HomeMy WebLinkAboutStaff Report 1351City of Palo Alto (ID # 1351)
Finance Committee Staff Report
Report Type:Meeting Date: 6/7/2011
June 07, 2011 Page 1 of 10
(ID # 1351)
Summary Title: Utilities Strategic Plan
Title: Utilities Advisory Commission Recommendation to Approve the 2011
Utilities Strategic Plan (Continued from Finance meeting of 3/0 1/11)
From:City Manager
Lead Department: Utilities
Recommendation
Staff and the Utilities Advisory Commission recommend that the Finance Committee
recommend that the Council approve the proposed 2011 Utilities Strategic Plan.
Executive Summary
The City of Palo Alto Utilities (CPAU) has completed a process to update the Utilities Strategic
Plan (Strategic Plan) last approved in 2005. Global climate change; macro, regional and local
economic challenges; new legislative and regulatory requirements; and major technology
changes in the water, wastewater collection, gas, and electric industries have all necessitated
the need to evaluate and update the Strategic Plan to ensure CPAU’s vision and key objectives
are in line with those of CPAU’s stakeholders, including CPAU ratepayers, Palo Alto citizens, the
City Council and the Utilities Advisory Commission (UAC).
The UAC reviewed the Strategic Plan many times during its development and established a
subcommittee in April 2010 to assist staff in developing the plan. Following a recommendation
from the UAC subcommittee, staff interviewed key stakeholders to assist in the development of
an overall vision for CPAU Using information collected in the interviews, the UAC’s feedback
and assistance from a consultant, staff provided the UAC a draft Strategic Plan for discussion at
its January 2011 meeting. The UAC requested additional changes at that meeting, which staff
supported and incorporated into a revised plan. At its February 2011 meeting, the UAC
acknowledged that the changes requested in January 2011 were incorporated and voted
unanimously to recommend Council approve the 2011 Utilities Strategic Plan.
Background
In the Spring of 2009, CPAU hired the consulting firm, Management Partners, Inc., to initiate an
internal strategic visioning and communications process for employees. CPAU Management
sought to develop a set of employee values prior to moving forward with the strategic planning
process. Management Partners conducted an employee survey and focus groups of
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management and non-management staff and found that employees placed the highest value
on: 1) honesty and integrity; 2) teamwork; 3) accountability; and 3) quality of service.
The Director of Utilities determined that the 2005 Utilities Strategic Plan needed to be updated
and the UAC created a committee to work with staff on the effort in April 2010. In June 2010,
staff, along with the UAC’s Ad Hoc Committee for Strategic Planning, engaged in an analysis of
external drivers shaping the industries in which CPAU operates, and a discussion of the
strengths, weaknesses, opportunities, and threats (SWOT) unique to CPAU. The external review
and SWOT analysis formed the basis for developing the key CPAU functions for which objectives
and strategies will be developed.
Another driver for updating the Utilities Strategic Plan was Council action on May 3, 2010 in
response to a Council Colleagues’ Memo (Colleagues' Memo from Mayor Burt, Vice Mayor
Espinosa, Council Members Yeh and Scharff Requesting the City Council Direct the Utilities
Advisory Commission to Make Recommendations to the City Council on a Comprehensive
Energy Efficiency and Renewables Procurement Strategy). During its discussions in July, the
UAC recommended that the Long-term Electric Acquisition Plan (LEAP), the Gas Utility Long-
term Plan (GULP) and the Utilities Strategic Plan should address the major issues raised in the
May 3, 2010 Council Colleagues’ Memo. The UAC also agreed that if there are any issues from
the Colleagues’ Memo that are either unresolved or not addressed in the updated LEAP, GULP,
or Strategic Plan, the UAC may wish to address those separately.
The UAC received informational memoranda for its meetings of July 20, 2010 and September 1,
2010 on the road map for and status of the development of the Utilities Strategic Plan. From
August through November, staff interviewed 26 community members to get their perspectives
on the problems and issues facing the CPAU, regional, state, national, and global issues of
interest to Palo Alto, the values of the community and how the department should make
adjustments in the future.
On November 3, 2010, the UAC reviewed the input gathered from the interviews, draft mission
and vision statements and draft strategic objectives for the Strategic Plan. In early November,
the City engaged a consultant to assist with the finalization of the Strategic Plan. Based on
information collected in the interviews, the UAC’s feedback and assistance from the consultant,
staff revised the strategic objectives, developed performance measures for the strategic
objectives and finalized the strategy map. At its January 2011 meeting, the UAC reviewed a
draft Strategic Plan and provided comments and input to staff. Based on comments received
from the UAC at that meeting, staff revised the Strategic Plan and presented it to the UAC at its
February 2011 meeting. At that meeting, the UAC acknowledged that the changes requested in
January 2011 were incorporated and voted unanimously to recommend Council approve the
2011 Utilities Strategic Plan.
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Discussion
The updated Utilities Strategic Plan needs to be consistent with the City’s mission and value
statements as stated in the Fiscal Year 2011 Council-approved Operating Budget and Council
priorities, as follows:
City of Palo Alto’s Mission: The government of the City of Palo Alto exists to
promote and sustain a superior quality of life in Palo Alto. In partnership with
the community, our goal is to deliver cost-effective services in a personal,
responsive, and innovative manner.
City of Palo Alto’s Values:
Quality –Superior delivery of service.
Courtesy –Providing service with respect and concern.
Efficiency –Productive, effective use of resources.
Integrity –Straight-forward, honest and fair relations.
Innovation –Excellence in creative thought and implementation.
Core Values
CPAU’s core values were developed through a process, facilitated by a strategic planning
consultant, which involved surveys, interviews, and focus groups with input from employees
from all the work groups in the Utilities Department. The core values and traits and how each
trait will be carried out are listed below.
1.Honesty and Integrity: We exhibit honesty and integrity when we model good behavior
and a strong work ethic; communicate with honesty, sincerity and respect for one
another; share all knowledge and create transparency; and follow-through at all levels.
2.Teamwork: We promote teamwork at CPAU by communicating clearly and respectfully
while proving to be dependable and respectful and exhibiting a positive attitude.
3.Accountability: We demonstrate this value by taking responsibility for our actions; being
clear about our vision, direction and expectations; following through on work tasks; and
being a results-oriented and accountable employee.
4.Quality of Service: We each contribute to achieving quality of service by being
responsive to customers’ needs and customer-focused, having a can-do attitude, and
striving for excellence by operating a safe and reliable system.
Planning Horizon
The planning horizon for the strategic plan is five years. The plan should be developed with a
longer-term (15-to 20-year) timeframe in mind, but so many things change over the course of
five years that after that time, it will likely be time to redo the strategic plan. In addition, the
issues that a strategic plan will address are likely to change significantly in five years.
What’s Included and Not Included in the Plan
Discussions on some related decisions are already well underway in the updated the LEAP and
GULP, which are expected to be considered by the Council in March 2011. The Utilities
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Strategic Plan encompasses several plans, policies and/or guidelines related to key CPAU
functions, including:
1.Water, electric and gas efficiency and electric demand reduction;
2.Resource management: water, electric and gas supply acquisition, asset management
and energy risk management;
3.Climate Protection: greenhouse gas reductions;
4.Financial management: rates, reserves, budget and long-term financial planning;
5.System reliability;
6.Information technology;
7.Customer service; programs,rates, information, communication; smart metering and
billing;
8.Distributed and local resources;
9.The equity transfer from the gas and electric funds to the City’s General Fund;
10.Regulatory compliance and reporting; and
11.CPAU workforce: recruitment, retention and management.
The Strategic Plan is not intended to include the following items:
1.Whether or not to sell Utilities;
2.What CPAU must do to comply with laws or regulations;
3.Governance of Utilities; and
4.Operating and compliance plans
Plans that will need to be in alignment with, whether or not incorporated into, the Strategic
Plan include the following:
1.LEAP, GULP, and WIRP (Water Integrated Resource Plan)
2.Capital Improvement Program
3.IT Strategic Plan
4.Rates Policy
5.Communications Plan
6.Energy Efficiency Plans
7.Urban Water Management Plan
8.Smart Grid Strategy Plan
9.SAP Billing System Plan
10.Energy Risk Management Policy
11.Fiber Broadband Business Plan
Interviews of Community Leaders
From August through November, staff conducted interviews of 26 community leaders including
Council Members, UAC Commissioners, and other people engaged in Utilities issues including
former Council Members and former UAC Commissioners. The interviews were conducted to
elicit input into the development of a vision for CPAU and to determine the viewpoints of
community leaders regarding several key topics. The summaries of the interviews are provided
as Attachment C to this report.
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The feedback from the interviews can be broken down into general topic areas, including
communications; costs,prices and rates; technology and innovation leadership, support for and
cost of green programs; and reliability, safety, and emergency preparedness.
1.Communications
Many of those interviewed felt that communications with customers and Council could be
improved. Many felt that CPAU should educate customers about programs and the benefits to
customers. Outage notification was specifically mentioned as an area that needs improvement.
However, there were some that felt that communication should not be a major piece of what
CPAU does as the main concern for customers is that the services be reliable and safe, and that
there is little interest or need in more communications from CPAU unless it relates to those
things (i.e. outages). Some suggested using social networking for communications.
2.Costs, Prices, and Rates
When asked whether they supported stable gas rates as opposed to gas rates that vary each
month with gas prices (as with Pacific Gas and Electric Company (PG&E)), almost all supported
stable gas rates in Palo Alto. Some advised that high water rates are a big concern and many
said that our bills overall should be competitive, or else the community will question the value
of having an independent, municipally-owned utility. Several brought up the problems with
having to raise prices if consumption declined. The recent issues with cost recovery in the
Refuse Fund were mentioned as a cautionary tale.
