HomeMy WebLinkAbout2003-05-12 City CouncilTO:HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: UTILITIES
DATE:
SUBJECT:
MAY 12, 2003 CMR:214:03
UTILITIES STRATEGIC PLAN PERFORMANCE REPORT, JULY
2002 THROUGH DECEMBER 2002
This is an informational report and no Council action is required.
BACKGROUND
On May 21, 2001, the City Council approved the Utilities Strategic Implementation Plan
[CMR:223:01] and directed staff to make periodic prowess reports on the performance of
the Utilities in meeting the objectives of the strategic plan. Staff committed to update the
Utilities Advisory Commission (UAC) and City Council twice per year. This report is
report #4.
Report I UAC Date ! Council Date
1 February 4, 2002
2 May 13, 2002
November 7, 2001
April 10, 2002
October 2, 2002
March 5, 2003
November 12, 2002
April 21,2003
t CMR
129:02
235:02
432:02
214:03
Focus
Performance Measures
July 01 - February 02
performance
March 02 - June 02
performance and Council
approved revisions
July 02 - December 02
performance and Balanced
I Scorecard
The attached March 5, 2003 report, covering July 2002 ~hrough December 2002, provides
key accomplishments and activities as well as key performance measures for each of the
strategic objectives. The report also includes discussion of the development of an overall
"balanced scorecard" approach to measuring and reporting the Utilities Department’s
CMR:214:03 Page 1 of 3
prowess in achieving the Strategic Plan Objectives, and application of this measurement
methodology to identify and implement action plans to improve shortcomings.
BOARD/COMMISSION REVIEW AND RECOMMENDATIONS
Staff sought UAC feedback on the prowess and the evolution of the Utilities Strategic
Plan presented in this report, and it was presented and discussed at the March 5, 2003
UAC meeting. Comments were generally positive and indicated that the Commission felt
that staff is moving in the right direction. Key commission questions and comments are
summarized below with staff responses.
Does the balanced scorecard design move Palo Alto closer to the way other
utilities measure themselves. Does it get Palo Alto squarely into the benckmarking
regime?
CPAU is among the minority of utilities that measure themselves this way, but the
data that feeds into the final measurement are used by many utilities. The
balanced scorecard method examines industry benchmarks collected from peer
utilities.
The page following the scorecard should emphasize the "minus" items with the
proposed action for addressing them, and then proceed to "bragging rights. "
In addition to the pluses and minuses in the balanced scorecard quadrants, there
wi!l be an associated Action Plan. The Action Plan will describe what CPAU is
going to do to maintain the pluses and what is being done to move from the
minuses to the pluses. The goal is to achieve a plus in each of the different
perspectives.
The measures should include bill comparison to entities other tha~ PG&E, such as
other similarly situated municipal utilities like Santa Clara.
In attachment B, the table of balanced scorecard measures, under item C4 "supply
cost advantage" items 2 and 3 are supply cost comparisons to municipal utilities.
Item C1 "competitive rates" refers to overall retail rate comparisons with other
local utilities. Staff will include other comparable utilities for benchmarking
besides PG&E.
CMR:214:03 Page 2 of 3
4.In the supply cost comparison, is the comparison between purchase cost or CPA U
billing versus PG&E bills?
This measure refers to commodity costs. The supply component of the rate is
easily discernible in utility rates used for benchmarking. There are additional rate
comparisons in item C !. One set of data compares overall retail rates and the other
compares supply cost.
RESOURCE IMPACT
This report has no direct resource impact.
POLICY IMPLICATIONS
This report supports the existing Council-approved Utilities Strategic Plan [CMR 432:02]
and Utilities Strategic Implementation Plan [CMR:223:01 ].
ATTACHMENTS
A:March 5, _00.~ UAC Report.
