HomeMy WebLinkAboutStaff Report 7944
City of Palo Alto (ID # 7944)
City Council Staff Report
Report Type: Informational Report Meeting Date: 5/8/2017
City of Palo Alto Page 1
Summary Title: Utilities Q2 Quarterly Report
Title: City of Palo Alto Utilities Update for the Second Quarter of Fiscal Year
2017
From: City Manager
Lead Department: Utilities
Recommendation
This is an informational report and no Council action is required.
Executive Summary
This update (Attachment A) on water, gas, electric, wastewater collection and fiber utilities,
efficiency programs, legislative/regulatory issues, utility-related capital improvement programs,
operations reliability impact measures and a utility financial summary, is for the Council and
Utilities Advisory Commission’s (UAC’s) information. This update has been prepared to keep the
UAC and Council apprised of the major issues that are facing the water, gas, electric,
wastewater collection and fiber utilities.
Items of special interest this quarter include:
Updates on some of the impacts of the winter’s precipitation on the Western and Calaveras
Hydroelectric Resources (pg. 1)
Two solar projects came online in December 2016 (pg. 1)
The electric utility has saved nearly $5M in its supply portfolio through February 2017 due
to a combination of higher hydroelectric output and lower sales. (pp. 5-6)
Gas prices have been higher than expected, which has led to higher commodity prices (pp.
9, 11)
Snowpack and precipitation at Hetch Hetchy have been at historically high levels. (pp 13-15)
In 2016 Palo Altans reduced water consumption 24% compared to 2013, surpassing the
SFPUC’s voluntary 10% request. (pp 15-16)
Updates on the status of fiber system rebuilds, expansion plans, and other projects (pg. 18)
Updates on efficiency program efforts, including a certification course for building operators
begun in February 2017, the submittal of final reports for the Georgetown Energy Prize in
February 2017, and a study with University of Oxford on drivers of household energy
consumption. (pp. 19-20)
City of Palo Alto Page 2
A report on progress toward the net energy metering cap (pg. 20)
An overview of the Program for Emerging Technologies (pg. 21)
Updates on electrification (pg. 22)
Legislative and Regulatory updates (pp 22-24). Items of note include bills to increase the
Renewable Portfolio Standard (SB 584), extend cap and trade past 2020 (AB 378), and SB
210 (requires school districts to restrict access to campus drinking water sources below EPA
lead standards). The State Water Resources Control Board (SWRCB) continues to advance
regulations requiring water providers to assist schools with lead testing. In February the
SWRCB extended its drought regulations through 2017, but will consider repeal in May
2017.
The electric utility is currently forecasting a $22M deficit rather than the $15M deficit in the
original FY 2017 budget forecast due to lower sales and higher transmission costs. This
deficit will result in decreases in reserves. High winter precipitation is likely to improve the
outlook in Q3 and Q4. Other utilities will see increases in reserves due to delays in the City’s
main replacement program. (pp. 25-27)
Attachments:
Attachment A: Quarterly Utilities Update for the Second Quarter of FY 2017
Utilities
Quarterly
Update
Second Quarter of
Fiscal Year 2017
April 2017
ATTACHMENT A
Quarterly Update for Second Quarter of FY 2017
April 2017
i
Utilities Quarterly Update
Table of Contents
I. Electricity ................................................................................................................... 1
Electric Supplies ............................................................................................................................................ 1
Cap-and-Trade: Use of Allowance Revenue................................................... Error! Bookmark not defined.
Electric Budget and Portfolio Performance Measures ................................................................................. 5
II. Natural Gas................................................................................................................. 9
Gas Supply Retail Rates ................................................................................................................................. 9
Cap-and-Trade: Use of Allowance Revenue.................................................................................................. 9
Gas Budget and Portfolio Performance Measures ..................................................................................... 10
III. Water ....................................................................................................................... 13
Water Availability ........................................................................................................................................ 13
Water Use Compared to Targets ................................................................................................................ 15
Recycled Water Strategic Plan .................................................................................................................... 16
Water Budget Performance Measures ....................................................................................................... 16
IV. Fiber Optics .............................................................................................................. 17
Commercial Dark Fiber Service ................................................................................................................... 17
Citizen Advisory Committee ........................................................................................................................ 19
V. Public Benefit, Demand Side Management Programs and Communications ............... 19
Energy Efficiency Program Achievements .................................................................................................. 19
Local Renewable Energy Programs ............................................................................................................. 19
Communications Activities ............................................................................ Error! Bookmark not defined.
VI. Research and Development and Innovation .............................................................. 21
Program for Emerging Technologies ........................................................................................................... 21
VII. Legislative and Regulatory Issues .............................................................................. 21
Summary ..................................................................................................................................................... 22
State Regulatory Proceedings ..................................................................................................................... 24
VIII. Utility Financial Summary ................................................. Error! Bookmark not defined.
Residential Bill Comparisons (based on 30-day bills)..................................... Error! Bookmark not defined.
Non-Residential Bill Comparisons (based on 30-day bills) ............................ Error! Bookmark not defined.
