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HomeMy WebLinkAboutStaff Report 2217 City of Palo Alto (ID # 2217) Policy and Services Committee Staff Report Report Type: Meeting Date: 11/29/2011 City of Palo Alto Page 1 Summary Title: Utility Emerging Technology Demonstration Program Title: Utilities Advisory Commission Recommendation that the Policy and Services Committee Recommend that Council Establish the Utilities Emerging Technology Demonstration Program From: City Manager Lead Department: Utilities Recommendation The Utilities Advisory Commission (UAC) and staff recommend that the Policy and Services Committee recommend that the City Council establish the Utilities Emerging Technology Demonstration Program with a budget of $200,000 for FY 2012 and direct staff to develop a process for evaluating and selecting projects. Executive Summary The Utilities Emerging Technology Demonstration Program (Program) is being established to promote the testing, evaluation and deployment of new technologies or application of existing technology in innovative applications that could be used in a variety of areas related to the provision of utility service, and for the benefit of City of Palo Alto Utilities (CPAU) customers. These technologies could be in the area of energy and water efficiency and conservation, and/or renewable energy generation. Technologies related to process improvement, improved customer service, or improved utility operations will also be considered along with smart grid related technologies and applications. The technologies or programs that are deployed will be evaluated based on their ability to: provide direct benefits to CPAU and its customers; provide positive return on investment for CPAU; and provide measurable, local environmental benefits. The Program will be integrated with the City’s Emerging Technologies Demonstration and Pilot Partnerships (Attachment A) to enhance Palo Alto’s attractiveness as a place that fosters innovation while helping achieve key Council objectives. Background CPAU has an existing small Research, Development and Demonstration (RD&D) program to support early stage technology evaluation and deployment, which is funded by a fraction of the City of Palo Alto Page 2 Public Benefits (PB) charges collected from gas and electric customers.1 Annually, the budget for the RD&D program is around $50,000, of which $30,000 is from electric PB funds and $20,000 from natural gas PB funds. In the past seven years, $170,000 has been spent on the program to support the deployment of ground source heat pumps at the Children’s Library and at a commercial facility downtown, electric vehicle charging stations, the LED streetlight pilot projects, hot water heating, the Green Plug program, and small-scale research into new electric technologies. RD&D program funds have also been used to facilitate workshops and informational sessions with large business customers on small-scale wind and fuel cell generation and new lighting technologies. Staff has assisted customers regularly by researching information, potential for success, and capabilities of technologies that have been presented as new or innovative. In addition, since CPAU is in the heart of Silicon Valley, staff regularly discusses and shares insights with many start-up and venture capital funds managers on the viability and markets for their early stage technologies. Examples of these technologies include: small wind generation for roof tops; boiler-burner based cogeneration applications for large buildings; in-home display devices showing real-time energy consumption of equipment at homes; on-line residential rebate applications; smart meter-based predictive models of home appliance characteristics to incent replacement of inefficient appliances; distribution feeder line monitoring and predictive maintenance algorithms; small micro-turbines for electricity generation utilizing pressure differentials in the City’s water distribution pipeline systems; distributed energy storage systems; various techniques to optimize electric vehicle charging and utilization; cloud-based deployment of utility back-end systems for smart grid applications; integrated tracking system of corporate GreenHouse Gas (GHG) emissions, etc. In the process, CPAU has succeeded in deploying a few of these technologies for the benefit of CPAU customers. Providing additional funds to the Program will enable CPAU to expand on its current RD&D activities. The new project evaluation and selection structure is intended to formalize and streamline the review process so that this can be accomplished with minimal additional staff time. The purpose of the Program is to support the deployment of innovative ideas, particularly from the local business community, provide recognition to the City as an innovation leader, and further enhance Palo Alto’s stature as a technology and innovation hub in Silicon Valley. The UAC has long supported the establishment of a CPAU program to support emerging technologies. In January 2010, the UAC formed an Ad Hoc Subcommittee on Innovation, Technology and Projects (Innovation Subcommittee). The Innovation Subcommittee met several times with staff to develop the outline of an emerging technology program. 