3.Leadership in Technology and Innovation
Most of those interviewed did not recommend that CPAU become a leader in technology or
innovation if doing that would require significant investment. Many felt that leadership in this
area would inevitably result in some failures and noted that the City is very risk averse.
However, almost all interviewees recommended that CPAU be aware of and consider new
technologies. Many recommended that a small amount of money be reserved for new
technology or innovative research and development projects (such as with the Light Emitting
Diode, or LED, streetlight pilot project). Some advised that CPAU be a test bed for new
technology and that it use the expertise of the community to help in these evaluations.
4.Support for and Cost of Environmental/Green Programs
Even in the current economic situation, most of those interviewed felt that the community
continues to support green programs as long as the additional cost for those programs is
reasonable. However, some did caution against starting new green programs that would raise
costs and rates in this economic environment. The 0.5 cent per kilowatt-hour rate impact limit
for renewable energy was mentioned as a reasonable adder, but many warned against raising
that limit. Many noted that environmentally beneficial programs are often also economically
beneficial and that staff should always conduct a complete, long-term, life-cycle economic
analysis and identify any rate impacts from green programs. As evidence of the community’s
support for green programs and the willingness to pay more for a green program, the
PaloAltoGreen voluntary renewable energy program was cited by several of those interviewed.
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5.Reliability, Safety, and Emergency Preparedness
Many of the people interviewed cited system reliability and safety of the distribution system as
a very important focus for CPAU. Many added that emergency preparation is very important.
Interviewees described locally-sited resources, such as the new water reservoir and
groundwater wells, as being very valuable to the City’s emergency preparedness and were
supportive of local electric generation as well. Some mentioned that local generation should be
from renewable sources.
Mission and Vision Statements
The feedback from the interviews helped to formulate the vision for CPAU. The mission
statement should describe what CPAU is and does. The proposed new mission statement
compared to the mission statement in the 2005 Strategic Plan is shown in the table below.
Mission Statement from 2005 Utilities
Strategic Plan
Proposed New Mission Statement
Provide valued utility services to customers
and dependable returns to the City.
The City of Palo Alto Utilities provides safe,
reliable, environmentally sustainable and cost-
effective services.
The vision statement should describe what CPAU is striving to become. The 2005 Strategic Plan
did not contain a vision statement. To develop this vision, staff determined that CPAU needs to
choose the appropriate value proposition. One possible value proposition is to be the lowest
cost provider. A utility with this value proposition would seek to minimize costs in the provision
of services. Alternately, a utility could seek to be a high quality provider with high standards for
service reliability, safety and service offerings. Or, a utility could seek to be a product leader
and provide unique, or high performance services. Of these choices, staff recommends that
CPAU seek to be a high quality provider, which seems to be the expectation of the Palo Alto
community. Of course, the cost for the services provided must also be reasonable.
The proposed vision statement that incorporates these concepts is:
We deliver extraordinary value for our customers.
To be more specific about the vision, the Strategic Plan should have a more defined “strategic
destination.” The proposed strategic destination is:
We will earn the high satisfaction of our customers with our cost-competitive
provision of safe, reliable, and environmentally sustainable utility services.
Balanced Scorecard (BSC) Approach
As with the 2005 Utilities Strategic Plan, the balanced scorecard methodology will be used to
track implementation by perspective. Using this framework, the strategic plan should include
Strategic Objectives, or statements of what the strategy must achieve and what is critical to its
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success. Each Strategic Objective should have Performance Measures and Targets for how
success in achieving each objective will be measured, tracked and reported and the level of
performance or rate of improvement needed to achieve the objective.
The draft strategic objectives are listed below by BSC perspective.
Customer Perspective
C1.“Be responsive to all my utilities-related service needs.”
C2.“I receive safe and reliable service.”
C3.“I expect to pay a reasonable bill”
C4.“Care for our environment”
Internal Business Process Perspective
BP1.Ensure a reliable supply of utility resources
BP2.Operate the utilities systems safely
BP3.Replace infrastructure before the end of its useful life
BP4.Serve customers promptly and completely
BP5.Communicate clearly and pro-actively with all our stakeholders
BP6.Offer programs to meet the needs of customers and the community
BP7.Negotiate supply contracts to minimize financial risk
BP8.Reduce cost of delivering service through best management practices
BP9.Maximize value of existing generation assets
BP10.Manage implementation of strategic plan
BP11.Increase the environmental sustainability of all Utilities practices
BP12.Promote efficient use of resources
People and Technology Perspective
PT1.Be an attractive place to work
PT2.Obtain, develop and train employees to ensure an adequate and qualified workforce
PT3.Ensure employees have adequate tools to perform job duties
PT4.Investigate and adopt innovative technologies
Financial Perspective
F1.Maintain financial strength
F2.Maintain adequate reserves
F3.Implement rate structures that balance cost of service and resource conservation
F4.Provide a fair return to the City
Based on input from the UAC and with guidance from the consultant, staff further developed
the Strategic Objectives and Performance Measures for each Strategic Objective. Each Strategic
Objective is explained in an “Objective Statement” to provide detail and clarity to all
stakeholders so that there is no ambiguity about what is meant by the objective. Using the BSC
method, the development of a strategy map is also recommended. A strategy map is a single-
page representation of the Strategic Plan that can be used to communicate the overall plan and
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how the enterprise creates value for customers. The list of draft Strategic Objectives and their
corresponding Performance Measures and Targets is provided as Attachment A. This
attachment also contains the draft Strategy Map.
Strategic Initiatives
Another element of the BSC method is the development of strategic initiatives, or key new
action programs required to achieve one or more objectives and the overall strategic plan.
Strategic initiatives aim to significantly change the way we do business, require significant
resources to complete, and have definite start and end dates. They are not daily or one-off
tasks or activities (“business as usual”), any project that is underway, tactical or steady state
(“the annual…”), or intentions (“meet quarterly sales targets”).
The proposed strategic initiatives include the following:
For the customer perspective:
1.Establish mechanisms to elicit customer feedback on their satisfaction with all
interactions with CPAU.
2.Redesign the Utilities bill to improve understandability.
3.Reassess the gas portfolio laddering purchasing strategy.
4.Redesign the PaloAltoGreen program.
For the internal business process perspective:
5.Develop a plan to complete a new electric transmission interconnection.
6.Prepare a Utilities Communications Plan that incorporates increased use of
neighborhood and business organizations and schools to disseminate program and
educational information.
7.Pursue gas prepay transactions to leverage the City’s low cost of capital and tax-exempt
status to acquire low cost gas supply resources.
8.Actively participate in Citywide efforts to improve the procurement process.
9.Evaluate and implement opportunities to maximize the value of the Calaveras project in
the new electric market framework.
10.Develop a program to ensure that the strategic plan is pursued and that objectives and
initiatives are managed.
11.Develop implementation plans to achieve the long-term water and energy efficiency
goals and implement programs as outlined in the implementation plans.
For the people and technology perspective:
12.Implement an annual employee satisfaction survey.
13.Develop a 5-year succession plan for each division.
14.Develop a Utilities-specific IT strategic plan.
15.Develop a process to evaluate and implement new technology through targeted
programs and consider creating a fund for innovative projects and pilots.
For the financial perspective:
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16.Re-evaluate the need for and purpose of the Calaveras (stranded cost) Reserve.
17.Evaluate the appropriate fraction of fixed costs to be collected by fixed charges.
Commission Review and Recommendation
The UAC was very involved in the development of the Utilities Strategic Plan. In April 2010, the
UAC Chair appointed an ad hoc committee on strategic planning to assist staff in developing the
plan. While under development, the plan was discussed at UAC meetings in July 2010,
September 2010, November 2010, and January 2011.
At its January 2010 meeting, the UAC reviewed the draft Utilities Strategic Plan and made
several requests for changes. The UAC provided comments and suggestions that were useful to
staff and which were incorporated into the proposed Strategic Plan. The comments ranged
from changes to the proposed mission statement, revisions to the performance measures,
additional clarificaitons to the objective statements, and the addition of a new strategic
objective. The notes from the UAC’s January 12, 2011 meeting are attached (Attachment D).
On February 2, 2011, the UAC considered the Utilities Strategic Plan for final action. After
acknowldeging that the changes requested in January 2010 were incorporated, the UAC voted
unanimously to recommend Council approve the proposed 2011 Utilities Strategic Plan. The
draft notes from the UAC’s February 2, 2011 meeting are attached (Attachment E).
Since the UAC reviewed the Strategic Plan in February 2011, staff changed the date from June
2011 to Decvember 2011 on the strategic initiative to prepare a Communications Plan since the
new Communications Manager was not on board as early as anticipated.
Timeline
After Council approves an updated Utilities Strategic Plan, staff plans to review the plan
annually and recommend any appropriate updates as part of the annual budget approval
process. In addition, staff will monitor and report on the implementation of the Utilities
Strategic Plan to the UAC and Council on a semi-annual basis.
Resource Impact
Implementation of the Utilities Strategic Plan is planned to be done without additional requests
for resources. However, some of the strategic initiatives may require additional, unbudgeted
resources. If this is the case, staff will request additional resources and Council will have the
ability to approve, or not, those requests. One example of a new initiative that is expected to
require additional resources is the creation of an innovation fund to implement or pilot new
technologies.
Policy Implications
Approval of a new Utilities Strategic Plan represents new Council policy.