B:Minutes from UAC Meeting March 5, 2003
PREPARED BY:
~RL KNAPP
Senior Resource P
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
of Utilities
HARRISON
Assistant City Manager
CMR:214:03 Page 3 of 3
MEMO1L4NDUM 3
TO:UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE:MARCH 5, 2003
SUBJECT:UTILITIES STRATEGIC PLAN PERFORMANCE REPORT, JULY
2002 THROUGH DECEMBER 2002
REQUEST
This report is the semi-annual update on water, gas and electric strategic planning
reporting issues and is for the Commission’s information only. No action is necessary.
This report has two major parts. The first major part of the report deals with an
implementation approach for tracking progress on the strategic plan called Balanced
Scorecard. This approach will be implemented starting in the next semi-annual update.
The second major part of this report deals with reporting on accomplishments from July
2002 through December 2002.
BACKGROUND
On November 1T~1_ , 2000 the Palo Alto City, Council (Council) approved the Utilities
Strategic Plan and directed the City Manager to return to Council with an implementation
plan at a future date.
On May 21, 2001, the City Council approved the Utilities Strategic Implemefltation Plan
[CMR:223:01] and directed staff to make periodic progress reports on the performance of
the Utilities in meeting the objectives of the strategic plan. Staff committed to update the
UAC and City Council twice per year about the performance of Utilities.
The first strategic plan performance report was presented to the UAC in November 2001,
and to City Council in January 2002 [CMR:129:02]. This initial report focused on
performance ~easures. Council indicated a desire to be presented with a discussion of
activities. This report provided key accomplishments and activities as well as key
performance measures for each of the strategic objectives. The report also included
................ l~,u,,lcanons to the Utilities Strategic Plan in order to adaptto the changing utility industry environment.
The next update was provided to the Commission in April 2002. In October 2002, the
UAC was presented with another Strategic Plan Performance Report. Proposed changes
to the Strategic Plan were unanimously approved by the UAC. City Council approved
the revisions in the Strategic Plan Performance Report in November 2002 (CMR 432:02).
Attachment A contains the approved version of the Utilities Strategic Plan.
DISCUSSION
Balanced Scorecard Measurement of Utilities Strategic Plan Implementation
Previous updates to the UAC and Council on the Strategic Plan focused on
reporting accomplishments. Staff indicated to the UAC that a proposal would be
made to set target and to measure performance. Staff examined several methods
of measurement, reviewing publications on these topics from the American
Management Association, the American Quality and Productivity Center, and the
American Public Power Association (APPA). After reviewing all the literature
and several methods used at other utilities, S’taft recommends using the balanced
scorecard method of measurement.
The "balanced scorecard" approach is a popular method used by public agencies
and corporations for strategic planning and performance measurement. In this
approach, the strategic goals and objectives are arranged into four "Perspectlves".
Within these four perspectives, there are categories where performance towards
strategic goals and objectives may be measured. The chart below depicts the four
perspectives. "
Chart
1.
2.
1: Depiction of Balanced Scorecard
Customer Community
Customer Satistaction
Reliabili~
Unique Municipal ~lue
t.
2.
a.
4.
co Financial
!.13ompetit~ Rates
2.Financial Strengtl~
~.~ ost-~ffect~ & Efficient
4.Supp~ cost a~n~ge
5.Returns to Oommuni~
~"+". "0". or
1.
2.
4.
"+", "’0", or .... I
Within each category, there are objective measures to determine if CPAU achieves
a pre-determined goal. For example, under the perspective of Customer &
Community, there is a category of Reliability. One measure of reliability is the
System Average Interruptible Duration Index (SAIDI). This is an objective
measure easily tracked by CPAU staff. The SAIDI measure can also be compared
to similar measures at other utilities if desired, since APPA collects statistics from
its member utilities.
Once an objective measure and a target goal are agreed upon, CPAU’s progress
towards the goal is then given a plus: + on the scorecard for achieving the goal, or
a minus: - for failing. Thus the balanced scorecard will contain pluses and
minuses, one for each measure. The reader will be able to easily track strategic
plan progress by examining the pluses and minuses on the balanced scorecard.