1 In 1996, the California legislature adopted Assembly Bill (AB) 1890, The Electric Utility Industry Restructuring Act, which allowed for deregulation of the electricity industry. The legislation included a public goods charge on electricity to fund public purpose programs, including ones focused on research and development. In 2000, AB 1002 created a public goods charge on natural gas. City of Palo Alto Page 3 Subsequently, the City Manager’s Office, through the City’s Economic Development Manager, initiated a broader, city-wide effort to develop policies for an emerging technology program into which the Utilities program was folded. The City Manager will designate a Demonstration Partnerships Coordinator who will coordinate the process. However, each proposed partnership will be coordinated with, and funded by, the City department that identifies the partnership opportunity. Therefore, CPAU needs to develop its own program to evaluate and select projects. The City’s Emerging Technologies Demonstration and Pilot Partnerships policy (Demonstration Partnerships Policy) was reviewed by the Policy and Services Committee on September 13, 2011. However, at that meeting the Committee did not have a chance to review the proposed CPAU Program. The City Manager’s office continues to refine the proposed City Demonstration Partnerships Policy and plans to return to the Committee in the next few months. Overall, the Demonstration Partnerships Policy will provide the City with a framework to engage in partnership opportunities to advance City priorities and address obstacles facing nascent companies. It will create a streamlined process for creating demonstration partnerships and utilize a standard agreement template to streamline procurement where appropriate and memorialize legal rights and responsibilities of both parties. In the meantime the Utilities Department is presenting the CPAU Program proposal to the Committee and requesting a recommendation to move forward with the budget and program development. Development of the CPAU Program will be coordinated with the City Attorney’s Office and other departments to follow current City policies, maintain data privacy and minimize risk to the City. On adoption of a city-wide Demonstration Partnerships Policy, the CPAU Program will be updated, as needed, to incorporate that new City policy. Discussion Staff proposes to establish a streamlined process for potential partners to apply to participate in the CPAU Program that does not require substantial staff time to administer. Staff evaluated two different approaches to soliciting project ideas. One method is to regularly issue Requests for Proposals (RFPs) to solicit projects and select some projects to pursue. Another method is to have an open process whereby project proponents can apply at any time for the Program. Experience over the past several years has shown that new technologies are brought to the attention of staff on an ongoing basis. Many of the technologies or companies request that CPAU allow them to test their ideas with real customers or with CPAU’s distribution systems. However, responding to these inquiries on an ongoing basis requires significant staff resources and a standard process is needed to ensure that projects are selected using established criteria. For these reasons, staff proposes a continuous project solicitation process with projects selected periodically from all applications received using a consistent set of evaluation criteria. City of Palo Alto Page 4 Other Programs Evaluated Staff has looked at other utilities for ideas on how to structure CPAU’s program, including the programs operated by the Sacramento Municipal Utilities District and the Emerging Technologies Coordinating Council. Sacramento Municipal Utilities District (SMUD): SMUD's Customer Advanced Technologies (CAT) is a research and development program designed to encourage customers to use and evaluate new or underutilized technologies. Under the CAT program, vendors and customers contact SMUD with the technology and the proposed demonstration project, and if the project meets SMUD’s eligibility criteria, then agreements are put in place between SMUD and the customer. The customer’s site is the test bed for the R&D project and the customer assumes most of the risk. SMUD provides funding to customers for installing the new technologies in exchange for a two-year monitoring access agreement. SMUD utilizes outside consultants to monitor equipment performance. Further details of SMUD’s CAT program are provided in Attachment B. The Emerging Technologies Coordinating Council (ETCC): ETCC provides a collaborative forum for its five stakeholder organizations (California's three investor-owned utilities (IOUs), SMUD, and the California Energy Commission (CEC)) to exchange information on opportunities and results from their emerging technologies activities. ETCC works to coordinate its members’ energy efficiency efforts in order to facilitate the assessment of promising energy efficient emerging technologies that will benefit California customers. The California Public Utilities Commission (CPUC) finances ETCC operations out of IOU ratepayer Public Goods Charge funds, and provides regulatory guidance. The ETCC meets four times a year. CPAU staff attends ETCC meetings, but currently SMUD, as the official ETCC member, represents the municipal utilities in the state. Proposed Staffing, Budget and Governance Structure CPAU staff will coordinate with other City departments to develop a formal application process for organizations seeking CPAU support or partnership in evaluating, testing, and deploying innovative and emerging technologies. A standard application form will be available on the CPAU website and applications can be submitted at any time. Applications will be reviewed on a quarterly basis and the evaluation and selection criteria, as well as the timetable for the next quarterly review will also be posted on CPAU’s website. A review panel will conduct the quarterly evaluation of applications, with the panel consisting of CPAU staff, other City staff from the City Manager’s office, Purchasing, and Facilities, as appropriate, and one or more members of the UAC. As the program develops the review panel may be expanded to include an external reviewer, who may be a Palo Alto resident or an industry expert. The City Attorney’s office will also review selected projects and assist in drafting agreements with project participants. Final approval of any project will be in accordance with established City processes, including the City’s Demonstration Partnerships Policy, Municipal Code and conflict of interest rules. City of Palo Alto Page 5 For each selected project, a CPAU staff member