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Environmental Review
Approval of a new Utilities Strategic Plan 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.
Attachments:
·Attachment A: 2011 Utilities Strategic Plan Balanced Scorecard Objectives and Strategy
Map (DOC)
·Attachment B: 2005 Strategic Plan (DOC)
·Attachment C: Strategic Plan Interview summaries (DOC)
·Attachment D: UAC Minutes for the January 12 2011 Special Meeting (DOC)
Prepared By:Jane Ratchye, Assistant Director
Department Head:Valerie Fong, Director
City Manager Approval: James Keene, City Manager
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
1
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
Customer and Community Perspective
Average time to
restore service per
interrupted
customer
Less than 90
minutes
C1.“I receive
safe and reliable
service.”
Customers expect that Utilities services are provided on a continuous
basis, without interruption. In addition, customers expect that the
Utilities delivery systems are safe and will not harm them or put them
in any danger. We will listen to our customers and seek to
understand their reliability and safety concerns and implement
programs and projects to address them.
Number of
electric system
interruptions per
year for average
customer
Ranks in the top
quartile
nationwide (less
than three)
C2.“Be
responsive to all
my utilities-
related service
needs.”
We understand that the customer wants clear, accurate bills with easy
methods of payment; access to usage history and enough
understanding to efficiently manage usage; to feel quickly and
completely “taken care of” when they have concerns, questions or
requests and to be communicated with effectively both as individuals
and as CPAU’s owners.One of the ways to achieve this is to elicit
feedback from customers to help improve service.
Customer
satisfaction scores
on annual surveys
for overall value.
Ranking in the
top two utilities
statewide
By the end of 2011,
establish mechanisms
to elicit customer
feedback on their
satisfaction with all
interactions with
CPAU.
C3.“I expect to
pay a reasonable
bill”
We understand that customers expect their bills to be comparable to
those in surrounding communities and do not expect to pay more than
PG&E customers. Customers believe it is reasonable to pay slightly
more in exchange for increased reliability, safety and protection of
the environment.However, customers’ overall bills for Utilities
services must remain reasonable and be reasonably stable and should
not increase significantly in any one year. Customers also want their
bills to provide useful information about their consumption of
resources in addition to the rate so that they can understand how they
The average
combined
residential
customer bill for
electricity, water,
gas, and
wastewater
services
Less than the
average of bills
for comparable
services in nearby
communities
(MP, MV, SC,
Hayward, RC,
Roseville, and
Alameda).
Redesign the Utilities
bill to improve
understandability and
implement the changes
by 2012.
Reassess the gas
portfolio laddering
purchasing strategy
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
2
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
can influence their total cost for Utilities services. For natural gas
service, Palo Alto’s supply cost has been relatively stable due to a
laddered gas portfolio purchasing strategy;however, this strategy
needs to be re-evaluated as gas prices are currently low and are
projected to stay low for the foreseeable future.Although, the
average bill for all services should be comparable to those in
surrounding communities, staff will continue to monitor and report
the bills for each service separately on a quarterly basis.
Annual rate
change
Maximum of
10% per year for
electric and
wastewater
services.
Maximum of
20% per year for
water service.
(GULP initiative)and
develop a rate change
performance measure
for gas service.
C4.“Care for
our
environment”
Our community wants its customer-owned utility to offer choices for
them to manage their resource use in ways that reflect their
environmental values.Utilities will improve existing programs and
develop new programs to meet customer needs and allow customers
to manage their own environmental footprint.
Percentage of
customers
participating in
the PaloAltoGreen
program
Top rank
nationally
Redesign the
PaloAltoGreen
program by June 2012
(LEAP task).
Internal Business Process Perspective
Safety and Reliability
Duration of
electric system
interruption per
year for average
customer
Ranks in the top
quartile
nationwide (less
than 60 minutes
per customer)
BP1.Ensure a
reliable supply of
utility resources
We will implement strategies that ensure the reliable supply of utility
resources to meet present and future needs. To provide opportunities
for economic development within Palo Alto,we must provide
sufficient resources that meet the short and long-term needs of our
customers. To achieve this we will maintain the utility system
components, and provide for adequate utility resource supplies to our
current and future customers. We will also develop new
management practices and organizational structure to ensure
compliance with regulatory requirements.
Response time to
water and
wastewater leaks
Under 30 minutes
Develop a plan to
complete a new
electric transmission
interconnection by the
end of 2011.
BP2.Operate
the utility
systems safely
We will continue to ensure the safety of our customers, employees
and the community by the ongoing implementation of a safety
programs. Protecting customers and employees from injury and
customer’s property from damage is essential for delivering quality
utility services to our customers. The safety programs will be
AGA (American
Gas Association)
Incidence Rate
Less than
industry (APPA,
APGA, AWWA)
average with a
goal of 0
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
3
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
implemented by updating safety procedures, educating customers via
outreach materials and workshops, correcting system deficiencies,
operating in accordance with existing safety rules, and ensuring that
products delivered to customers are safe.
Customer
awareness of gas
safety issues
90% of customers
responding to
annual gas
customer safety
awareness survey
BP3.Replace
infrastructure
before the end of
its useful life
We will continue to implement a long-term strategy for replacing
infrastructure before the end of its useful life. Reliable delivery of
electric service to our customers is critical for the success of business
and the quality of life for our residents. To accomplish this, we will
focus on reducing the backlog and replaces infrastructure systems in a
manner that spreads the expense across multiple years resulting in
program with even expenditures patterns in future years.
Backlog of
infrastructure
elements whose
age is beyond its
useful life.
Zero
Customer Service Excellence
Average phone
wait time
Less than 90
seconds
BP4.Serve
customers
promptly and
completely
We will provide customers with the highly responsive service they
desire. We will do this by reviewing and improving our processes for
managing accounts, handling payments,resolving billing issues,
responding to information and field service requests and notifying
customers during service disruptions. We will identify ways to
streamline these processes and implement changes.Specifically, we
will review, document and improve business processes that have been
identified as having long customer response times.
Number of billing
adjustments
10% reduction
from number in
2009.
BP5.Communic
ate clearly and
pro-actively with
all our
stakeholders
We will proactively communicate with all our stakeholders, including
all customer groups, civic leaders, community groups and the press.
To achieve this objective we will provide the information needed for
our stakeholders to effectively access, understand and utilize all
utilities services and programs. In addition, we will design
communication vehicles and dissemination processes that will enable
our residents to be educated owners of their municipal utilities
system.For example, Palo Alto’s gas rate stability is something
customers should be educated about as it differentiates CPAU from
PG&E.
Time until
informing the
public and local
media of a
disruption
affecting at least
500 customers or
any sensitive
major customers
Less than 90
minutes after
becoming aware
of a disruption
Prepare a Utilities
Communications Plan
by December 2011
that incorporates
increased use of
neighborhood and
business organizations
and schools to
disseminate program
and educational
information.
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
4
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
BP6.Offer
programs to meet
the needs of
customers and
the community
We will assist customers to lower their cost of utilities services and
support the environment. We will assist customers facing economic
hardship by offering bill payment assistance programs. We will
educate customers on the reasons for and their means of compliance
with our safety and regulatory requirements.We will also identify all
customer groups, identify any gaps in service provision to those
customers, and propose new programs or changes to existing
programs to close those gaps.
Participant*
satisfaction with
Utilities programs
(*rebate
recipients,
workshop
attendees, callers,
etc.)
At least 90% of
program
participants
satisfied with
their experience
Reduce Costs
BP7.Negotiate
supply contracts
to minimize
financial risk
We will continue to negotiate supply contracts to acquire supply
resources while managing supply portfolio cost uncertainty to meet
rate and reserve objectives and following sound risk management
practices. To ensure that we are buying commodities at as
competitive prices as possible, we will negotiate contracts with new
counterparties to continue to have a sufficient set of credit-worthy
trading partners. We will continue to develop long-term acquisition
policies and plans (LEAP and GULP)and update those plans at least
every three years.We will also determine all that is necessary to
execute a gas prepay transaction as that is one clear way to lower the
cost of gas supply resources.
Number of
competitive bids
received for each
fixed-price
transaction.
Minimum of
three
Pursue gas prepay
transactions to
leverage the City’s
low cost of capital and
tax-exempt status to
acquire lower cost gas
supply resources
(GULP Strategy).
BP8.Reduce
cost of delivering
service through
best management
practices
We will reduce the cost of delivering service to customers. We will
identify opportunities to better coordinate between Utilities and other
City departments to improve efficient delivery of services. We will
perform benchmarking studies to identify potential modifications to
procedures, practices, materials, and plans and to ensure that we are
following best practices.One best practice is to increase calibration
and replacement schedules for gas and water meters since the meters
slow over time so that the actual usage is under-recorded, resulting in
lost revenue.
“lost and
unaccounted for”
volumes of gas
and water
80% of 2009
levels.
Actively participate in
Citywide efforts to
improve the
procurement process.
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
5
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
BP9.Maximize
value of existing
generation assets
Palo Alto owns significant supply resource assets including a portion
of the Calaveras Hydroelectric Project, a contract with the Western
Area Power Administration, a permanent allocation of water from the
regional water system managed by San Francisco,and allocated
capacity on a gas transportation pipeline. We will seek out both daily
and operational and long-term opportunities to optimize the value of
these assets to enhance revenue and/or to reduce costs. We will work
with joint-owners of our resource assets to leverage those resources
and advocate to maintain or improve the value of existing resources
into the future (LEAP and GULP strategies).
Value harvested
from Redwood
gas pipeline
capacity
100%Evaluate and
implement
opportunities to
maximize the value of
the Calaveras project
in the new electric
market framework.