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List of Figures
Figure 1: Electric Supply Resource Actual and Projection, 2015 to 2017 (as of Oct. 26, 2016) .................... 2
Figure 2: CY 2017 Monthly Electric Supply Resource Projection .................................................................. 3
Figure 3: Northern California Peak Electric Prices (as of October 25, 2016) ................................................ 4
Figure 4: FY 2016 Electric Load and Resource Balance ................................................................................. 7
Figure 5: FY 2016 Electric Market Purchase Costs and Market Prices .......................................................... 8
Figure 6: CPAU’s Gas Commodity Rates—July 2012 through November 2016 ............................................ 9
Figure 7: Cumulative Redwood Pipeline Cost vs. Market Benchmarks ...................................................... 10
Figure 8: Natural Gas Consumption – Budget vs. Actual ............................................................................ 11
Figure 9: Natural Gas Supply Cost – Budget vs. Actual ............................................................................... 11
Figure 10: FY 2016 Natural Gas Prices ($/MMBtu) – Expected vs. Actual .................................................. 13
Figure 11: Precipitation at Hetch Hetchy – Water Year 2017 ..................................................................... 14
Figure 12: % Median April 1 Snowpack Conditions .................................................................................... 14
Figure 13: Water Available to the SFPUC .................................................................................................... 15
Figure 14: Drought Conditions in California ................................................................................................ 15
Figure 15: Water Use Compared to Voluntary Target ................................................................................ 16
Figure 16: Water Consumption – Budget vs. Actual ................................................................................... 17
Figure 17: Water Cost – Budget vs. Actual.................................................................................................. 17
List of Tables
Table 1: Use of Cap-and-Trade Allowance Auction Revenue and Expenditures .......... Error! Bookmark not
defined.
Table 2: FY 2016 Electric Utility Supply Cost Summary ................................................................................ 5
Table 3: FY 2016 Electric Load and Generation Compared to Budget Projections ....................................... 6
Table 4: Status to date of all applications to the Program for Emerging Technologies ............................. 21
Table 5: Residential Electric Bill Comparison ($/month) ............................... Error! Bookmark not defined.
Table 6: Residential Natural Gas Bill Comparison ($/month) ........................ Error! Bookmark not defined.
Table 7: Residential Water Bill Comparison ($/month) ................................. Error! Bookmark not defined.
Table 8: Residential Wastewater Collection (Sewer) Bill Comparison ($/month) ........ Error! Bookmark not
defined.
Table 9: Median Residential Overall Bill Comparison ($/month) .................. Error! Bookmark not defined.
Table 10: Non-Residential Electric Bill Comparison ($/month) ..................... Error! Bookmark not defined.
Table 11: Non-Residential Natural Gas Bill Comparison ($/month) .............. Error! Bookmark not defined.
Quarterly Update for Second Quarter of FY 2017
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I. Electricity
Electric Supplies
Western Area Power Administration (Western) Issues
Drought conditions have lessened since the beginning of the new water year (Oct 1, 2016),
raising projected Western Base Resource generation levels to near long-term average levels
(399 gigawatt-hours, or GWh). For the second quarter of FY 2017, Western supply delivered 32
GWh (12 GWh below long-term average levels, but 6 GWh higher than in FY 2016). From July
2016 through January 2017, Western has supplied 200 GWh (only 5% below long-term average
levels) and cost $6.9M (1% lower than the FY 2017 Adjusted Budget). As snowpack measures
come in the the next few weeks, staff anticipates the forecast for Western supply to increase
with corresponding decrease in supply costs.
Calaveras Hydroelectric Project Issues
Drought conditions are also lessening their impact on Calaveras Hydroelectric Project
(“Project”), as the water shed has benefited from above average precipitation so far this winter
and the main reservoir is projected to fill to capacity. For the second quarter of FY 2017 Palo
Alto’s share of this project’s generation was 19.5 GWh (9% above the long-term average level,
and 66% higher than in FY 2016).
The extreme weather conditions experienced in December 2016 through mid February 2017,
caused substaintial damage to portions of the Calaveras hydroelectric project. The high flow
resulted in extensive sediment build up and forced outages at some of the Project’s generators.
As a result, on February 23, 2017, the Northern California Power Agency (owner and operator
of the Calaveras project) via resolution declared a State of Emergency at the Project.
Renewable Energy Contract Summary
On December 2, 2016 the Elevation Solar C and Western Antelope Blue Sky Ranch B projects
officially achieved commercial operations and have been operating smoothly ever since. The
two facilities have a combined capacity of 60 megawatts (MW), and are the fourth and fifth of
the City’s five utility-scale solar photovoltaic (PV) projects to begin operating. The two projects
are located on adjacent plots of land in Lancaster, CA, and are owned and operated by sPower –
which is the developer that also owns and operates the Hayworth Solar Farm.
Electric Load and Resource Balance
The size of the committed and planned market purchases over the last and current calendar
years (CYs) (shown in Figure 1 below) reflects an average level of hydroelectric output, as
discussed above. For CYs 2016 and 2017 combined, net committed fixed-price forward market
purchases currently account for approximately 204 GWh, which represents 11% of the City’s
total load for the two-year period. For CY 2018, normal hydro output is projected along with a
surge in solar resources. Long-term renewable resources (landfill gas, wind and solar) are
projected to provide 56% of the City’s total CY 2018 load. Overall electric supply resources are
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expected to be surplus to load by about 25% for CY 2017 and 16% for CY 2018; however, some
periods will see significant surplus positions while other periods will be deficit (see Figure 2
below).
The forthcoming surplus positions will be sold as generic energy either ahead of the prompt
month or in and settled in the spot market through the California Independent System
Operator, thus allowing the City to retain full credit of the renewable attributes (RPS, etc.) of
our renewable and hydro generation.
Figure 1: Electric Supply Resource Actual and Projection, 2016 to 2018 (as of Feb. 28, 2017)
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Figure 2: CY 2017 Monthly Electric Supply Resource Projection
Electric Market Price History and Projections
As of February 21, 2017, the price for on-peak energy for March 2017 in Northern California
was $33.66 per megawatt-hour (MWh)1, while the prices for December 2016 and January 2017
were $38.99/MWh and $39.62/MWh, respectively. These values are approximately $3.83/MWh
lower than they were at the time of the last quarterly report.2 On-peak prices for calendar year
strips are in the range of $35 to $37/MWh for 2016 through 2018. These prices are
approximately $1.90/MWh lower than they were at the time of the last quarterly report. Figure
3 below illustrates historical monthly on-peak prices and projected monthly forward prices for
Northern California from 2005 through 2023.