will be indentified as the key staff liaison for project progress review and evaluation. The liaison will also be responsible for coordinating with the initial review panel to recommend projects for further development as a CPAU program and sharing results with other City departments. Depending on resources available, this liaison role may be filled by a temporary recruit. Progress on each of the projects selected will be reported to the UAC on a semi-annual basis and to Council annually. The Program is not intended to be a grant funding mechanism. The Program budget may be used to engage a consultant to work with CPAU staff and evaluate the performance of technologies tested, or to assist in the initial development of the Program. The budget may also be used to provide funding for equipment needed at participant sites (as in the SMUD CAT program described above). If such funding is required, all approvals for contracts or procurement of equipment or material will follow normal approval processes established by the City. Co-funding with other Utility programs such as the Smart Grid Pilot Program is also contemplated. It is expected that many of the projects selected will require staff resources to assist in finding customers to test a technology or in installing a technology on part of the distribution system’s infrastructure; however, existing staff resources are expected to be sufficient for this work. Proposed Evaluation Criteria Applications for the CPAU Program will be evaluated using the following criteria, which could be expanded to include further criteria established to comply with the City’s Demonstration Partnerships Policy. The first four criteria listed below are the minimum requirements for a project to be included in the CPAU Program (i.e., the project would need to be innovative in nature, comply with the City’s contractual requirements, be applicable to CPAU and its customers and show the potential to provide a measurable benefit). The other six criteria would also be used to evaluate and rank the applications submitted. The city-wide Demonstration Partnerships Policy emphasizes local economic development; however, while considering this in the evaluation, CPAU’s Program will not preclude applications from companies based outside of Palo Alto. 1. Innovative nature of the product or application 2. Acceptance of City’s contractual indemnity and customer privacy protections 3. Applicability of the technology or process to CPAU and its customers 4. Beneficial features of the technology and market potential to CPAU and its customers. For example, show potential for: lower costs; measurable and local environmental benefits; process improvement; and/or energy or water use benefits 5. Proposed start date, milestones, and duration of the demonstration 6. Reliability and track record of promoters of the technology and partnering arrangement being sought 7. CPAU staff resource requirement 8. Amount of funding required from CPAU and funding available by applicant City of Palo Alto Page 6 9. Local economic development opportunities 10. Coordination with local research institutions Project applications that propose to use CPAU customer data or utility system information without appropriate confidentiality protections will not be evaluated by the review panel. CPAU’s Role as a Project Partner Depending on the project, CPAU’s partnership role could range from simply allowing project proponents access to willing customers, to providing funds for equipment and staff time. As with the SMUD program, much of the program funds are expected to be used to hire a consultant to evaluate the performance of the technologies after they have been installed and tested for some period of time. CPAU’s role could include any or all of the following: 1. Enable access to customers who are willing to participate 2. Facilitate by identifying customers willing to participate in projects; provide appropriate access to the utility system, rights-of-way, and/or data; provide marketing and customer support (similar to the SMUD program) 3. Use City facilities/processes for a test bed 4. Provide funds and/or equipment 5. Provide staff or consultant time 6. Coordinate or participate in the application of research grants, such as the American Public Power Association’s Demonstration of Energy-Efficient Developments Program At the conclusion of a demonstration project, staff will report on the results to the UAC and Council. Any insight from successful applications will be shared with other City departments. Case studies and reports from the demonstration projects may also be posted on-line. Timeline and Outline of Program Phases If the establishment of the Program and budget is approved by Council, staff is proposing to have a budget, review team, and application process in place by February 2012. The first evaluation of applications received would be in May 2012, and then quarterly thereafter. If any projects are selected in May 2012, semi-annual reports to the UAC would start in November 2012.  Phase 1: Quarterly evaluation and selection of submitted applications  Phase 2: For projects selected in Phase 1, contracting, actual demonstration, and post- demonstration evaluation may take from 12 to 24 months. CPAU may retain outside consultants for the post-demonstration evaluation.  