BP10.Manage
implementation
of strategic plan
Completing the strategic plan is only the beginning of getting value
from the strategic planning process. Ongoing management of the
strategies and initiatives and reporting on progress of those initiatives
is essential to achieving positive results from the strategy. We will
report to the UAC and Council on plan progress twice annually and
we will review and revise the objectives and develop new initiatives
on an annual basis.
Number of
strategic
initiatives
completed
100%Develop a program to
ensure that the
strategic plan is
pursued and that
objectives and
initiatives are
managed
Environmental Sustainability
BP11.Increase
the
environmental
sustainability of
all Utilities
activities
Adding sustainable resources to the supply portfolios will help the
City meet its Climate Protection Plan goals by reducing the carbon
footprint of the utility services provided to our customers. We will
achieve this by acquiring renewable resources and promoting the
development of local renewable resources within the rate objectives
in the Long-term Electric Acquisition Plan (LEAP).Sustainable
practices will be pursued not just for the supply portfolios, but across
all the Utilities day-to-day operations.
Carbon intensity
of the electric
portfolio
80% of baseline
(2005) level
BP12.Promote
efficient use of
resources
Resource efficiency programs meet our customers’ desire for
environmental solutions that save money as well as contributing
towards the Climate Protection Plan goals. We will promote resource
efficiency by dedicating the tactical staffing and budgetary resources
Actual electric
energy efficiency
achievement
At least as high
as goals set in
May 2010
By June 2011, develop
implementation plans
to achieve the long-
term water and energy
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
6
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
necessary to reach maximum deployment of economically feasible
resource efficiency.We will revise and document our long-term
efficiency strategies by updating our 10-year Energy Efficiency goals
every three years and updating our water efficiency goals every five
years in the Urban Water Management Plan.To maximize the
savings potential for new development, coordinate with the City’s
Economic Development Manager to ensure that new developments
incorporate energy saving features in the design phase.
Actual gas energy
efficiency
achievement
At least as high
as goals set in
January 2011
efficiency goals and
implement programs
as outlined in the
implementation plans.
People and Technology Perspective
PT1.Be an
attractive place
to work
We will create a positive values-based work environment which
attracts and retains qualified staff. To achieve this objective we will
try to better understand employees desires, work with City
management to establish sufficient compensation, benefits, and
incentives, and will articulate our values both internally and as we
recruit.
Employee
satisfaction rating
Improvement
from baseline
level
Implement an annual
survey to determine
employee satisfaction
levels and establish the
baseline satisfaction
level for 2011.
PT2.Obtain,
develop and train
employees to
ensure an
adequate and
qualified
workforce
A properly sized, trained and certified workforce is essential to our
effectiveness. We will identify skill and staffing gaps at the
individual and organizational levels and seek to fill those gaps
through the effective use of opportunities including hiring,
mentorship programs, role rotations, knowledge transfer
opportunities, long-term developmental assignments and both internal
and external training opportunities. We will plan for workforce
succession and provide cross-training opportunities for employees to
improve employee satisfaction and build a more robust work force
Percentage of
operations
personnel that has
appropriate
certification and
training required
for working in all
areas they may be
assigned
100%Develop a 5-year
succession plan for
each division.
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
7
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
PT3.Ensure
employees have
adequate tools to
perform job
duties
As major users of technology assets, we must have access to quality
and timely delivered IT services. We must build and maintain an
effective relationship with the City’s IT division that includes clear,
frequent communication as well as productive coordination. We will
collaborate with IT to identify barriers to providing support for
technology projects and remove them. In those instances in which
our immediate technology needs cannot be addressed by the City’s IT
division in a timely or sufficiently-comprehensive fashion, we will
utilize external expertise.
Technology needs
being met
100% for all
Utilities work
groups
Develop a Utilities-
specific IT strategic
plan.
PT4.Investigate
and adopt
innovative
technologies
Our customers value Utilities embracing new technologies that will
help reduce costs and/or meet Climate Protection Plan goals. We will
innovate by researching technologies and cultivating relationships
with entrepreneurs and academics to identify new cost-effective and
environmentally sustainable technologies to consider adopting.The
smart grid strategic plan will be complete by the end of FY 2012 and
new technologies, programs, and projects identified in the plan will
be implemented.
Number of new
technologies
evaluated per year
by an in-depth
study or pilot
project
Three Develop a process to
evaluate and
implement new
technology through
targeted programs and
consider creating a
fund for innovative
projects and pilots.
Financial Perspective
F1.Maintain
financial strength
Maintaining a high credit rating reduces the cost of borrowing if
needed for capital projects. We will continue best practices for
financial management, adhere to energy risk management policies
and guidelines to minimize financial risk,and maintain sufficient
reserves to cover debt obligations as required to retain CPAU’s
current favorable bond rating so that the cost of capital is low for any
bond funded capital projects.
Credit rating At least AA as
determined by
Fitch Ratings or
Standard and
Poor’s or at least
Aa3 as
determined by
Moody’s
Utilities Strategic Plan –Strategic Objectives ATTACHMENT A
8
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
F2.Maintain
adequate
reserves
Maintaining adequate cash reserves contributes to maintaining our
overall financial health and retaining our current favorable bond
rating. We will maintain Rate Stabilization Reserves levels within
Council-approved guidelines and sufficient to provide rate stability as
desired by ratepayers. During the annual budget and rate setting
process, the risks that each Utilities fund is exposed to will be
identified along with the trajectory of costs and revenues to allow
Council to determine appropriate reserve levels and rate adjustments.
Rate Stabilization
Reserve levels
Adequate to
cover cost
uncertainties over
a two-year period
while meeting
rate stability
objective
Re-evaluate the need
for and purpose of the
Calaveras (stranded
cost) Reserve by the
end of 2011.
F3.Implement
rate structures
that balance cost
of service and
resource
conservation
Retail rates should be designed so that the revenues from a customer
group match the cost to serve those customers. Rates consist of fixed
charges and volumetric charges, which are based on usage. Fixed
costs consist of customer-related costs (meter reading, billing, etc.)
and costs related to capital projects and operations while variable
costs include the cost of buying supplies (water, gas, or electricity).
When fixed costs are recovered through charges based on usage,
costs will not be recovered if customers reduce usage more than
projected. To address this problem we will examine alternate rate
structures that strike a balance between the two competing objectives
(cost of service and resource efficiency) to ensure that certain fixed
costs are recovered with a fixed charge, but other costs are recovered
with charges that vary depending on usage (volumetric charges).
By the end of 2011,
evaluate the
appropriate fraction of
fixed costs that should
be collected by fixed
charges versus
volumetric charges.
F4.Provide a
fair return to the
City
CPAU provides an equity transfer to the City of Palo Alto’s General
Fund which provides a return on the City’s original investment in the
Utilities and reflects the City’s ultimate responsibility for Utilities
operations. Council approved the current equity transfer method in
May 2009. The equity transfer is used by the General Fund as
determined by the City Council and supports activities such as fire,
police and library services to the City residents and businesses. This
benefit, along with favorable rates and utility services, is a key value
provided to the community from municipal ownership of Utilities.
Equity transfer to
the City’s General
Fund
100% of the
transfer as
calculated by the
Council-approved
equity transfer
methodology and
permitted by law.
9
Maintain adequate
reserves
Maintain financial
strength
Implement rate structures that balance cost of
service and resource conservation
Financial
Resources
People and
Technology
Be an attractive
place to work
Obtain, develop and train
employees to ensure an
adequate and qualified workforce
Ensure employees have
adequate tools to
perform job duties
Values: Honesty and Integrity Teamwork Accountability Quality of Service
“Be responsive to all
my Utilities services-
related needs”
“I receive safe and
reliable service”
“I expect to pay a
reasonable bill”
“Care for our
environment”
Vision: We Deliver Extraordinary Value to Our Customers
Strategic Destination: We will earn the high satisfaction of our customers with our cost-
competitive provision of safe, reliable and environmentally sustainable utility services
Customer
Operate the
Utilities systems
safely
Reliability and Safety Customer Service
Excellence
Manage Cost Environmental
Sustainability
Serve customers
promptly and
completely
Offer programs to meet
the needs of customers
and the community
Communicate clearly and
proactively with all our
stakeholders
Negotiate supply contracts
to minimize financial risk
Reduce cost of delivering
service through best
management practices
Internal Business Processes
Increase the
environmental
sustainability of all
Utilities operations
Promote efficient
use of resources
Investigate and
adopt innovative
technologies
Ensure a reliable
supply of utility
resources
Replace infrastructure
before the end of its
useful life
Maximize value of existing
generation assets
Manage implementation
of strategic plan
Provide a fair
return to the City
ATTACHMENT B
1
2005 Utilities Strategic Plan -
Key Strategies and Tactics
MISSION
“Provide valued utility services to customers and dependable returns to the City.”
SUPPORTING OBJECTIVES
1. Enhance customer satisfaction and utility infrastructure.
2. Employ balanced environmental solutions.
3. Provide fair and reasonable returns to the City and competitive rates to customers through
municipal ownership.
4. Ensure a safe and engaged workforce.
KEY STRATEGIES, Years 2005-10
STRATEGY 1: Ensure a high level of system reliability in a cost effective and timely
manner.
STRATEGY 2: Manage supply portfolio risk as per council policy to provide stable gas
and electric rates, to preserve a supply cost advantage, and to manage
business processes cost effectively.
.
STRATEGY 3: Improve inter-and intra-departmental business processes to reduce
cost, improve efficiency and enhance information flow.