1 Note that $30 per megawatt-hour is equal to 3 cents per kilowatt-hour.
2 Market prices for the previous quarterly report were from October 25, 2016.
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Figure 3: Northern California Peak Electric Prices (as of February 21, 2017)
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Electric Budget and Portfolio Performance Measures
Electric Supply Cost Summary Compared to Budget Estimates
Table 1 below shows the City of Palo Alto Utilities’ (CPAU’s) supply cost by cost category
through the second quarter of FY 2017. Supply costs were $5.1 million (9.8%) under budget
primarily due to less than expected market purchases.
Table 1: FY 2017 Electric Utility Supply Cost Summary
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Electric Usage and Generation Summary Compared to Budget Estimates
Table 2 and Figure 4 below summarize the City’s electric supply sources through the second
quarter of FY 2017. Load was 4.3% lower than budget. Solar generation was below budget (-
10.5%), but was balanced out by hydro generation from Calaveras and Western, which was
significantly above budget (+37%). Some spot market purchases were expected; however, the
City ended up selling power on the spot market (in January 2017) due to a combination of the
above factors. As a result, total supply was below budget.
Table 2: FY 2017 Electric Load and Generation Compared to Budget Projections
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Figure 4: FY 2017 Electric Load and Resource Balance
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Electric Market Prices and Costs Compared to Budget Estimates
Figure 5 shows monthly market prices and the cost of purchasing energy from the market.
Electric market prices saw fluctuations during the second quarter of FY 2017. The cost of
market purchases through the second quarter of FY 2017 was higher than what it would have
been if all energy had been purchased in the spot market3. The total cost of market purchases
in the second quarter was lower than budget mainly due to lower than expected load and
higher than expected production from hydro resources.
Figure 5: FY 2016 Electric Market Purchase Costs and Market Prices
3 Note that some market purchases are made on a forward basis to lock in market prices.
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II. Natural Gas
Gas Supply Retail Rates
Since July 1, 2012, the commodity portion of CPAU’s retail gas rates for all customers varies
every month depending on the market price of natural gas. Figure 6 below shows the actual
commodity rates charged from July 2012 through March 2017. These rates can also be found
on the web at: http://www.cityofpaloalto.org/civicax/filebank/documents/30399. Note that gas
commodity rates have risen from the low rates in the spring of 2016.
Figure 6: CPAU’s Gas Commodity Rates—July 2012 through January 20172016
Cap-and-Trade: Use of Allowance Revenue
Calendar year 2015 was the first year the CPAU Gas utility had a compliance obligation in
CARB’s cap-and-trade program. As of the end of CY 2015, CPAU received $501,000 in revenue
from auctioning the emissions allowances allocated to its gas utility. The City Council adopted a
resolution on January 26, 2015 (Staff Report 5397) that identified the following permissible
uses for allowance revenue: 1) Investment in energy efficiency programs for the City’s natural
gas portfolio and retail customers, 2) purchases or investment in cost effective renewable bio-
gas resources for the City’s gas portfolio, 3) Investment in other carbon reduction activities for
the City’s natural gas utility, including system maintenance or replacement to reduce fugitive
gas emissions; and 4) Rebates to natural gas retail ratepayers provided on a non-volumetric
basis. All available funds were carried over into CY 2016 and are planned to be expended this
year.
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Gas Budget and Portfolio Performance Measures
Value of CPAU’s Share of Redwood Pipeline Capacity
Figure 7 below shows the cost of the Redwood gas transmission line compared to the value at
month-ahead spot market prices as well as daily spot market prices. The Redwood pipeline
allows the City to buy gas at the receipt point of Malin, Oregon and transport the gas to “PG&E
Citygate”, which is normally a higher value receipt point. The City’s share of the Redwood
pipeline was a net benefit to the Gas Utility of approximately $190,000 through the second
quarter of FY 2017. This is the difference between the value of Redwood capacity of $553,000
(the difference of the monthly index prices at the ends of the Redwood pipeline in Malin,
Oregon and PG&E Citygate) and the transportation cost of using the Redwood pipeline of
$363,000.
Figure 7: Cumulative Redwood Pipeline Cost vs. Market Benchmarks
Natural Gas Consumption and Costs: Budget vs. Actual
Figure 8 and Figure 9 compare actual natural gas use and supply costs with the FY 2017 budget.
Natural gas use through the second quarter of FY 2017 was 1.5% lower than the budget
forecast, and costs were 13% higher than budgeted amounts.
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Figure 8: Natural Gas Consumption – Budget vs. Actual
Figure 9: Natural Gas Supply Cost – Budget vs. Actual
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Figure 10 shows actual gas prices at PG&E Citygate (CG) versus gas prices that were projected
at the time the FY 2017 budget was developed. During FY 2017, gas prices have been
significantly higher than budget.
Figure 10: FY 2016 Natural Gas Prices ($/MMBtu) – Expected vs. Actual
III. Water
Water Availability
Above normal precipitation and water available on Tuolumne River have resulted in Regional
Water System storage capacity to be full. Figure 11 shows precipitation at Hetch Hetchy, Figure
12 shows the percentage of median April 1 snowpack conditions, and Figure 13 shows the
water that has been made available to the SFPUC.
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Figure 11: Precipitation at Hetch Hetchy – Water Year 2017
Figure 12: % Median April 1 Snowpack Conditions
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Figure 13: Water Available to the SFPUC
In addition, most of the state is out of drought condition as seen in Figure 14.
