any increase in the cost of water;  creates no additional exposure to more frequent or severe water shortages;  supports the existing water system and its operation. Local, Regional & State   Page 3 of 10 Utilities Legislative Policy Guidelines for 2011 1. Reliable infrastructure 2. Supplies at fair cost 3. Local Authority 4. Minimize imports 4. Advocate for interpretations or implementation of Water Code provisions (such as those enacted by AB 1823 (2002), AB 2058 (2002) and SB 1870 (2002)) that maintain or reinforce the authorities and protections available to the City and BAWSCA members outside of San Francisco. Local, Regional, and State    5. Support provision of sufficient resources for BAWSCA to enable it to advocate for:  an environmentally sustainable, reliable supply of high quality water at a fair price;  preservation of Palo Alto’s existing contractual water allocation and transportation rights on the SFPUC Hetch Hetchy system;  regional planning for conservation, recycled water, and other water supply projects. Local and Regional     6. Advocate for:  actions that preserve Palo Alto’s existing contractual rights  supporting actions that preserve local control over water use and limit encroachment from outside jurisdictions Local and Regional   7. Support infrastructure security and reliability including an interconnection between the SCVWD West Pipeline with the SFPUC’s Bay Division Pipelines 3 and 4. Regional, and State  8. Support notification requirements that aid residents/customers but do not inflict undue or unobtainable requirements on the utility. State   9. Support local control of public benefit funds funding levels and program design. State   10. Advocate for financing or funding for water conservation programs and recycled water projects that meet end-use needs and conserve potable water. Regional, State and Federal     Page 4 of 10 Utilities Legislative Policy Guidelines for 2011 GAS Goals 1. Preserve /enhance the ability of municipal utilities to develop their own demand side efficiency and conservation programs, alternative gas supplies, and rate structure. 2. Support efforts to reduce greenhouse gas emissions and protect the environment. 3. Increase the security and reliability of the gas supply and transmission infrastructure. This includes retaining access to intra- and interstate gas transmission systems to reliably serve customers. 4. Preserve just and reasonable utility rates. Legislative Policy Guidelines Venue Goals 1. Local Authority 2. Environ- ment 3. Reliability of Infrastructure 4. Cost Control 1. Advocate most of these goals mainly through the American Public Gas Association (APGA) with minor support from Palo Alto staff. Primarily Federal with minor advocacy at State level     2. Work with Northern California Power Agency (NCPA) and California Municipal Utilities Association (CMUA) to the extent that the City’s goals as a gas distributor align with generators’ use of natural gas. Federal and State     3. Support increased production/incentives for renewable gas supplies. Federal and State     4. Advocate for financing or funding for natural gas efficiency and solar water heating end uses. Federal and State     5. Support market transparency and efforts to eliminate market manipulation through reasonable oversight Federal  6. Support municipal utilities ability to enter into pre-pay transactions for gas supplies. Federal  Page 5 of 10 Utilities Legislative Policy Guidelines for 2011 ELECTRIC Goals 1. Preserve /enhance the ability of municipal utilities to exercise local accountability and oversight over matters impacting customer service, programs (such as demand side efficiency and conservation programs), and rate structure. 2. Preserve/enhance the reliability and security of infrastructure. 3. Support legislation that makes bold progress in cost effectively reducing greenhouse gas emissions and encourages early voluntary action. 4. Preserve just and reasonable utility rates/bills. Legislative Policy Guidelines Venue Goals 1. Local Accountability 2. Reliability 3. GHG Reduction 4. Cost Control 1. Advocate goals through Northern California Power Agency (NCPA), California Municipal Utilities Association (CMUA), American Public Power Association (APPA), Transmission Agency of Northern California (TANC), and Bay Area Municipal Transmission Group (BAMx) with support from Palo Alto staff to speak with a coordinated voice. Federal and State     2. Advocate for legislation/regulations that provide local support for:  clean distributed generation and cogeneration projects, and standards for connecting such resources to the local distribution system;  electric efficiency programs;  implementation of renewable portfolio