STRATEGY 4: Provide low and stable rates, adequate reserves, and budgeted transfers
to the General Fund.
STRATEGY 5: Provide proactive, responsive and integrated communication to
customers.
STRATEGY 6: Provide targeted customer and environmental programs and services.
STRATEGY 7: Foster a productive workplace environment that promotes safety, job
satisfaction and self improvement goals.
ATTACHMENT B
2
KEY STRATEGIES with TACTICS
STRATEGY 1: Ensure a high level of system reliability in a cost effective and timely
manner
A.Complete budgeted CIP projects as scheduled.
B.Flush and clean ½ million feet of sewer main per year.
C.Flush and clean 1/3 of the water system main lines each year.
D.Check and operate 1/3 of the main line water valves each year, replace or repair as needed.
E.Check and operate all Gas system Key valves each year, repair or replace as needed.
F.Check and operate all gas system valves once every 3 years, repair or replace as needed.
G.Complete the gas leak survey of the business districts once per year, leaks repaired (depending upon
grade) within specified time frames.
H.Gas leak survey 1/5 of the city each year, leaks repaired (depending upon grade) within specified time
frames.
I.Gas leak survey all bridges, railroad crossings and creek crossings each year, leaks repaired (depending
upon grade) within specified time frames.
J.Inspect all water reservoirs once every 3 years.
K.Maintain all traffic signal cabinets and lighting systems once per year.
L.Test all traffic signal battery backups monthly.
M.Continue the citywide undergrounding of utility wires. Minimize the impacts of undergrounding on
street tree root systems and planting areas.
N.Continue with line clearing and vegetation management activities and meet the goal of 9000 trees per
year that interfere with power lines.
O.Complete annual GO 95 and GO 128 inspections and make corrections by December of each year,
complete the GO165 report by the following February.
P.Evaluate transmission alternatives and implement physical, regulatory and legislative alternatives that
improve reliability.
Q.Evaluate the potential for small-scale distributed generation and demand-side measures to improve
distribution system reliability and power quality..
STRATEGY 2: Manage supply portfolio risk as per council policy to provide stable gas and
electric rates, to preserve a supply cost advantage, and to manage business processes cost
effectively.
A.Prepare a recommendation for policy-makers on the remaining elements of the WIRP not already
addressed in the Council-approved WIRP Guidelines.
B.Comply with the Urban Water Management Planning Act by updating the City’s UWMP/UWSCP by
December 2005.
C.Implement Council adopted long-term electric acquisition plan (LEAP).
D.Implement Local Generation Feasibility Study.
E.Develop efficiency goals and integrate efficiency into resource planning.
F.Work towards achieving Renewable Portfolio Standard goals of 10% by 2008 and 20% by 2015, and
review or revise those goals to meet customer needs and regulatory requirements.
G.Evaluate transmission alternatives and implement physical, regulatory and legislative alternatives that
reduce cost.
H.Implement Council adopted gas utility long-term plan (GULP).
I.Manage the electric and gas portfolio as per Council adopted recommendations and risk management
policies.
J.Develop and implement annual regulatory and legislative goals by working individually and through
collaboration with BAMx, BAWSCA, NCPA, TANC, and CMUA.
K.Monitor and influence cost structure of partner agencies such as NCPA, TANC and BAWSCA.
ATTACHMENT B
3
STRATEGY 3: Improve inter-and intra-departmental business processes to reduce cost,
improve efficiency and enhance information flow.
A.Identify and map key business processes to eliminate waste, increase accuracy and minimize
complaints.
B.Ensure timely information related to preparing accurate budgets and financial forecasts.
C.Identify areas where technology would increase efficiency and implement.
D.Establish back-up systems for mission critical billing and communication system.
E.Evaluate and implement a CIS System.
F.Review and modify bill presentation.
G.Design and implement a department-wide complaint tracking and response database.
H.Evaluate the integration of Automated Meter Reading, Advanced Metering. SCADA and Dark Fiber.
I.Evaluate SAP solutions for business process improvements.
J.Improve recordkeeping and tracking
a.Maintain and publicize Point-of-Contact numbers for customer problems
b.Update Blockfinder database and online search applications
c.Update customer phone number database and circuit mapping for the automated Porsche
Outage Notification system
K.Develop and maintain a centralized system of key administrative information for frequently used
templates and critical timelines
L.Review and update Service Level Agreements as appropriate.
M.Ensure timely interdepartmental communications at the manager level and above.
N.Coordinate major project initiatives with other City priorities (e.g. Alma Sub –Housing; Local
Generation/ESC/WQP; etc.)
STRATEGY 4: Provide low and stable rates, adequate reserves, and budgeted transfers to
the General Fund
A.Explore SAP solutions in designing and implementing effective (user friendly) financial and other
reporting systems to include:
a.Budget –to-Actual reports for Operating and Capital Budgets for both labor and expenses.
b.Asset management in compliance with FERC requirements,
c.Revenue margin guidelines,
d.Review the use of allocated vs direct charges for charges for support services from other
departments and develop a methodology to track these charges and their impacts on the
financial health of CPAU,
e.Develop a system to study, review, and authorize all budget transfers to other departments,
both for support services and other services.
B.Review the use of financial reporting tools such as income statements, balance sheets, and others for
drivers for decisions at the appropriate time within the appropriate ranges.
C.Establish and manage retail cash management policies that include credit policies, deposits, cycle
balance and working capital.
D.Evaluate and implement contractor damage cost recovery plans that encourage reduction in
occurrences.
E.Implement changes to rates and reserves policies as necessary.
F.Monitor and pursue outside funding opportunities to leverage City resources
ATTACHMENT B
4
STRATEGY 5: Provide proactive, responsive and integrated communication to customers
A.Maintain ongoing and effective customer communications in the service areas of:
a.Red Tags
b.Turn-ons and Turn-offs
c.Unscheduled Service Disruptions
d.Planned Shutdowns
e.Changes in Water Quality
B.Enhance ongoing and effective internal and customer communications:
a.Communicate CIP plans
b.Communicate CIP construction schedules and status
c.Communicate long-term resource plans
d.Engage the public on major initiatives (PP/reservoirs/intertie/water and electric rates)
e.Promote visibility in the community through public speaking opportunities at neighborhood
groups, service groups, etc.
f.Develop and implement a plan to improve reliability perception
g.Create New Customer “Welcome Packets”for Residential and Business customers
C.Implement and evaluate targeted customer communications:
a.Website
b.Email list serve
c.Promotional events
d.Bill stuffers and UCAs
e.Program materials
f.Form letters to customers
g.Customer Satisfaction Surveys
h.Required annual notifications: Water quality notifications, Gas safety, Call Before You Dig
i.Brand awareness campaigns
ATTACHMENT B
5
STRATEGY 6:Provide targeted customer and environmental programs and services
A.Continue providing high quality Key Account Services
B.Expand Low Income Assistance Program
C.Provide integrated energy and water efficiency programs
D.Continually evaluate and revise forecasts for electric power demand. Pursue adequate low cost
supplies to meet this demand by participating in cost-effective programs offered by Northern
California Power Agency (NCPA) or other suppliers and marketers of energy.
E.Work individually and through partner agencies such as SCVWD, NCPA, CMUA, BAWSCA,
CUWCC to maintain and enhance efficiency and conservation program effectiveness
F.Monitor other utilities that successfully use alternative energy sources and seek funding for similar
projects that would be appropriate in Palo Alto
G.Support implementation of City’s Sustainability Program
H.Support implementation of the environmental components of the City’s Comprehensive Plan
a.Continue providing staff support and technical assistance in energy conservation and demand
side management to architects, developers, and utility customers.
b.Regularly review the water rate structure to ensure that it encourages efficiency and is
competitive.
c.Maintain citywide water conservation and efficiency programs for all customer classes.
d.Where practical, incorporate federal, state, and other agency policies and standards for water
efficiency into City codes, regulations, and procedures.
e.Implement incentives for the use of drought-tolerant landscaping and recycled water for
landscape irrigation.
f.Implement gas and electric rate structures that encourage energy conservation and that are in
balance with other rate-making objectives, such as providing competitive rates. Set rates to
achieve a balance between actual service costs, market prices, and the goal of promoting
conservation and efficient use. Continue to provide a baseline service rate.
g.Encourage establishment of public education programs addressing energy conservation and
efficiency.
h.Provide information and advice on the use of alternative energy technologies, including the
relative costs and benefits of different types of fuel to all customers.
i.Encourage the use of compact and well-designed utility elements, such as transformers,
switching devices, and backflow preventers. Place these elements in locations that will
minimize their visual intrusion
I.Work with the Santa Clara Valley Water District to identify and map key groundwater recharge areas
for use in land use planning and permitting and the protection of groundwater resources.
J.Embrace Environmental Solutions: Invest in equipment, facilities and programs that reduce the
environmental footprint of providing utility services: increased efficiency, lower losses,
environmentally friendly materials and processes, and reduced environmental impact.
a.Use environmentally friendly materials for parts and equipment
b.Use less destructive construction methods
c.Continue to support the Right Tree in the Right Place program
d.Continue to support the Shade Tree Program
e.Continue to stay up-to-date on current industry practices on minimizing, mitigating negative
environmental impact
K.Evaluate fossil fuel efficiency and greenhouse gas impacts of thermal generation [per AB1478]
L.Develop the City Council approved fiber optic ring around the City as recommended in the 1996
Telecommunications Strategy Study and evaluate and implement enhancements to the system
a.Improve dark fiber billing, pricing and contract terms
b.Promote VOIP to hotels
c.Use dark fiber as AMR and advanced metering back bone infrastructure [and evaluate use for
SCADA or distribute resources monitoring and control even though it is not in the report?]