Additionally, once the pluses and minuses are identified, staff will develop a~
accompanying action plan that reflects recommendations and actions to mitigate
the minuses, and improve or maintain other results. ~
Each perspective and category was examined for alig-nment with C AU s
p ,Strategic Plan to ensure that all four strategic objectives and all seven strategies
were integrated within the balanced scorecard approach. Over 180 internal CPAU
and industry measures of performance were collected and examined for relevance
to strategic plan measurement reporting. Of these, 52 were selected for the
balanced scorecard. Many of the measures are also collected by outside entities
like APPA and RKS Research, and will provide CPAU benchmarking
opportunities, providing a useful tool for analysis. The experts in the literature we
reviewed caution that published benchmarks should not be the sole basis for the
"correct" level of perfornaance, however staff feels that benchmarks are useful for
analysis, discussion and management learning opportunities in the strategic
planning process. The analysis can then help identify concrete action steps that
CPAU can take to improve in all four Perspectives.
The balanced scorecard approach will assist in performance measurement and
promote a better understanding of CPAU’s strategic business processes. It is
expected that the scorecard will evolve over time and respond to changes in the
business climate, just as the Strategic Plan will evolve. At this time, the
Perspectives are presented in no particular order, i.e. are not arranged in order of
increasing importance, for example. No item is weighted more heavily than
another at this time. For the future, staff is examining the integration * customer
O-r" ~.~value management" into this process. Customer value management techniques
determine which measures and goals customers value the most, and then place an
emphasis on the measures that customers find most important.
The proposed measures are detailed in A’~tachment B.
II.Key Accomplishments for the July 2002 through December 2002 period
Activities undertaken across all divisions as important tactics under the seven Key
Strategies have achieved numerous milestones and accomplishments that further
the four Supporting Objectives of the Utilities Strategic Plan. Attachment C
contains detail on the Utilities Department accomplishm~ents as per the Strategic
Plan. This first part of this attachment is organized by overall organization and
then by division. The second part of this attachment lists accomplishments bv the
supporting objectives of Customer Satisfaction, Reliability, Einancial erformancep ~and Municipal Value. These accomplishments demonstrate successful progress
towards achieving the objectives of the Utilities Strategic Plan.
4
~CHMENTS
A: Utilities Strategic Plan
B: Balanced Scorecard Measures
C: Utilities Strategic Plan Performance Report, July 2002 ~ough December 2002
PREPARED BY:
Kevin Kelly J
Utilities Market Analyst
REVIEWED BY:
DEPARTMENT HEAD:
Scott Bradshaw,.Assistant Director
Randy Baldschun Assistant Director
Girish Balachandran, Assistant Directo[~~
/A
J ~OH~ ULRICH
ATTACHMENT A
Utilities Strategic Plan*
MISSION
"To build value for our citizen owners to provide dependable returns to the City and citizens of
Palo Alto and to be the preferred full sera,ice utilin’ provider while sustaining the environment, "
SUPPORTING OBJECTIVES
1. Enhance customer satisfaction by delivering valued products and services.
2. Invest in utili~ infrastructure to deliver reliable service.
3. Provide superior financial performance to the City and competitive rates to customers.
4. To identi~, and maintain the unique advantages of municipal ownership.
KEY STRATEGIES, Years 2001-06
STRATEG7 ]:t Operate distribution systems in a cost-effective manner.
STtL4 TEGY 2.i Preserve a supply cost advantage compared to the market price.
STRA TEGY 3.[ Streamline and manage business processes to allow CPAU to xvork efficiently
land cost-effectively.
STir4 TEGF 4.[ Deliver products and sen’ices valued by our customers, and continue to build
! CPAU brand presence.
STRATEG75:f Attract and retain employees with critical skills and t, mowtedge.
STRA TEGF 6.! Maintain stable General Fund transfers, and maintain financial strength.
STRATEGY 7:I Implement pro~ams that improve the quality of the environment.
KEY STRATEGIES with TACTICS
STtL~.TEGY 1: Operate distribution systems in a cost-effective manner.