Phase 3: For any project that successfully demonstrates potential in Palo Alto, the City may decide to roll out a larger scale pilot or even a full scale customer program. Commission Review and Recommendations Staff provided a presentation on the proposed budget and structure for the Emerging Technology Demonstration Program at the October 5, 2011 UAC meeting. During the City of Palo Alto Page 7 discussion, the UAC members asked for further details and clarification on the use of the proposed budget and the timeline for project demonstrations. Staff confirmed that the budget is expected to be used primarily to hire consultants to perform post demonstration evaluations, but that some budget may be used to purchase or provide equipment. Staff also confirmed that the program and budget would not be used as a grant funding mechanism, neither would it be used for existing CPAU staff time. Regarding timelines and process, staff explained that timing would depend on the proposed project demonstration and that would be one of the criteria used in the evaluation and selection of projects. Staff also clarified that regular reporting to the UAC and Council is part of the proposal. After discussion, the UAC voted unanimously (7-0) to recommend Council approval of staff’s proposed budget and program development. The draft minutes from the UAC’s October 5, 2011 meeting are provided in Attachment C. Resource Impact About $50,000 in funds is currently available from the City’s Electric and Gas Public Benefit RD&D program for FY 2012. If approved by Council, an additional $200,000 will be available for FY 2012. The source of the funds will be $125,000 from the Electric Fund, $50,000 from the Gas Fund, and $25,000 from the Water Fund. Sufficient funds are available without any rate increases, but a Budget Amendment Ordinance to allocate the funds to the Program will be required. The Program may also receive additional private or research funding related to the Program activities. Future funding for the Emerging Technology Demonstration Program will be requested during the annual budget process. Policy Implications This Program will advance the Council priorities of environmental sustainability and economic development. The establishment of an emerging technology program is a strategic initiative in the Council-approved 2011 Utilities Strategic Plan: “Develop a process to evaluate and implement new technology through targeted programs and consider creating a fund for innovative projects and pilots.” Staff will work with the City Attorney’s Office to ensure that funding requests are compliant with current legal requirements. Environmental Review Approval of this recommendation does not meet the California Environmental Quality Act’s definition of a project pursuant to Public Resources Code Section 21065, and therefore, no environmental review is required. Attachments:  Attachment A: City's Test Bed Policy (PDF)  Attachment B: SMUD's CAT Program (PDF)  Attachment C: DRAFT UAC Minutes of October 5_2011 (PDF) City of Palo Alto (ID # 1786) Policy and Services Committee Staff Report Report Type:Meeting Date: 9/13/2011 September 13, 2011 Page 1 of 5 (ID # 1786) Summary Title: Emerging Technologies Pilot Title: Review and Recommendation from the Policy & Services Committee on Emerging Technologies Pilot and Demonstration Partnerships Policy From:City Manager Lead Department: City Manager Recommendation Staff recommends that the Policy & Services Committee recommend approval by the City Council of an adoption of a resolution approving a Council Policy entitled “Emerging Technologies Demonstration and Pilot Partnerships” Executive Summary Approval of this Council policy will result in establishing a framework for engaging and evaluating demonstration and pilot partnerships with the goal of developing, testing, and demonstrating emerging technologies, product and service innovations. Background The City of Palo Alto is known for innovation, and is the home to many start-ups featuring exciting new technologies from an array of disciplines. As a municipality and a utility, we are uniquely suited to form special partnerships to support entrepreneurial development of new technologies and processes. Such partnerships can help to enhance Palo Alto’s attractiveness as a place that fosters innovation, while helping us reach key Council objectives. While especially true in the areas of Energy Efficiency/ Sustainability and Economic Development, emerging technology partnerships can also assist our goals in transportation, planning, neighborhood development, communication, and many other areas across departments, and across the City. Through staff discussions, it is clear that many ad-hoc partnerships are already underway in the form of technology piloting/ demonstration, use of emerging software, and other types of arrangements. These partnerships have taken place in many departments, at many levels of the organization. Staff feels that a council policy that sets a framework for decision making on partnerships will not only create an understandable process for potential partners, but will also streamline the use of staff time through the development of a standard agreement which outlines the basic terms for such partnerships. Discussion September 13, 2011 Page 2 of 5 (ID # 1786) The proposed Emerging Technologies Demonstration and Pilot Partnerships Policy (Policy) provides a framework for engaging in and evaluating demonstration partnerships. The Policy also provides an effective economic development attraction and expansion tool not currently available under City policy. It is designed to achieve a balance between the City seeking innovative solutions to delivering municipal services, increasing energy efficiency, encouraging an environment of innovations, budgetary considerations, and providing a level playing field for emerging companies within similar fields using similar technologies. The Policy (Attachment 1) enables the City to enter into mutually beneficial partnerships such as pilot projects, demonstration/ testing or mutual development opportunities. The primary goals of the Policy are to: 1.Create a streamlined process for creating demonstration/ pilot partnerships. 