ATTACHMENT B
6
STRATEGY 7: Foster a productive workplace environment that promotes safety, job
satisfaction and self improvement goals
A.Maintain OSHA Reporting System and incent employees to adhere to safety regulations
B.Provide employees with ergonomics recommendations
C.Ensure all employees are aware of and implementing security procedures
D.Ensuring targeted safety meeting participation
E.Implement Phase II Gallup Q12 Program
F.Schedule quarterly communication from department/senior management to entire department (State of
the Department) [rotate divisions chairing meeting]
G.Ensure 100% involvement in Strategic Plan development [input and buy-in]
H.Develop interdivisional work teams for identified projects.
I.Track skills related training hours and dollars
J.Implement Career Development Actions
J.1.Career-day once per quarter / open house
J.2.Cross-training
J.3.Shadow mentoring
K.Ensure all employees have a learning and development plan
ATTACHMENT C
1
Strategic Planning Interview Summaries
By Topic Area By Interviewee Type
Communications:
Council
·Should tout our non-GHG-emitting electric portfolio, our low electric rates, and our
efficiency gains. Should do more communications and more effective communications.
·All communication with customers follows a continuum from a low level of engagement due
to low level of knowledge to participation, to active involvement, to advocacy as the level of
knowledge increases. If you want engagement, you have to educate.
·Staff can improve how it presents information in staff reports.Would like staff to identify the
uncertainties in the analysis and present a simple matrix of costs, benefits and impact on rates
for all decisions. We provide a lot of outreach efforts –bill stuffers, brochures etc. and could
be done more effectively and cheaply.
·Public relations should improve –there is a good story to tell, but it has not been sent by us
or received by the community.
·Should not be under the radar and supports communication efforts, especially those to market
efficiency programs, but concerned with staff capacity limitations.
·Communication is not working now –need to go out of the box to find a better way. Use
people in the community to help design and implement programs –you will end up with
practical solutions and an engaged community.
UAC
·Suggests that we think like a marketing and brand management person –like a campaign.
Have an idea of what image should be and repeat relentlessly.
·Do a better job on outage notification. Need to proactively tell the positive story of Utilities
–annual report?
·Seems to be a disconnect between staff’s expertise and the Council decision-making (e.g.
Ameresco contract issues). Conversations between the UAC and Council need to improve.
·Improvements are needed in communicating to the public. Glad we’ll have new
communication person. Really need to improve communications when something goes
wrong -have to let people know when service will be restored. Need to spend more time
educating Council so that they are ready when facing an action item.
·Experiment with ways to communicate, including “raw” communication, which is cheaper.
City Management
·New communications manager should develop relationships with local reporters. Put out
regular messages. No one knows what Utilities is/does –could offer classes (e.g. Electric
101) that could net you supporters.
·Communications with public should be improved. Need to use all tools: twitter, facebook,
ongoing messaging through social media. Need to explain Calaveras Reserve. Things to
communicate: What’s coming up, what’s on horizon, new initiatives. This could engage
people that are generally not aware of Utilities business. Use triple bottom line to tell the
story.Could ask for direct customer feedback after delivery of service.
·Communication is important in changing how the community perceives the value the City
provides and whether or not we’re transparent. We need to think of our decisions/policies as
ATTACHMENT C
2
being long-term and not react to short-term disruptions. Strong and consistent leadership are
important. Branding and imaging done through bill inserts is good conveying a good image
and thus positioning the City in a positive way with the public.
·We need to improve communication and outreach to the community. We have a good story
to tell (e.g. aggressive infrastructure replacement programs), but we don’t do a good job of
telling it. It is essential to tell this story as it helps explain our rates for some utilities. Part of
the communication needs to be with the Council, which needs to be continually re-educated.
The outcome should be that Council feels that Utilities indeed has a comprehensive and
coordinated plan to address all their issues (efficiency, renewables, rates, costs, etc.).
Community Members
·Utilities should be invisible –should be available, but not a concern to citizens. Be so good
that no one knows you exist. Don’t want customers to have to think or worry about us. It’s
very hard to get to the public given all their other interests. Press should know who to call in
Utilities for outages and press should be posted by Utilities on these incidents immediately.
·Communication strategy should be to not be in the newspaper. The best way to avoid being
in the newspaper is continue to run a tight shop and have a reliable, safe system.
·CPAU is highly regarded by the citizens. Utilities is a critical component of city finances.
The General Fund Transfer is not communicated well.
·Most people think Utilities does a great job. Bad things make the paper. Utility bill inserts
are fantastic. Should use CANS system for emergency situations. Should be proactive in
calming public’s fears given recent San Bruno incident. Neighborhood associations are a
great way to distribute information.
·Web site should be improved and could add a blog. Would like a more informal engagement
process –UAC and Council meeting setting is too rigid and isn’t encouraging of public input.
·Overall, Utilities communication is better than the rest of the City. Could do more
occasional outreach about the utility budget with comparison to PG&E. Also information on
the rates is needed.
·CPAU should communicate to the public about its infrastructure maintenance and
replacement projects and history. Utilities does a good job of informing folks before a
project begins. Could thank people for their patience after replacement projects are
completed.
·City needs to use the press to inform the public –it can help to do the City’s work. The City
needs to be more coordinated in its public communication activities. ALL outages should be
reported to the media –let media decide if they are too small to report to the public. Should
view “talking with the media” (which may be a low priority in an emergency) as “informing
the general public.”
·In general, customers just want reliable service at a reasonable cost and don’t need to hear a
lot from the utility. Not many people read bill stuffers.Most people don't pay attention even
when rates increase. Don't raise an issue higher than you need to. Garbage rate increase was
a big problem because it was so drastic.
Costs/Prices/Rates:
Council
·Remember the lessons from the Refuse Fund –can’t provide services for free and allow
revenues to fall too low to cover costs.
ATTACHMENT C
3
·People should pay the real cost of things, and is not so concerned about rate increases.
Community perception is that we used to have lower rates than PG&E and now we are
above. If economy lags, more Council members will be concerned with cost-cutting.Some
will challenge the General Fund transfer.
·Concerned about rate increases for all utilities and affordability of services for all Palo Altans
especially renters and those on fixed income. Need to manage rates and services to avoid
extreme fluctuations in either –prefers current stable gas rates. Should consider providing
rate subsidies to encourage small business to come and stay. Should not penalize small users
with higher rates –ensure that rates increase for larger users.
·High water rates are a big concern. Supports stable rates –take the longer view. Need to
keep up with the laddering strategy.
·Supports stable, predictable rates. Some customers feel angst about their Utilities bill and
feel that they don’t have any control or influence over it. They worry about what rates may
be in the future.
·Concerned about keeping rates low and making sure that any programs, environmental or
otherwise, are economically justified and are not justified by saving the world. What
happened in Refuse Fund is a problem. Utilities should not be in a position of needing a
huge rate increase due to not thinking through the impacts of a contract or a plan/program.
·Concerned about finances and pricing –don’t repeat the Refund Fund mistake by reducing
use of service and providing other services for free. Need to make sure that our models
adequately address rate impacts and the need for reserves. Concerned with narrowing gap
between PG&E and CPAU’s rates.
UAC
·Can’t ignore costs, but can be both green and cost conscious at same time.
·Low rates are a two-edged sword since they do not encourage conservation and renewables
(PV on roof). Could increase the price of the top tier while lowering the price of the lowest
use tier to encourage conservation. Think about rate impact vs. bill impact.
·Rates should be stable in the short-term. Utilities should provide long-term rate projections
to assist customers in evaluating the cost-effectiveness of efficiency improvement
investments. There is much anger in the community about the General Fund Transfer to the
City. There is a less concern with money spent on Utilities infrastructure.
·Price is important as an economic driver.
City Management
·Utilities operates in a highly regulated and a highly political environment. Many costs are
not under our control (e.g. gas and electric market prices and the availability of water).
Operating costs are subject to constraint as for the rest of City government –can’t be separate
from the City in that respect.
·This is a tolerance for some increases related to green programs, but they need to be done
gradually. There will always be grouchiness. Careful, incremental changes would be
supported.
·Integration versus Isolation -The Utilities Department needs to become better integrated with
the rest of the City departments and consider the implications of its policies, rates, actions on
the whole of the community.
ATTACHMENT C
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·Need to stay competitive with our rates. If rates keep going higher, the question will be
raised of why the City has its own utilities. Council has an increasing focus on costs and on
Utilities expenses. Even if complicated to do, benchmarking studies are a good way to have
this information available. May have to do some outreach with our story, especially with
respect to efficiency and lower usage leading to higher rates.
Community Members
·People are more sensitive to electric rates than gas rates. If electric rates are higher than
PG&E, the call will go out to sell the utility and there will be questions about the value of
being independent. Water rates are high, but we have spent more on infrastructure
replacements and the emergency water supply and storage project. If costs are high due to
infrastructure costs, for example, break out that as a separate component on the bill. People
can then see what they are paying for this and most people support infrastructure
improvements.
·Understands that Hetch Hetchy costs will go up and that energy costs are volatile, but in the
end we should ensure that our bills are lower than PG&E’s. Does not have a strong feeling
about stable vs. fluctuating gas rates, but acknowledges that some people might have
problems with volatile rates.
·Continue to strive to be low cost. Do not exceed rate cap for renewables. Stable gas rates
are still a good objective.
·Rates are really not a huge issue in this community. We are fortunate to have cheap hydro
and renewable resources.