Figure 14: Drought Conditions in California
Water Use Compared to Targets
The State Water Resources Control Board extended the Emergency Water Conservation
Regulation; however, Palo Alto’s mandated water conservation target remains at zero. The City
is conserving water at a rate far beyond the San Francisco Public Utilities Commission (SFPUC)
request for 10% voluntary water use reduction. As of January 31, the City’s water use was
24.1% less than 2013 as shown in Figure 15 below.
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Figure 15: Water Use Compared to Voluntary Target
Recycled Water Strategic Plan
Work has begun on the Northwest County Recycled Water Strategic Plan (see Staff Report
6700). Ninety percent is being funded by the SCVWD (not to exceed $1.8 million) and the
remaining ten percent is being paid by all the partners of the Regional Water Quality Control
Plant. The first task underway is a feasibility study and risk assessment of expanding the
existing recycled water distribution system to the Stanford Research Park.
Water Budget Performance Measures
Figure 16 and Figure 17 below compare actual water consumption and water supply cost to the
FY 2017 budget projections. Actual water use through the second quarter of FY 2017 was 1.0%
lower than budget estimates. Actual supply costs through the second quarter of FY 2017 were
0.9% below budget.
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Figure 16: Water Consumption – Budget vs. Actual
Figure 17: Water Cost – Budget vs. Actual
IV. Fiber Optics
Commercial Dark Fiber Service
The total number of commercial dark fiber customers remained at 108 in the second quarter of
FY 2017. The total number of active dark fiber service connections serving commercial
customers increased from 216 to 221 in the second quarter of FY 2017 (some customers have
multiple connections). Commercial customers generate 81% of the dark fiber license revenues.
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Fiber Optic Network Rebuild Project
The rebuild project will install new aerial duct or substructure (conduit and boxes), in addition
to fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or
near capacity. This project will allow CPAU to meet customer requests for services. The project
areas primarily cover the Stanford Research Park, Palo Alto Internet Exchange/Equinix at 529
Bryant, and Downtown areas. This project basically “overlays” new fiber over existing fiber
routes in the network. Existing fiber will continue to serve City facilities and commercial dark
fiber customers.
2017-2021 Capital Improvement Projects
The budget for the rebuild project was reduced by the City Council during the Fiscal Year 2016
budget process. The Fiscal Year 2017 budget reflects this adjustment from $2.4 million to $1.3
million. The rebuild is a CIP charged to system improvements.
Rebuild Work in Progress
Route from PAIX at 529 Bryant to the Park Boulevard Substation. Substructure work, fiber
pulling and cabinet installation are nearing completion. The new fiber installed for the backbone
rebuild is 312-count single-mode fiber (2 x 144-count single-mode fiber, plus 24-count single-
mode fiber).
Upcoming work scheduled over the next 12 months:
Route from Park Substation to Hansen Substation
Route from Hansen Substation to Stanford Research Park
Additional phases/routes to be determined.
The estimated cost for the rebuild is between $500,000 and up to $1,000,000 for substructure
work. Another $250,000 for the overhead portion of the work is allocated for the project. CPAU
crews are performing the equipment installation, cable pulling and terminations. CPAU’s
substructure contractor is installing the conduit and boxes.
Fiber-to-the-Premises Master Plan and Wireless Network Plan
Staff is currently working on the following tasks for the FTTP and Wireless Plans as directed by
the Council on September 28, 2015:
1. Development of recommendations for fiber expansion opportunities for the UAC in April 2017 and
the Council in May 2017.
2. “Dig Once” ordinance: Staff, including the City Attorney’s office and the City’s consultant
CTC Technology & Energy (CTC), is working to evaluate existing dig once models, ordinances
and strategies implemented by other municipalities and counties. Staff is meeting with
AT&T and Comcast and other third parties that may be impacted by a dig once policy and
ordinance. Staff anticipates bringing a recommendation to the Council at the end of the
fiscal year.
3. Staff is working with CTC and the Office of Emergency Services to develop a Request for
Proposal (RFP) for a Mobile Broadband Network for Public Safety (e.g. “in-vehicle”
broadband access) and a Request for Qualification (RFQ) for a Point-to-Multipoint Network
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for Secure City Enterprise Access to improve command and control of critical City
infrastructure for Public Safety and Utilities. The RFP and RFQ are expected to be released in
April or May of 2017.
4. Staff will recommend expanding the City’s OverAir Wi-Fi Hotspots to specific unserved City
facilities at portions of the Cubberley Community Center, Lucie Stern Community Center
and the Golf Course.
Citizen Advisory Committee
Staff continues to meet on a regular basis with the committee regarding fiber and wireless
initiatives. In 2016, five new members were appointed by the City Manager to the committee.
The committee has provided significant input for the fiber/wireless expansion options and
recommendations that will be submitted to the UAC and the Council in the next few months.
V. Public Benefit, Demand Side Management Programs and
Communications
Energy Efficiency Program Achievements
Building Operator Certification Courses for Key Account Facilities Managers
The City is sponsoring a Building Operators Certification course for Key Account business utility
customers. These are a series of classes designed to teach facilities management staff
techniques to keep their buildings operating as efficiently as possible. The first class is being
held on February 28, 2017. The course is divided up into eight one-day classes that are offered
over a five month span. The class is funded partially by the student’s admission fee and partially
from Utilities Public Benefits funds.
Water Efficiency Rebates
Residential clothes washer rebates, which were partially funded by the SCVWD and CPAU, have
ended as of December 2016.
Georgetown University Energy Prize Competition
The Georgetown University Energy Prize (GUEP) competition is a national competition amongst
small-to-medium-sized cities for a $5 million prize, sponsored by Georgetown University. The
goal of the competition is to incentivize energy savings along with development of energy
efficiency programs that are innovative, replicable, lasting, equitable, and connected to
education. The competition measures energy usage in 2015 and 2016. Based on data from
January through September 2015, Palo Alto ranked 15th (out of 50) in the competition.