2.Develop a standard agreement/contract template to streamline procurement and minimize legal risk. 3.Maintain good business practice and assure added value to the City. 4.Encourage technology firms/ start-up companies to locate in Palo Alto, innovate in Palo Alto, and grow in Palo Alto. 5.Advance the City’s Municipal and Community energy efficiency/ Sustainability goals and Economic Development Strategy, and to enhance Palo Alto’s image as the center of the Silicon Valley’s cutting edge innovation. As outlined in the Policy, for some projects, the City may use existing Municipal Code Section 2.30 (Contracts and Purchasing Procedures) to test newly developed products or services as a pilot. However, this process may not sufficiently address the needs of some innovative companies to have their products tested. Pilot programs are generally not designed to serve as an economic development tool, but rather as a mechanism to test products or services the City has interest in using. Therefore, the Policy offers an alternative scenario under which the City can take advantage of arising opportunities to learn about new technologies and offer support to innovators in order to close the innovation commercialization gap. The decision to engage in a Demonstration/ Testing option is driven by a cost/ benefit analysis prior to agreeing to a Demonstration/ Testing agreement. The mutual development option allows the City to offer a partner more favorable terms in exchange for the project’s contribution toward economic development of the City and/or its potential for benefit for use by the City. Such help may include financial assistance, different risk allocation or exemption from City Policy, if agreed by the Council. Depending on the nature of the partnership and its benefit to the City, Palo Alto may offer different levels of support to the project. Usually the City may provide demonstration partners with access to City land, facilities, equipment, right-of-ways, and/or City data. The purpose of the cooperation is to test, evaluate, develop, and/or demonstrate innovative solutions defined as a product, process, service, or information technology that is expected to deliver measurable environmental, economic, or social benefits and improve performance, overall process September 13, 2011 Page 3 of 5 (ID # 1786) reliability, and control. It is envisioned that this Policy will allow the City to take advantage of opportunities to test emerging technologies, products, and service innovations. Moreover, it seeks to provide a structure for engaging companies either at an early phase of development, attempting to fulfill an identified need of the City, or seeking to demonstrate the potential effectiveness of an innovative product or service. Overall, the Policy provides the City with a framework to engage in temporary partnership opportunities to advance City priorities and addresses obstacles facing nascent companies. Prior to engaging in a partnership, staff will follow the proposed framework to evaluate the potential rewards and risks to the City. Based on the nature of the demonstration project, the Policy sets forth a process to identify the appropriate process to arrive at the agreement in a timely manner, while staying consistent with applicable City policies and ordinances. Example Demonstration Partnership Project Mutually beneficial demonstration partnerships may involve allowing use of City land, facilities, equipment, right-of-ways, and/or City data to test, evaluate and/or demonstrate innovative products or services. A recent innovative partnership with a start up known as People Power (on Bryant Street) provides a good case study. Staff is using this partnership to more closely develop and refine its test bed policy and to alert itself of potential issues in this emerging field of public/private partnerships. People Power is developing an Energy Services Platform that allows people to see their energy usage in real time remotely turn off appliances and adjust their heating/cooling levels. By accessing real-time data, people will be more aware of their usage and the corresponding costs. The user will then be able to remotely control unnecessary appliances, saving energy, costs, and reducing greenhouse gasses. In order to pilot its emerging products, People Power is planning to partner with 20 residents and 10 local businesses by placing its technology in half the homes and businesses, using the additional customers as a control group. The volunteers will need to have a smart phone and be willing to give access to their utility consumption data during the trial period. The City’s Utilities Department (CPAU) will allow People Power to install the necessary equipment on the gas and electricity meters at the selected homes and businesses. In addition, CPAU will partially fund the endeavor through its Public Benefit Demand Side Management (DSM) program as a Research and Development project. The efficiency and conservation programs funded through the DSM budget help residential and business customers reduce water, natural gas and electricity usage by incentivizing efficiency improvements, promoting new conservation technologies, supporting new installations of renewable energy generation and assisting low income customers manage and pay for their utility usage. More information on this portfolio of programs is available on the City’s website at http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=14820 September 13, 2011 Page 4 of 5 (ID # 1786) The devices that will be placed on the volunteers’ meters by People Power are similar to those already being used by Acterra through the City-funded Green@Home program. These power control monitors (PCM’s) clamp onto the meter and transmit usage information to a display inside the home or business. There, the customer can track usage and/or cost instantly. The instant feedback through these monitors will give residents and businesses a greater understanding of the usage requirements of their different appliances and equipment and a better ability to manage their utility consumption and bills. For CPAU, this program will allow staff to begin tracking the cost-effectiveness of this type of feedback method. Based on the results of this pilot project, this type of program could be expanded to other customers. The City believes that piloting this emerging technology will also highlight Palo Alto as a place of innovation, which