·This community can afford reasonable rate increases to support moving to carbon neutrality.
We must recognize that the costs of mitigation (for climate change) will be high if we don’t
act now.
·Community is served well by stable rates. Remind people about the long-term view. Should
talk about overall impact on bills, not rates –try to reduce costs for homeowners.
·There is a value to stable rates. It is good to protect customers from extreme swings. Water
problems can be the same as with the Refuse Fund where conservation can bankrupt the
utility. Likes the idea of raising fixed charges to stabilize part of the revenue and so that
system is not penalized by efficiency.
·Keep with current stable rates objective and gas laddering strategy –it is no better or worse
than other strategies. There is no reason to change. To control rates, place increased
emphasis on the rate impact of expenditures which are not directly related to safety and
reliability (e.g. the proposed water recycling project,smart meters for residential customers,
and the acquisition of high-priced renewable electric supplies beyond what is required by the
State).
Technology/Innovation Leadership:
Council
·We should be a test bed for emerging innovations and technologies. We have top
intellectuals in town –how can we harness these resources? We need to enlist these folks on
a volunteer basis –tap into their area of expertise. How can staff and the UAC guild a
clearinghouse of experts –from Stanford, EPRI, the community –to help them?
ATTACHMENT C
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·Consideration of new technologies needs to be part of the model. Show that staff is always
aware of and considering new technologies. Community likes the idea of innovation but in
reality there isn't an appetite for it unless there is a really great cost/risk ratio.
·Utilities should be a leader and at least be willing to test new technology with a small pot of
money –costs can’t be high.
·Supports only limited technology investments given staff limitations. Should enhance
relationships with Stanford and seek low-cost ways to do demonstration projects or make
ourselves available for others to test technologies.
·CPAU should not be cutting edge, early adopter of new technology. We should not take on
new risk. Believes in low cost, low rates, high reliability delivery of services –not new tech
for new tech sake.
·The stomach for innovative projects that could fail is very small. Re: Ameresco contracts,
LFG projects are not the friendliest environmentally. NYTimes article shows that burning
trash and making electricity is better than landfilling it and making electricity from the
methane generated in the landfill.
·We should look at smart tech. Use the precautionary principle –put out your parameters,
define your borders. Could set aside a certain amount of funds for innovation and R&D.
UAC
·We don’t need to be a first mover, but don’t appear to drag feet either –work prudently to
evaluate new technologies. We are a leader –we do LED, hired a smart grid consultant, etc.
The perception that we’re not a leader could be an issue of messaging. Embrace EVs –Palo
Alto will have a huge penetration of this technology.
·Should also do additional innovative programs.Do cheap, time-tested technologies, but also
new, cutting edge technologies, but on a small scale, or pilot, basis. Do not lead on smart
grid. Should support EVs. PA could position itself as a green tech home.Promote clean
tech “revolution” –can we attract economic development of green tech businesses? Can we
allow clean tech businesses to conduct pilots of their technologies in town?
·CPAU should have an education center similar to PG&E’s Energy Center to show how
shading, design of a building, etc. affects energy use. Utilities should take a more active role
in new building design.
·Should not be bleeding edge adopters, but be second movers on adoption. Should invest
some reasonable time and money to be a test bed.
·Have couple percent of our budget to explore new ideas.
City Management
·Don’t mistake the City for an entrepreneurial entity, but should have a small pot of money
and some resources devoted to trying some new things. City is too small and can’t afford to
take a risk. Instead, City should be on the examining leading edge.
·We should not be technology leaders –incremental, steady changes only. Do trials of new
technology before jumping in with both feet. City has very little tolerance for error and
wasting money.
·The community wants us to be leaders in technology and sustainability and our challenge is
to find a way to effectively communicate and strike a balance between our fiduciary
responsibilities versus being a leader especially in challenging economic times.
ATTACHMENT C
6
·Be less resistant to try new technologies. Find a way to test them, or at least be open to
analyze them and report your results to Council. Need to show that you are aware of the
technologies and have a way to evaluate them, try them, pilot them.
Community Members
·CPAU is not big enough to influence roll-out of new technology. Being on leading edge
exposes you to negative reviews that will end up in the press, which could swamp all the
good that you do. Let others work out growing pains of new tech. Be aware of new
technology and when something does make sense, embrace it. Be in front of technology just
by knowing about it.For EVs, be a “following leader” by watching demands. Don’t
promote by installing charging stations, but make it easy for people to install charging units
at their homes. Should encourage night-time charging. Downtown charging stations would
encourage daytime charging.
·CPAU should not be a technology leader. We should not spend a lot of money on research –
should be frugal. Leading in technology is risky. Risky ventures and bad outcomes are
another opportunity to be in the newspaper.On smart grid, wait for the technology to shake
out. LED streetlights tactic with pilots was good.
·CPAU should not be on the leading edge of technology. Stick with the tried and true since 8
out of 10 new ventures fail –let the venture community lead. Wait until things shake out.
Pilots are the way to test new tech. Firm believer in a fiber system build-out (fiber to the
premises). It is the leading,but not bleeding,edge.
·Should be cutting edge on some projects like anaerobic digester. We should wait to see how
things fall out with PG&E smart meter project. Need to think ahead on electric cars.
·CPAU should be on leading edge of innovation, especially with respect to establishing
carbon neutrality goal. Can use PA’s cachet to move the state/nation. Should find a way for
entrepreneurs to demo their technology. Utilize Stanford’s expertise.
·CPAU should be slightly ahead of the game, especially on climate issues. One way to handle
is to have an innovation fund to try new technologies.
·Palo Alto should not be a leader here just to be a leader. You should upgrade the system with
technology if it makes sense. Changes should be slow and incremental. Continue to evaluate
the impact of technology, but make decisions based on economic feasibility. Not every
advance (tech) will survive in the long term. Palo Alto is not in the gasoline business so we
shouldn't be in the EV charging business.
·Don't be a technology leader;rates and reliability are the two important issues.
Support for and Cost of Environmental (Green) Programs:
Council
·Sustainability programs and plans need to be dynamic since thinking, understanding, costs,
and impacts are constantly changing. Embrace change –it’s the way of Silicon Valley.
Within renewables, what are different shades of green? What is the true objective? What is
the greenest?
·Staff is asking the right questions about the environmental balance.Council should set very
high-level policy and let staff run the department. Staff needs to have conversation with the
Council to set broad policy so that staff is not always being second guessed.Staff’s
presentation should be neutral and should highlight trade-offs to solicit opinions from
Council.
ATTACHMENT C
7
·Staff should present a complete environmental picture (life cycle analysis) on green
proposals and include an impact on rates. PA should be a green leader –but not at any cost
and avoid green washing.Need to educate our customers on our sources of energy and water
and how they are delivered so that our customers can get a sense of how bad some of these
resources are for the environment.
·The community wants to be green –need to take a long view of these things. Should stay on
a constant course even if public can be flighty and respond to whims. Need to do more
innovative efficiency programs and programs to save water. Green policies should continue
even in this economic environment –they are long term goals that should not be put on hold.
Keep focus steady.
·Community generally supports environmentally focused programs.
·Should be as environmental as possible without raising rates. Can’t give a number for
acceptable rate impact of environmental programs, but if we have increasing rates for other
reasons, don’t add to the burden with environmental programs cost. If rates are flat or not
increasing, there may be an opportunity to increase rates for enviro programs.Should
maintain our brand as environmentally conscious community –keep up the talk and the low
cost/no cost programs. Don’t do anything just for environmental good –only do if makes
economic sense. Reducing GHG reductions in Palo Alto does nothing for the world. We’re
too small. Efficiency does have value.
·The gap between cost of renewables and market prices is a sticking point. Thinks there is a
better way to think about renewables –are we giving consumers the best value for
environmental goals?
·The community is too provincial in its approach to environmental sustainability. We need to
look globally at the overall worldwide resource constraints and accept that our lifestyles are
not sustainable. We need to accept the impacts locally of our use of resources –things must
be sited here that may scratch the surface of pristine Palo Alto such as putting a windmill in
our baylands. Need to look at whole picture –the life cycle of the process. We need now to
make incremental steps towards this future.
UAC
·We should be a green leader, but always remain cost conscious. Don’t need to pull back on
environmental goals –there is huge support in the community. In addition, we can be a
green leader without huge economic impact. The issue of either environment or cost is a
false issue. Keep doing the right thing environmentally at a prudent cost. Most enviro
decisions are very economically reasonable.
·PA has an opportunity to be a green leader that would have a large impact if other areas were
to follow. For example, in solar hot water heating, which many do not offer at this time –
figure out a way to do this before others do –get out ahead. General support for efficiency
vs. renewables. Should push as hard as reasonable on efficiency. Community is very green
oriented.
·People are very ignorant of how much energy they use and how much it costs. Education is
needed. Utilities should provide long-term rate projections to assist customers in evaluating
the cost-effectiveness of efficiency improvement investments.
·City should not be a leader on RPS, should only follow fed and state regulations. Energy
independence is more important than climate problem. Renewables more valuable when
local (solar, cogen, landfill gas).
ATTACHMENT C
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·Most of the Council doesn't necessarily understand what RPS will mean for rates. Will
spend a lot of time dealing with the economic implications of green, but we need to tell
Council all the consequences.
City Management
·Community is supportive of green programs, but must temper expenditures given economic
recession. Need to show the cost-benefit of proposals. Now is not the time for big new green
programs and projects.
·Cost of green efforts generally supported by the community, but need to communicate what’s
being done with the money.