standards;  storage integration;  smart grid design and implementation, and  control of public benefit funds (as allowed in AB1890 (1996)). Federal and State     3. Support cap-and-trade market designs that:  protect consumers from the exercise of market power;  allocate allowances that help mitigate impacts to Palo Alto customers while providing incentives for utilities to move to lower GHG emission portfolios;  provide flexible compliance mechanisms such as banking & borrowing of allowances. Federal and State    Page 6 of 10 Utilities Legislative Policy Guidelines for 2011 1. Local Accountability 2. Reliability 3. GHG Reduction 4. Cost Control 4. Support renewable portfolio standards that:  promote the 33% goal for the state;  maintain local compliance authority;  allow utilities to pursue low cost alternatives by utilizing existing transmission system to access out-of-state resources. Local and State    5. Support/encourage transmission, generation, and demand-reduction projects and solutions including advocating for financing or funding solutions/options for projects that:  enhance/ensure reliability;  ensure equitable cost allocation (including protection against imposition of state-owned electric contract costs on municipal utility customers);  improve procurement flexibility (e.g. resource adequacy rules that ensure reliability and provide flexibility or use of Renewable Energy Certificates (RECs) in meeting State renewable portfolio standards);  improve market transparency (particularly transparency of IOU’s transmission and procurement planning and implementation activities); and  lower the environmental impact on the Bay Area and the Peninsula. Local, State, and Federal     6. Advocate for Congressional, legislative, or administrative actions on matters impacting costs or operations of the Western Area Power Administration such as:  support of Congressional Field Hearings to explore modernizing flood control strategies, river regulation and generation strategies at CVP plants to enhance generation, water delivery, flood control and fisheries;  protection of the status of Western Power Marketing Administration and cost-based rates; and  provisions for preference customers’ first take at land available with economic potential for wind farms. Federal, State and Regional   Page 7 of 10 Utilities Legislative Policy Guidelines for 2011 1. Local Accountability 2. Reliability 3. GHG Reduction 4. Cost Control 7. Advocate for Congressional, legislative, or administrative actions on matters relating to overly burdensome reporting and compliance requirements established by the North American Reliability Corporation (NERC), the Federal Energy Regulatory Commission (FERC) or the Western Electricity Coordinating Council (WECC). Federal, State and Regional   8. Seek Congressional remedies (if needed) for punitive application of fees and fines established by NERC, WECC, or FERC. Federal and Regional   9. Work with California Independent System Operator (CAISO) or through FERC:  to give buyers of renewable intermittent resources relief from imbalance penalties; and  to promote financial and operational changes that result in timely and accurate settlement and billing. Federal and State    Page 8 of 10 Utilities Legislative Policy Guidelines for 2011 WASTEWATER COLLECTION Goals 1. Increase the reliability of the local wastewater collection systems. 2. Maintain the provision of an environmentally sustainable, reliable high quality wastewater collection service at a fair price. 3. Support ability of municipal utilities to develop and manage their own conservation and efficiency programs and retain authority over ratemaking, including the imposition of non-volumetric customer meter or infrastructure charges for wastewater collection service. 4. Support equal comparisons of wastewater collection system with regard to regulations in order to minimize and reduce onerous, costly and time-intensive reporting requirements and improve value and accuracy of information reported to the public. Legislative Policy Guidelines Venue Goals 1. Reliable infrastructure 2. Maintain service 3. Local Authority 4.Valuable Reporting 1. Advocate goals through active participation in the Association of Bay Area Governments (ABAG). Local, Regional & State     2. Advocate to ensure that legislative actions regarding the comparison of wastewater collections systems for future regulations include the following requirements:  timely rebuilding of the local wastewater systems;  maintains the quality of delivered wastewater collection service;  minimizes any increase in the cost of wastewater collection service;  creates no additional exposure to more frequent or severe wastewater overflows;  supports the existing wastewater collections systems and their operation. Local, Regional & State   3. Support provision of sufficient resources for ABAG to enable it to advocate for:  environmentally sustainable, reliable wastewater collection service at a fair price;  regional comparisons of wastewater Local and Regional   Page 9 of 10 Utilities Legislative Policy Guidelines for 2011 Page 10 of 10 1. Reliable infrastructure 2. Maintain service 3. Local Authority 4.Valuable Reporting collection projects for future state grant funding. 