No updated rankings have been provided since September 2015, and communications from the
GUEP team fell off significantly throughout 2016. According to the most recent communication
from the GUEP team, they will be selecting finalists in late March or early April of 2017 based
on their evaluation of 2016 Year-End Reports, which CPAU submitted in February 2017. Finalists
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will submit a Final Report in June, and a winning community will be selected based on these
submissions.
Oxford University Collaboration
CPAU is currently supporting a project led by the University of Oxford to study the drivers of
household energy consumption, including correlations between consumption and three factors:
energy values, online portal use, and energy literacy. The researchers developed a survey that
was sent to CPAU’s residential email list of 13,300 customers who have elected to receive
information electronically, including newsletters, workshop and new program announcements,
and other notifications. A pilot version of the survey was sent first to a subset of the customer
list to test the effectiveness of incentives. Customers who were offered a free LED light bulb
had the highest response rate and so this incentive was used for the remaining larger group of
12,700 customers. Overall, the response rate for the survey was 9.7%, which is high considering
the length and content-depth of the survey. Results are being analyzed and will be available in
late spring.
Local Renewable Energy Programs
Net Energy Metering Cap
On August 22, 2016 Council approved the Net Energy Metering (NEM) Successor Program and
revised the NEM cap to 10.8 MW. As of February 16, 2016 Palo Alto has 8 MW of local solar
photovoltaic (PV) capacity, representing 74% of the NEM cap. Staff launched a NEM
Reservation program (Nov. 2016) to allow customers who have signed PV purchase or lease
contracts to apply for a reservation for the remaining NEM capacity. Once the remaining NEM
capacity is fully reserved customers will be placed on the NEM Successor program. CPAU will
maintain a NEM Reservation wait list in the event that a project with an approved NEM
Reservation is cancelled.
Communications Highlights
This section summarizes communications highlights, updates on major campaigns and
noteworthy events. Copies of all current and past ads and bill inserts are available online at
cityofpaloalto.org/UTLbillinsert
Education, Workshops and Community Outreach Activities
The following activities were held since the last quarterly report attracting more than 500
customers:
September 17: CPAU hosted a Residential Solar Workshop at Mitchell Park Community
Center
September 18: CPAU tabled at the Midtown Residents Association Ice Cream Social
September 24, CPAU hosted a Landscape Design and Planting Workshop w/ BAWSCA
October 2: CPAU tabled at the Bike ‘n Roll Event in front of City Hall
October 15: CPAU hosted a Pruning, Propagation & Dead Heading Workshop
w/BAWSCA
November 5: CPAU hosted a workshop featuring the Home Efficiency Genie Program
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Power Content Label
CPAU produces a Power Content Label each year and typically distributes it to customers via
utility bill inserts, email newsletters, on the website and in social media during the month of
September. This year, CPAU developed two Power Content Labels: one for residential
customers and one for non-residential customers. Two different versions are necessary in order
to accommodate information on the PaloAltoGreen program, as that program is no longer
available for residential customers, but is still available to non-residential customers. View
these at www.cityofpaloalto.org/PowerContentLabel
VI. Research and Development and Innovation
Program for Emerging Technologies
CPAU’s Program for Emerging Technologies, or PET, (www.cityofpaloalto.org/UTLInnovation)
provides the opportunity for local businesses and organizations to submit proposals for
innovative and impactful products to CPAU for review as a prospective partner. The goal is to
find and nurture creative products and services that will manage and better use electricity, gas,
water and fiber optic services. From the program’s inception in June 2012 through the second
quarter of FY 2017, the program has received a total of 61 applications. Table 3 below
summarizes the status of all applications through the first quarter of FY 2017.
Table 3: Status to date of all applications to the Program for Emerging Technologies
Deadline Total Received Under Review Declined/Closed Active Completed
FY 2013 13 0 11 0 2
FY 2014 15 0 11 1 3
FY 2015 15 0 11 2 2
FY 2016 14 0 9 0 5
FY 2017 4 0 2 1 1
TOTAL 61 0 44 4 13
PET Project Highlight from the second quarter of FY 2017:
Do-It-Yourself Solar PV System for Residential and Small Commercial Applications – A
team from the thin-film solar panel manufacturer MiaSolé approached CPAU to receive
feedback on their proof-of-concept, off-the-shelf, do-it-yourself, pre-packaged solar PV
system for residential and small commercial applications. CPAU staff coordinated
meetings between the MiaSolé team and the appropriate staff from the CPAU
Engineering division and the City’s Building department, who provided valuable
feedback to MiaSolé on how to modify their product to make it code-compliant. The
MiaSolé team is now working to deploy their product on two beta sites in Palo Alto, and
CPAU staff are monitoring their progress.
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Electrification Activities
Heat Pump Water Heater Pilot Program
The City launched a Heat Pump Water Heater (HPWH) pilot program in late Spring 2016 to
encourage residents replace their gas water heaters with efficient HPWHS. The pilot program
website provides information such as rebate levels (up to $1,500), qualifying models that meets
the minimum efficiency standard required by the California Energy Commission, installation
considerations, etc. The City has developed a permit submittal check list for installing a HPWH.
The City is planning to host a contractor training on HPWH installation in May 2017.
EV Charger Rebate Program
The City will begin offering rebates in March 2017 for Electric Vehicle Charging Stations
installed at schools, apartment complexes, and non-profit buildings with common area charging
accommodations. Rebates up to $30,000 will be available for Schools and Non-Profits and up to
$16,000 will be available for use at Multi-Family and Mixed Use buildings. The Bay Area Air
Quality Management District also just announced an incentive program for EV Chargers for
public and private entities, which we will promote to those ineligible to participate in our
rebate program. Additionally, we are putting the final touches on a new online PV and EV
calculator. This calculator will help customers understand the costs associated with use of solar
PV and electric vehicles in Palo Alto, using City of Palo Alto Utility rates and taking into account
customers’ roof exposures for solar generation.