we can use to enhance our sustainability message and goals, while testing this technology and feedback method for changing resident and business energy usage. If the pilot proves successful and is expanded throughout the City to other customers, it could result in a reduction in environmental impacts, including energy usage and carbon emissions, as well as potentially creating jobs. A partnership agreement with People Power was launched recently under the City Manager office’s review. The City Manager’s office collaborated with the City Attorney’s office to develop a contract template that would facilitate innovation, streamline procurement and minimize legal risk. Future Implementation To oversee future implementation, the City Manager will designate the Emerging Technology Demonstration and Pilot Partnerships Coordinator, a point person within the City Manager’s Office for Demonstration or Piloting Partnership inquiries. The Economic Development Manager will serve in this role for the near term. As part of on-going reporting efforts to the Council, the Coordinator will provide periodic reports to update the Council on the program. In addition, partnership agreements that have a value of $85,000 or greater, expose the City to an extraordinary risk, or require an exemption from the Policy will be brought forward to the City Council for consideration. Resource Impact Implementation of the Policy will require varying levels of support depending on the nature of the partnership agreement. Generally, a demonstration or piloting partnership should be at no cost or a substantially discoutned cost to the City. If a potential partnership requires funding, the Economic Development Manager or lead Department will secure appropriate funding. Hard costs for program financing will be expected to provide a return to the City. It is expected that some staff time will be needed to coordinate the facilitation of these partnerships, especially by the City’s Economic Development Manager, Attorney, and Public Works and Utility Staff. However, because current partnerships have occurred on an ad-hoc basis, staff expects that overall staff time will be used more efficiently, thereby using less resources in the long run. These adminstrative costs will be absorbed by current City Staff. September 13, 2011 Page 5 of 5 (ID # 1786) Policy Implications This policy will advance the Council Priorities of Environmental Sustainability and City Finances/Economic Development. Environmental Review (If Applicable) Not subject to CEQA Attachments: ·Attachment A: Test Bed Policy (DOC) Prepared By:Katie Whitley, Administrative Assistant Department Head:James Keene, City Manager City Manager Approval: James Keene, City Manager Attachment A DRAFT POLICY The City may enter into a Demonstration Partnership Agreement with the purpose of testing, evaluating and/or demonstrating innovative solutions if the potential partnership follows the Goals of Demonstration Partnerships and meets the requirements of the Guiding Principles set forth in this Policy. The application of this Policy depends on the type of Demonstration Partnership as defined in this policy. The City may consider but it is not limited to, some of the following to enter into a meaningful demonstration partnership: 1. Make available temporary use of City owned land, facilities, equipment, rights-of-way and data. 2. Provide financial assistance and/or absorb some costs for project implementation. 3. Agree to non-disclosure statements. 4. Request City Council to exempt the project from certain City Policies. DEFINITIONS A "Demonstration Partnership" refers to an agreement between the City and businesses, nonprofit organizations, and/or other governmental agencies to test, evaluate and/or demonstrate innovative solutions utilizing City land, facilities, equipment, right of ways, and City data. The partnership may fall into the following types: 1. "Pilot Project" refers to a product, process, service, or information technology that is currently available in the U.S. marketplace and that the City may want to explore for further application to improve City services. 2. "Demonstration/Testing" refers to a request by an outside party for the City to provide the outside party with City land, facilities, right of ways, equipment or/and data for the purpose of testing, evaluating and/or demonstrating the outside party innovative solution. 3. "Mutual Development Opportunity" refers to a Demonstration/Testing partnerships that the City has identified as a potential candidate for a contribution toward economic development and/or has the potential for a benefit for use by the City."Innovative solution" refers to a product, process, service, or information technology that is new or improves an existing product, process, service, or information technology and is not currently deployed in the U.S.marketplace. An innovative solution is expected to deliver measurable benefits compared to current practice in the areas of environmental benefits, performance, overall process reliability and control, or economic or social benefits. Moreover, an innovative solution shall consist of a specific and identifiable research component. Attachment A IMPLEMENTATION GUIDELINES A. Goals of Demonstration Partnerships Through demonstration partnerships, the City strives to achieve one or more of the following: a. create new markets and new jobs or/and support existing local innovators; b. improve quality and efficiency of City services and operations; c. advance the City's Green Vision and Economic Development Strategy; and d. educate the public about innovative solutions. B. Guiding Principles Mutual benefits and consistency with City Policy Both the City's and the partner's goals should be openly and clearly stated. The City will strive that a proposed partnership be mutually beneficial to both parties. All partnerships shall, to the extent feasible, be consistent with all applicable policies and ordinances set by the City, with