4. Support infrastructure security and reliability including equitable allocation of funds for increasing the security of infrastructure. Regional, and State  5. Advocate for funding for wastewater collections system projects that reduce overflows and improve collection system efficiency. Regional, State and Federal   Utilities Advisory Commission Minutes Approved on: Page 1 of 1 DRAFT UTILITIES ADVISORY COMMISSION EXCERPT MINUTES OF DECEMBER 1, 2010 ITEM 3: ACTION ITEM: Utilities Legislative Policy Guidelines for 2011 Acting Assistant Director Debra Lloyd presented the Utilities Department’s proposed Legislative Policy Guidelines for 2011. Lloyd explained the reason for the guidelines, to provide direction in evaluating and responding promptly to legislative action involving utilities and utilities’ issues throughout the year and to clarify approved policy and advocacy direction when active involvement of Palo Alto elected officials is required. Then she highlighted the changes to goals and guidelines from those approved in 2010 that are proposed to respond to anticipated legislative focus in 2011. The Commissioners made further amendments to the goals and the guidelines through the presentation. The “All Utilities” goals were amended to include a reference to storage and safety issues. An additional guideline was added to protect the value of existing contracts, which was a guideline originally stated in the electric utility section but that the UAC suggested was a priority that applied to all utilities. For the Water Utility guidelines the Commissioners discussed the relevance of guidelines for interactions with other agencies that are more operational in nature rather than legislative. Commissioner Berry suggested that language should allow for legislative remedies while avoiding language that would curtail the City’s ability to pursue legal remedies, so changes were made to guideline 6 to make it more generally applicable to potential legislative remedies. Staff was directed to review this language again with the City Attorney’s office. Commissioner Berry suggested changes to Guideline 8 to make it more general to refer to notification requirements to any residents. The UAC made no changes to the Natural Gas utility goals and guidelines but Commissioner Foster did ask for clarification on the change of language in Guideline 4 that the proposal is to advocate for financing or funding for efficiency programs, which could be from state or federal grants or from local funding. For the Electric Utility guidelines, the Commissioners discussed the language proposed for the allocation of GHG emissions allowances under a cap-and-trade market in guideline 3. To make the guideline more focused on protecting Palo Alto customers the language was changed to “Support cap-and-trade market designs that allocate allowances that help mitigate impacts to Palo Alto customers while providing incentives for utilities to move to lower GHG emission portfolios.” The Commissioners also discussed the new guideline 4 to support the 33% RPS goal for the state while allowing utilities to use out-of-state resources to meet that goal. Staff explained that although Palo Alto may meet its goal with in state resources, any restrictions on how other utilities met their targets could require expensive transmission infrastructure investments, the costs of which would be shared by everyone, including Palo Alto. No changes were recommended to the proposed language for Electric guideline 4. Chair Waldfogel suggested that the Electric guideline 9 regarding protecting the value of existing contracts could be more generally applied to all utilities and the UAC agreed that this should be moved to the All Utilities section. Lloyd provided an overview of the goals and guidelines for the new section added for the Wastewater Collection utility. There was no discussion on these guidelines and no changes proposed. ACTION: Commissioner Eglash made a motion to recommend Council approval of the Utilities Legislative Policy Guidelines for 2011 with changes proposed by the UAC. Commissioner Cook seconded the motion. The motion carried unanimously (6-0) with Commissioner Keller absent.