VII. Legislative and Regulatory Issues
While the City operates on the Fiscal Year (July through June), the State legislature and
Congress operate on the Calendar Year, and federal agencies follow the Federal Fiscal Year
(October to September). In order to provide accurate information in this report, staff notes
here current issues, regardless of each entity’s operating year.
Summary
The State legislature began in earnest in January and promptly introduced hundreds of new
bills. Those affecting CPAU are noted below. Congress began with new leaders and an uncertain
road ahead with a new Administration. Thus far, there are no federal bills impacting CPAU; we
note regulatory items below.
State bills
With the California Municipal Utilities Association (CMUA) and NCPA, CPAU staff is actively
tracking each of the following bills
ENERGY
SB 584 (De Leon): Renewable Portfolio Standard (RPS). Changes RPS targets to 50% by 2025 and
100% by 2045.
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AB 35 (Quirk): Energy efficiency programs: low-income communities. A Spot bill that would
require agencies with energy efficiency programs to establish metrics and collect data to
increase the performance of energy efficiency programs in low income communities.
AB 378 (Garcia, et all): California Global Warming Solutions Act of 2006: regulations. This bill
would extend the greenhouse gas (GHG) emissions Cap & Trade program by allowing CARB to
continue using a “market-based compliance mechanism” (aka Cap & Trade) from 2021 to 2030,
to help achieve the state’s GHG reduction target of 40 percent by 2030 established by SB 32
(Pavely, 2016).
AB 151 (Burke): California Global Warming Solutions Act of 2006: market-based compliance
mechanisms. Currently only a placeholder bill, this is also an attempt to extend Cap & Trade.
AB 33 (Quirk): Greenhouse gases from transportation: reduction: fees and rebates on new
vehicle purchases. The intent of this bill is to enact legislation to reduce net GHG emissions from
transportation by imposing fees and granting rebates on sales of new automobiles and light
trucks. CPAU staff is tracking this bill because it is a placeholder bill and future language could
impact the City.
SB 71 (Wiener): Electricity: solar energy systems. This placeholder bill expresses the intent of
the Legislature to enact legislation requiring the installation of solar PV or solar water heating
systems in (as yet) undefined “solar zones.”
AB 1405 (Mullin): RPS. Electricity: Clean Peak Energy Standard. This bill would require the CPUC
to ensure an (unspecified) percentage of energy delivered to ratepayers during a peak load
time period is derived from eligible renewables or energy storage. Specifically applies to POUs
as well as IOUs.
SB 338 (Skinner): RPS. Clean Peak Reliability Requirement. A Spot bill; would establish a
program ensuring the state’s renewable generation actually results in an overall reduction of
GHG emissions.
WATER
AB 18 (Eduardo Garcia): California Clean Water, Climate, and Coastal Protection and Outdoor
Access For All Act of 2018. This bill would place on the June 2018 ballot a bond measure
authorizing the issuance of $3,005,000,000 to finance a clean water, climate, and coastal
protection and outdoor access for all program.
AB 196 (Bigelow): Greenhouse Gas Reduction Fund: water supply repairs. This bill would allow
money from the GHG reduction fund (Cap & Trade funds) to be used for water supply repairs if
such repairs further the goal of GHG reduction.
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SB 5 (De Leon). California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor
Access For All Act of 2018, aka the 2018 Climate Bond. A companion to the above bill, this bill
places on the June 2018 ballot a bond measure, authorizing $3,000,000,000 to finance a
drought, water, parks, climate, coastal protection, and outdoor access for all program. $1.5
billion is dedicated to replenishing state water programs. The focus of funding is disadvataged
communitities.
SB 210 (Leyva). Pupil health: drinking water. This bill prohibits drinking water that does not
meet federal lead standards from being provided at schools. Requires a school district with
drinking water below the EPA’s standards for lead or any other contaminant to close access to
those drinking water sources, and to provide alternative drinking water sources.
SB 427 (Leyva): Public water systems: lead user service lines. By July 2020, this bill would require all
water systems with known lead services lines to provide to the state a timeline for
replacement. If a water system has identified areas that may have lead lines, it must provide
the State Board a timeline for their replacement.
State Regulatory Proceedings
California Air Resources Board
CARB continues to work on cap-and-trade regulations for post 2020 implementation and
updates to the climate scoping plan.
California Energy Commission
The CEC continues to work on implementing new regulations for the integrated resource plans
(IRPs), the renewable portfolio standard (RPS), and the power source disclosure regulations (i.e.
the Power Content Label). CPAU staff is motoring all proceedings and providing comments
through NCPA.
State Water Resources Control Board
In February the Water Board extended the current emergency conservation regulations by 270
days, or until the Governor lifts the emergency declaration or the Board determines the
regulations are no longer necessary. Specifically, at the board meeting in May 2017 the Board
will consider repealing the regulation based on hydrologic and supply conditions at the end of
the rainy season.
In 2016 legislation was proposed that would have required water suppliers to test for lead in
drinking water at private and public schools, health care centers, and other locations. While
that legislation failed to pass, the Water Board utilized regulatory means to realize the intent of
the bill regards to testing in schools. Consequently, if a public or private K-12 school requests
testing of its drinking water, utilities must provide such testing. In CPAU, we are working closely
with the Palo Alto Unified School District to organize such efforts.