variance from policy subject to City Council approval. Mitigated Risk The partners, its employees and potential subcontractors must, at a minimum, comply with all applicable laws, codes, rules, regulations and requirements pertaining to the execution of the demonstration project. Coordination The City Manager will designate a Demonstration Partnerships Coordinator who coordinates the partnership creation process as defined in this policy. Each proposed partnership will be coordinated with all City departments identified by the Partnerships Coordinator as being crucial to the success of the project. Performance Measurement and Evaluation At the outset of each Demonstration Partnership a set of performance measures should be established. At the conclusion of each project, a report evaluating the project against the stated performance measures and any additional information should be forwarded to the Demonstration Partnerships Coordinator. C. Partnership Process Step 1. The City department or Partnerships Coordinator identifies the type of Demonstration Project considered. 1. Pilot Projects should to the extent possible follow the procedures established by the Finance Department/Purchasing Division or the Public Works Department, if the project is a public work. Attachment A 2. Demonstration/Testing Projects should first be subjected to an initial assessment, prepared by the proponent, to identify the potential costs and benefit to the City in engaging in the project. Estimated cost factors should include staff time, out of pocket expenditures, risk to the City and lost opportunity of providing core services. Projects that are found to have costs that outweigh the benefits should not be engaged in as a Demonstration/Testing Project. 3. Mutual Development Opportunities must identify potential for a contribution toward economic development of the City and/or have the potential for a benefit for use by the City. To the extent that the City might not otherwise engage in such a project, the City's Office of Economic Development or interested City Departments may identify resources for the City to engage in the Project. Step 2. The Partnerships Coordinator in conjunction with City departments will prioritize potential demonstration partnerships based on the following criteria: 1. Consistency of the goals of the proposed partnership with the City's mission and core services. 2. Consistency with existing laws, City policies and practices. 3. Balance between the potential benefit of the partnership with the level of risk assumed by the City. 4. Potential for actual or perceived conflicts between demonstration partners' and City's goals or business practices. Step 3. Based on internal interests and requests from potential demonstration partners, the Partnerships Coordinator, in consultation with the City Procurement Officer will decide whether to negotiate with a potential demonstration partner or pursue, to the extent feasible and practicable, a competitive process as prescribed by the City of Palo Alto Municipal Code [Chapter 2.30].The Partnerships Coordinator may decide to use modified competitive models where it is infeasible or impractical to follow established City procedures. When the Mutual Development Opportunities Model is employed, City staff may negotiate concurrently with potential partners to establish the most advantageous demonstration partnerships and to arrive at a timely agreement which is consistent with this policy and applicable City policies and ordinances. Step 4. The City, if requested to share some of the potential liability in recognition of the benefit to be gained by the City, should decide the matter by applying processes used for other Public-Private Partnership agreements within the City. This includes but is not limited to mutual indemnification. Attachment A Step 5. Demonstration Partnership Agreements shall be approved by the City Council when: 1. Involving City revenues or expenses of $85,000 or greater, 2. Exposing the City to an extraordinary risk, or 3. Requiring exemption from City Policies. D. Duration and closure Each Demonstration Partnership should have a limited duration that is established at the outset. At the conclusion of each project a report evaluating the project against the stated performance measures and any additional information should be forwarded to the Demonstration Partnerships Coordinator. Depending on the partnership agreement the City may require partners to remove all equipment or materials installed and to return City property to its original condition. E. Responsibilities All demonstration partnerships will be coordinated by the leading City department(s) under the direction of the Partnerships Coordinator designated by the City Manager. The Demonstration Partnerships Coordinator will be responsible for: 1. Implementing this policy. 2. Providing guidance to all City departments regarding the interpretation and application of this policy. 3. Reviewing and assisting in the development of partnership agreements. 4. Tracking and reporting all demonstration partnerships developed by City departments. 5. Acting as a contact person for partnership opportunities and connecting potential demonstration partners with appropriate departments. 6. Recommending to the appropriate Authority approval or denial of the proposed Demonstration Partnership Agreements. 