·Community still supports green programs, but need to have visibility of results. There is a
sensitivity to rates in the community, but community is generally supportive of green projects
and programs, but don’t increase the ½ cent rate impact limit at this time (during current
recession).
Community Members
·Palo Altans are willing to pay more for greenness, but be cautious. If we could provide more
green power and still be lower cost than PG&E that would be great. Palo Alto is affluent
enough that money spent on renewables and EE spending is still acceptable.
·Green resources are fine and supported by the community as long as the cost is moderate.
CPAU should push water conservation. Projects like recycled water should be analyzed
financially not theologically (in the religion of green at any cost). For new developments,
City rules should require minimized lawn and use low-water using landscaping.
·Values PA role in environmental leadership and efforts done to date. Believes climate
change is the biggest concern for the world and for Palo Alto due to its proximity to the bay.
Charging more for brown power is not a tax –it is removing subsidies. We should use the
money to create a fund to deal with problems created by climate change.
·Climate change is the biggest issue and CPAU is a large part of the carbon footprint of its
customers so it must be engaged here. We must recognize that the costs of mitigation (for
climate change) will be high if we don’t act now.
·There is still support for green programs and people are still willing to pay extra for a
renewable portfolio. Climate change is a huge issue for the City –we should be considering
the long-term impacts on the utility. For example, water supply and hydroelectric generation
both may be impacted.
·People are willing to pay more for green but that fades when people are anxious about the
safety of the system. Safety comes before green but green is still important. Even though
hydropower doesn't count for RPS we should communicate our low carbon portfolio to the
public.
·Community still supports sustainability. High PaloAltoGreen participation rate is a good
indication of level of community support. Small rate impact for portfolio RPS is still ok.
Does not support the recycled water project.
Reliability/Safety/Emergency Preparedness:
Council
·For local generation: avoidance of GHG emissions should be the goal.
·Staff seems to have answered the questions about our system integrity.
ATTACHMENT C
9
·Keep service level high.Wants reliable service and to be well prepared for emergencies. We
should continue discussions regarding a second electric transmission connection and should
ensure that we can shut down our gas system as needed in an emergency.
·Reliability is a concern –there was big publicity on a business leaving City due to electric
reliability issues and the outage caused by the plane crash highlighted the issue.
·Top priority of Utilities should be reliable service –the core function of Utilities
·How can we integrate new, high tech, green solutions?
UAC
·Reliability is one of the top issues for Utilities.
·Reliability is a top issue –both in short-term and long-term. Lack of redundancy due to a
small islanded system. Supports a high level of maintenance and infrastructure
improvements.
·Emergency preparedness should be the top priority. Should think about what we need to do
to keep City alive for some period of time –all utilities. Local generation is key.
·Should evaluate building some local generation.
City Management
·Focus on safety, reliability and running a well managed utility.
Community Members
·Service reliability is vital.
·A large (25-50 MW) gas-fired generation facility would be a hard sell to the community, but
local plant is attractive for reliability reasons. Good to be self reliant. Solar within the city is
a better bet although cost may be an issue.
·Control your own destiny –consider buying gas supplies at the wellhead and pursue a
baseload power plant or cogen unit in town.
·Emergency preparedness is an important issue and directly tied to the environment as we can
find solutions through local generation with a focus on meeting critical loads (hospitals and
key infrastructure). Locally generated green power is best. Must have an environmental
platform to win a council seat in Palo Alto –this is proof that community values
environmental sustainability.
·Emphasized that safety and basic, reliable services are our core mission. Utility issues
should be handled in an integrated fashion. For example, drought and emergency
preparedness as well as flooding potential are all water issues that should be dealt with in a
comprehensive, integrated manner.
·Safety of the distribution systems is paramount. Now (in the wake of the San Bruno disaster)
would be the time to ask for bond money for any needed capital projects related to
infrastructure upgrades. We are lucky to have a large number of firms who recognize that
reliability and safety are more important than being the lowest cost.
·We should be doing everything we need to do to make sure we have top reliability.Local
gas-fired gen, if done economically, is a good idea for reliability.
ATTACHMENT D
Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 1 of 2
FINAL
UTILITIES ADVISORY COMMISSION –SPECIAL MEETING
EXCERPTED MINUTES OF JANUARY 12, 2011
CALL TO ORDER
Chair Waldfogel called to order at 7:05 p.m. the meeting of the Utilities Advisory Commission (UAC).
Present: Commissioners Berry, Cook, Foster, Keller, Melton and Chair Waldfogel and Council Member
Scharff.
Absent: Commissioner Eglash
NEW BUSINESS
ITEM 3: DISCUSSION: Draft 2011 Utilities Strategic Plan
Assistant Director Jane Ratchye stated that the Utilities Strategic Plan is close to final, but that she is
soliciting additional feedback before bringing the plan back to the UAC for action at the next (February)
meeting of the UAC. She provided a presentation of the highlights of the four themes of the strategic plan:
safety and reliability, customer service excellence, cost management, and environmental sustainability.
One strategy that was added was to ensure that the strategy itself was implemented as this will require
resources to manage, track and report regularly so that the UAC and Council can follow the progress
towards completion of the initiatives and whether the performance targets are met.
Commissioner Berry stated that he was very involved with staff in the development of the strategic plan and
requested that the UAC use this opportunity tonight to provide staff feedback on the draft plan so that it can
be finalized for consideration at the next meeting.
Commissioner Keller asked why objective BP1 (ensure a reliable supply of utility resources) did not include
anything about back-up supplies and emergency preparedness.Ratchye said that not all Utilities activities
are reflected in the Strategic Plan, but it is intended to capture those areas that need continued focus and,
especially, those areas that need improvements, changes in focus, additional resources, or changes in
practice or operations. Commissioner Keller asked if there needs to be a placeholder for important issues
that may not be an issue now, but could be in the future. Ratchye stated that the strategic plan will
necessarily change as we move forward with implementation and that new initiatives will be added as
others are completed. Since the plan will be reported on every six months, there will be opportunities to
make adjustments to the strategic objectives and performance measures. Regarding objectives BP4 and
BP6 relating to customer service, Commissioner Keller asked if there was a way to add outreach for new
development. She is concerned that there are resource efficiency opportunities for new buildings that could
be incorporated in the design phase. She suggested coordinating with the City’s Economic Development
Manager to determine any upcoming development plans. Regarding objective PT1 (be an attractive place
to work), Commissioner Keller noted that the performance measure relates only to new employees and not
to retaining valued existing employees.
Chair Waldfogel stated the draft strategic plan omits the rate of return to the City provided by the Utilities
Department and, since it is a key element of the City’s revenues and the Utilities expenses, it should be
captured in the strategic plan. He recommended the financial perspective as the location for an objective
related to the City as a stakeholder.
ATTACHMENT D
Utilities Advisory Commission Minutes Approved on: February 2, 2011 Page 2 of 2
Council Member Scharff commented that the stable rate objective is embedded in the strategic plan, but
that is premature since the laddering strategy and rate stability issue will be reconsidered by the UAC and
Council as a result of an added implementation task in the proposed Gas Utility Long-term Plan (GULP).
He added that the performance measure for objective C3 (I expect to pay a reasonable bill) should not
necessarily be the aggregate Utilities bill, but rather each fund separately. Otherwise, the information about
the relative position of each fund is lost.
Commissioner Berry added that he did not think the performance measure for objective C3 related to the
annual rate change should necessarily be the same for all Utilities funds. Ratchye acknowledged that, at
least in the short term, rate increases for water are likely to be higher than 10% per year. Commissioner
Berry stated that, if that was the case, it is not a good idea to include a performance measure that you
know you are not likely to meet and suggested having different targets for each fund. This would signal to
the Council and public what the direction of rate changes are likely to be. Commissioner Keller added that
predictable rates are valuable if communicated to customers to allow them to make informed investment
decisions regarding efficient appliances and other improvements.
Regarding objective C4 (care for our environment), Commissioner Cook stated that environmental
sustainability should be across all operations. He indicated that he supported objective PT4 (investigate
and adopt innovative technologies) and agreed with Chair Waldfogel that the equity transfer should be
added to the financial perspective. Minimizing financial risk should be incorporated into the financial
perspective as well. Commissioner Cook also indicated that environmental sustainability should be
included in the mission statement.
Commissioner Foster agreed that environmental sustainability should be included in the mission statement
and that the last phrase “…in support of the vibrant community of Palo Alto” should be omitted.
Commissioner Foster stated that objective C1 (I receive safe and reliable service) is about service
interruptions, yet the performance measure was about response time after an interruption. He suggested
that the measure should be related to the number of interruptions/outages. Regarding objective PT4
(investigate and adopt innovative technologies), Commissioner Foster recommended additional clarity on
the performance measure target of three new technologies evaluated per year. He wanted to ensure that it
was at least a somewhat extensive evaluation, perhaps including a trial or pilot program, rather than solely
a paper economic evaluation. Commissioner Foster also stated that the performance measure and target
for objective F3 regarding rate structures essentially is a policy change and this type of policy change
should be debated and discussed prior to be incorporated into the strategic plan. Ratchye responded that
she agreed with Commissioner Foster’s suggestion and will move the idea to a strategic initiative as
something that should be addressed and a policy call made.
Commissioner Berry stated that the performance measure for objective PT1 (be an attractive place to work)
should be employee satisfaction as determined by a regular, periodic survey. He suggested that this is the
best way to determine if employees feel that they are working in an attractive place.It is also a way for
management to address any issues that are raised. Regarding objective C1 (I receive safe and reliable
service), Commissioner Berry advised that recovery time is important as well as number of outages.