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Federal Regulatory issues
The Federal Energy Regulatory Commission is operating without a quorum, meaning their
ability to perform certain duties is limited. While not currently directly impacting Palo Alto,
NCPA’s business before the Commission is stymied, including a recent complaint alleging
PG&E’s lack of transparency in increasing rates. CPAU staff will continue to monitor the
situation and wait to hear about Mr. Trump’s appointees.
VIII. Utility Financial Summary
This section describes the unaudited actual financial results for FY 2017 for all Utilities funds.
The Council-adopted long-term Financial Plans for the Electric, Gas, Wastewater Collection, and
Water Funds will be updated for FY 2018 during the budget review process.
Electric Utility Overview
Sales through the second quarter of FY 2017 were 6.1% lower than expected. Sales revenues
have consequently been lower by about $6 million from budget. Due to the ongoing drought,
deliveries from Western and Calaveras hydroelectric resources have been lower than average.
While this has necessitated additional electricity market purchases, market prices have been
slightly lower than projected. Lower renewables costs have stemmed from a delayed start to
the Elevation and Western Antelope solar projects. Transmission Access Charges (TAC) continue
to be higher than originally budgeted. Current projections indicate lower net energy costs of
$1.76 million for FY 2017. A planned $3 million customer funded project to rehabilitate a
portion of the distribution system near the VA Hospital has been delayed, and the projected
revenues will not be seen until FY 2018.
This combination of lower costs and lower revenues results in a decrease in the level of the
Electric Supply Operations Reserve to $9.4 million. Both the Electric Distribution and Electric
Supply Operations Reserves may fall below the FY 2017 reserve minimum guideline levels based
on preliminary reserve projections. In the FY17 Financial Plan, several proposed transfers from
the Hydro Rate Stabilization and Rate Stabilization reserves were proposed, and staff may
request an additional $8 to $10 million from the Electric Special Projects reserve as a short term
loan. The Electric Rate Stabilization Reserve also has $3.6 million which could be used for this
contingency.
As shown in Table 6, the Electric Utility CIP Reappropriation and Commitment Reserves totaled
$24.4 million at the end of Q2 FY 2017, of which $2.6 million was under contract.
Gas Utility Overview
Gas Utility sales through the second quarter of FY 2017 were lower than budget by 5.3%, but
early results from January and February show that sales have picked up considerably. As
drought conditions have eased and people start to use more household water, gas usage has
also halted its downward trend. While the decreased consumption to date has resulted in
Quarterly Update for Second Quarter of FY 2017
April 2017
26
$353,000 lower distribution sales revenue, it is too early in the winter heating season to
determine whether this trend will continue. Gas supply revenues to date have also been lower
than budget by $127,000, although cost impacts are reduced since as gas prices are passed
through directly to customers through the market-based monthly-varying commodity rate.
Of greater impact to the gas fund at this time is the pushing out of gas main replacement
project 23 to FY 2019. This delay is the result of several factors: higher incoming bids resulting
in the need to redesign projects, in gas as well as water and wastewater collection, and a
shortage of qualified staff to perform the additional design work. This will reduce costs in FY
2017 by $3.55 million. The Gas Operations Reserve is projected to be between the minimum
and maximum reserve guideline range for FY 2017.
As shown in Table 7, preliminary levels for the Gas Utility CIP Reappropriation and Commitment
Reserves totaled $10.1 million at the end of Q2 FY 2017, of which $375,000 was committed to
projects under contract.
Wastewater Collection Utility Overview
Sales revenues are projected to be slightly lower than forecast, mainly due to lower winter
water usage and thus lower commercial wastewater revenues. Similar to gas, Wastewater
Rehabilitation Project 28 has been pushed out until FY 2019, the net effect being a $3.8 million
reduction in expenses. The Wastewater Collection Operations Reserve is projected to be within
the guideline levels for FY 2017. Should it be needed, the CIP reserve has an additional $2.6
million that could be utilized in case of emergency.
As shown in Table 8, the Wastewater Collection Utility CIP Reappropriation and Commitment
Reserves totaled $10.2 million at the end of Q2 FY 2017, of which $4.4 million was committed
to projects under contract.
Water Utility Overview
With what appears to be a break in the State’s long running drought, water sales have started
to increase, and sales through December are 4.4% above projections. Purchases are also
commensurately higher.
As with gas and wastewater collection, Water Main Replacement Project 27 has been delayed
until FY 2019, with a savings of $6.22 million in FY 2017. The Water Operations Reserve is
projected to be at or above the maximum guideline range, but should it be needed, the CIP
Reserve has an additional $13.3 million that could be utilized.
As shown in Table 9, the Water Utility CIP Reappropriation and Commitment Reserves totaled
$22.7 million at the end of Q2 FY 2017, of which $3.9 million was for projects under contract.
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April 2017
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Fiber Optic Utility Overview
Fiber sales and expenses through the second quarter of 2016 are $2.0 million and $1.1 million
respectively, both are in alignment with the FY 2016 budget. Expenses are expected to increase
by $1.6 million from FY 2015 to FY 2016, $2.4 million to $4.0 million respectively, primarily due
to the Fiber Optic System Rebuild CIP project. The dark fiber network was constructed in the
early 1990s. Several sections of the dark fiber system have either reached capacity or are in
need of repair, thus limiting the City’s ability to add new customer connections. As shown in
Table 5, the Fiber Optics Rate Stabilization Reserve is projected to be $22.2 million as of the end
of FY 2016.