7. Regularly reporting to the City Council regarding the implementation of this policy and the status of all partnership agreements approved to date. Extract from Sacramento Municipal Utility District Website Customer Advanced Technologies SMUD's Customer Advanced Technologies (CAT) is a research and development program designed to encourage customers to use and evaluate new or underutilized technologies. Unlike many R & D programs, research is accomplished through implementing real-world demonstration projects (instead of laboratory testing). CAT provides funding for customers in exchange for a two-year monitoring agreement. Completed demonstration projects include lighting technologies, light emitting diodes (LEDs), building envelopes, heating ventilation and air conditioning (HVAC) systems, and a wide variety of other technologies. Reports describing the results for many of these projects are available. To download the reports, please click on the links provided below. All files require Adobe Acrobat Reader to view or print. Please note that SMUD does not endorse specific products or manufacturers. The information, statements, representations, graphs and data presented in these reports are provided by SMUD as a public service. Mention of any particular product or manufacturer should not be construed as an implied endorsement. Quarterly newsletter CAT produces a free electronic newsletter that is published and distributed via e- mail on a quarterly basis. The newsletter describes current research efforts and includes a calendar of scheduled technology workshops. Lighting technologies Since lighting comprises approximately 20 percent of all electrical energy use in California, development of new energy-efficient technologies is important for our energy future. The evaluations presented below demonstrate the pioneering spirit of SMUD's customer-owners. Heating, ventilation and air conditioning (HVAC) It takes a lot of energy to heat and cool our homes and businesses. SMUD is well-known for its innovation and pioneering spirit, particularly in the area of energy-efficiency. SMUD customers have installed geothermal heat pumps, evaporative condensed air conditioners, indirect/direct evaporative cooling (IDEC) systems and other ultra-high efficiency cooling techniques. Other technologies SMUD customers have participated in demonstration projects for a wide variety of technologies including non-chemical water treatment systems, voltage regulation devices, solar powered lighting systems and solar powered pond circulators. _______________________________________ City of Palo Alto DRAFT UTILITIES ADVISORY COMMISSION MEETING EXCERPT MINUTES OF OCTOBER 5, 2011 ITEM 2: ACTION: Utilities Emerging Technology Demonstration Program Senior Resource Planner Debbie Lloyd provided a summary of the report. The Utilities Emerging Technology Demonstration Program (Program) is being introduced to promote the testing, evaluation and deployment of new technologies or innovative applications for the benefit of Utility customers. Lloyd explained the background to the proposal: Utilities’ existing public benefits programs; UAC support for an expanded demonstration program; and the City manager’s proposal for a city-wide policy. She also summarized the proposed program structure with an ongoing application process and quarterly evaluation and selection of projects; funding levels of $50,000 from the existing public benefits program and an additional $200,000 for FY 2012; and the evaluation criteria for selecting participating projects. Commissioner Keller asked if here is a defined timeline to getting benefits from the projects. Lloyd stated that it would depend on the project - it could be long term or short term. Commissioner Keller asked how the funds were established from each fund. Lloyd stated that the legal uses of the funds will be considered. Ratchye stated that this was staff's initial guess of where the benefits would accrue. Director Fong added that staff would need to be careful to not commingle funds. Commissioner Keller asked if NCPA has a program. Lloyd advised that ETCC is funded by the Investor Owned Utilities and the Sacramento Municipal Utilities District. NCPA works with the Public Benefits Committee to coordinate innovation and R&D efforts at member utility locations. Vice Chair Berry asked if the program will go to the Finance Committee. Staff indicated that it may go to the Finance Committee and/or the Policy and Services Committee. Commissioner Waldfogel asked if there would be an annual report to the UAC. Lloyd said yes. Commissioner Waldfogel asked if the City could get an equity position in any start-up for which we provided support or funding taking a page from Stanford University. Director Fong thanked the commissioner for the idea and promised to look into it. Chair Foster clarified that money would be spent primarily for consultants to do post-installation evaluation. Regarding the ETCC, it is a valuable entity and CPAU has been involved in their meetings. He stated that he likes the program Commissioner Eglash asked what the money can and cannot be spent on. Lloyd said that the majority will be spent on consultants for evaluation. Commissioner Eglash advised that staff make very clear any restrictions on what CPAU's money will be used for. Commissioner Eglash supported the level of budget devoted to the effort and how high the bar is being set to select projects, and believes that this will help to Utilities Advisory Commission Minutes Approved on: Page 1 of 2 Utilities Advisory Commission Minutes Approved on: Page 2 of 2 mitigate the risk of opportunity costs spent in engaging these companies. Commissioner Eglash stated that a willingness to take risks should not be equated to a willingness to make bad decisions, and that the proposed list of criteria and the transparent process will help prevent bad decisions. Commissioner Eglash suggested that future reports and presentations address how the program will be managed –as the current focus is on launching the program and selecting projects. As an example, will a company be required to commit to milestones? Commissioner Keller asked if the results will be evaluated and if that could be used to expand the program, if justified. Lloyd explained that most of the funds are anticipated to be spent on that activity. She cited the SMUD program described in the report as an example of how projects and evaluation results could be shared. ACTION: Chair Foster made a motion to support the staff recommendation. Commissioner Keller seconded the motion. The motion carried unanimously (7-0).