Table 4: Financial Projections, FY 2017
Sales Volumes
Revenue
($000)
Expense
($000)
Net Reserve Change
($000)
Electric Utility
Financial Plan 963,034,720 kWh 151,761 (166,953) (15,192)
Current Forecast 909,752,142 kWh 142,960 (165,193) (22,233)
Change from
Financial Plan
-53,282,578 kWh (8,801) 1,760 (7,041)
-5.5% (5.8%) (1.1%)
Gas Utility
Financial Plan 28,652,783 therms 35,938 (40,418) (4,480)
Current Forecast 28,295,300 therms 35,454 (37,363) (1,909)
Change from
Financial Plan
-357,483 therms ( 484) 3,055 2,571
-1.2% (1.3%) (7.6%)
Water Utility
Financial Plan 3,859,444 ccf 41,522 (46,454) (4,932)
Current Forecast 4,030,511 ccf 43,366 (40,578) 2,788
Change from
Financial Plan
171,067 CCF 1,844 5,876 7,720
4.4% 4.4% 4.4%
Wastewater Collection Utility
Financial Plan 19,565 (20,968) (1,403)
Current Forecast 19,265 (17,128) 2,137
Change from
Financial Plan
(300) 3,840 3,540
-1.5% (18.3%)
Fiber Optic Utility
Financial Plan 4,842 (3,785) 1,057
Current Forecast 4,842 (3,958) 884
Change from
Financial Plan
0
0.0%
(173)
4.6%
(173)
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April 2017
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Table 5: FY 2017 Operations Reserves ($000)
Electric
Supply
Electric
Distribution
Gas Water
Wastewater
Collection
Fiber
Optic *
Beginning 15,642 6,208 9,952 12,415 3,211 21,361
Projected Change (13,209) (11,228) (1,909) 2,788 2,137 884
Transfers 9,911 14,500 - - - -
FY 2017 Ending 12,344 9,480 8,043 15,203 5,348 22,245
Reserve Minimum 16,241 8,866 5,618 6,232 2,715 895
Reserve Maximum 32,242 13,170 11,235 12,558 6,767 2,238
* For Fiber Optics, the Reserve is the Rate Stabilization (not the Operations) Reserve
CIP Reserves (Reappropriations and Commitments) Summary
Table 6: Electric CIP Reappropriations and Commitments
Table 7: Gas CIP Reappropriations and Commitments
Table 8: Wastewater Collection Utility CIP Reappropriations and Commitments
.
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April 2017
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Table 9: Water Utility CIP Reappropriations and Commitments
*Includes unspent funds from previous years carried forward or reappropriated into the current
fiscal year
**Equal to Reserve for Reappropriations + Reserve for Commitments (CIP Reserves).
Residential Bill Comparisons
Table 10: Residential Electric Bill Comparison ($/month)
As of March 1, 2017
Season Usage (KWh/mo) Palo Alto PG&E Santa Clara Roseville
Winter
(Nov -Apr)
300 33.09 59.94 35.18 55.67
453 (Median) 57.18 100.12 53.78 70.80
650 90.48 154.52 77.73 97.85
1200 183.43 306.38 144.59 179.96
Table 11: Residential Natural Gas Bill Comparison ($/month)
As of March 1, 2017
Season Usage (therms) Palo Alto
Menlo Park, Redwood City,
Mountain View, Los Altos, and
Santa Clara (PG&E Zone X)
Roseville
(PG&E Zone S)
Winter
(Nov-May)
30 34.88 41.57 41.57
54 (Median) 54.53 74.82 74.82
80 85.50 120.77 121.76
150 180.51 255.05 256.04
Quarterly Update for Second Quarter of FY 2017
April 2017
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Table 12: Residential Water Bill Comparison ($/month)
As of March 1, 2017
Usage CCF/month Palo Alto Menlo Park
Redwood
City
Mountain
View
Santa
Clara Hayward
4 43.69 44.46 33.37 46.47 19.80 34.63
(Winter median) 7 67.18 63.03 45.20 65.43 34.65 53.68
(Annual median) 9 87.24 75.43 53.09 78.07 44.55 66.38
(Summer median) 14 137.39 107.95 73.81 119.47 69.30 98.13
25 247.72 180.33 119.91 229.94 123.75 206.08
Based on the FY 2013 BAWSCA survey, the fraction of SFPUC as the source of potable water supply
was 100% for Palo Alto, 95% for Menlo Park, 100% for Redwood City, 87% for Mountain View, 10%
for Santa Clara and 100% for Hayward.
Table 13: Residential Wastewater Collection (Sewer) Bill Comparison ($/month)
As of March 1, 2017
Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward
34.83 85.91 75.11 34.30 33.93 41.65 29.80
Table 14: Median Residential Overall Bill Comparison ($/month)
As of March 1, 2017
Utility and Usage Palo Alto
Menlo
Park
Redwood
City
Mountain
View Santa Clara Hayward
Electricity (453 kWh/mo) $ 57.18 $ 100.12 $ 100.12 $ 100.12 $ 53.78 $ 100.12
Gas (54 th/mo) 54.53 72.82 72.82 72.82 72.82 72.82
Wastewater 34.83 85.91 75.11 34.30 41.65 29.80
Water (9 CCF/mo) 87.24 75.43 53.09 78.07 44.55 66.38
TOTAL $233.78 $334.28 $301.14 $285.31 $212.80 $269.12
CIP Project Detail
Tables showing the details regarding the Capital Improvement Program projects are shown in:
1. Table 16 for the Electric Utility;
2. Table 17 for the Gas Utility;
3. Table 18 for the Wastewater Collection Utility; and
4. Table 19 for the Water Utility
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Table 15: FY 2017 Q2 Reserve Report from the City’s Financial System
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Table 16: Electric Utility CIP Project Detail (pg 1/2)
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Table 16: Electric Utility CIP Project Detail (pg 2/2)
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Table 17: Gas Utility CIP Project Detail (pg 1/2)
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Table 17: Gas Utility CIP Project Detail (pg 2/2)
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Table 18: Water Utility CIP Project Detail
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Table 19: Wastewater Collection Utility CIP Projects