A.Accelerate the capital improvement program to reduce maintenance costs in later years when
competition may become more intense.
B.Develop multi-year supplement contracts with local contractors to reinforce staff’s installation of new
water, gas. and wastewater services.
C.Provide customized reliability solutions to meet customer needs.
D. Identify and implement measures to reduce the frequency of contractors accidentally rupturing mains.
STRATEGY 2: Preserve a supply cost advantage compared to the market price.
A..Explore alternative supply methods and projects to control the cost of electric, gas, and water
commodities to meet existing and future customer needs.
B.Investigate parmerships, alternative sources, and projects to secure low cost. reliable transmission for
commodity supplies.
C.Manage exposure to energy commodit? price risk.
D.Enhance wholesale revenues through optimization of contractual rights for transmission and
generation.
E.Work through partner agencies such as BA.WUA, TANC and NCPA to become a more effective voice
for our mutual benefit.
STP,_ATEGY 3: Streamline and manage business processes to allow CPAU to work efficiently & cost
effectively.
A.Develop, execute, and monitor service level agreements with other City Departments.
B.Review the Municipal Code for governance and organization changes, which could improve Utilities
communication and success.
C.Examine outsourcing for cost-effective opportunities.
D.Support City effort to streamline budget, adrr, nistrative, and regulatory processes.
E.Protect customer confidentiality to the greatest extent possible, as allowed by governing law.
F.Track and evaluate other departments’ char~_es to Utilities accounts.
ATTACHMENT A
STRATEGY 4: Deliver produc~s & services valued by, ot~r customers and continue to build CPAU brand
presence.
A.Reliability sen’ices
B.Convenient customer bill payqnent and self-service options consistent with "e-government" tactics
C.Energy and water efficiency, information and control services
D.Installation and maintenance services
E.Commodity, products
F.Telecommunications products
G.Special Facilities and metering options
H.Explore technical and financial assistance, and standards for customers who wish to install distributed
generation equipment
I.Provide 24 x 7 field customer service
STRATEGY 5: Attract and retain employees with critical skills and "knowledge.
A.Offer compensation and benefit packages that are competitive with private industry and consistent with
the local markets.
B.Evaluate hiring practices to allow the Utility, to respond to a competitive envirortment.
C.Promote a safe and drug free work place.
D.Evaluate establishing apprenticeship and recru!ting programs.
STRATEGY 6: Maintain stable transfers to the General Fund.
A.Maintain reserves within established guidelines.
B.Balance transfers between enterprise funds to provide flexibility.
C.Maintain bond-financing ratings and consider it to fund major projects.
D.Optimize the economics of buying rather than leasing property.
E.Complete the work order cost system.
F.Create performance measures and establish budgetary, and cost monitoring tools.
STRATEGY 7: implement programs that improve the quality of the environment.
A.Support implementation of the environmental components of the City’s Comprehensive Plan.
B.Improve existing green pricing program.
C.Support implementation of the City’s Sustainability Program.
D.Support investment in future green resource projects.
E.Implement Public Benefits and demand side management programs.
F.Provide sustainability life cycle cost analysis to Palo Alto customers.
G.Enhance conservation.
*As approved by City Council in November 2002, CMR 432:02
Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
Utilities Strategic Plan Performance Report
July 2002 through December 2002
March UAC Meeting
This section highlights major milestones, accomplishments, and issues tied to the Key
Strategies and Supporting Objectives. Major milestones and accomplishments are from
July 2002 through the end of December 2002. Part A of this attachment reports on
accomplishments by division. Part B of this attachment reports on accomplishments by
the four key objectives.
A.Accomplishments by Division
Multi-Division
CPAU installed energy efficient lighting in California Avenue tunnel for increased
safety and enjoyment of the art murals
De~ee pro~ams for employees promoted increased learning and employee retention
Public Power Week, Natural Gas Week celebrated community and unique municipal
value
Pato Alto’s Annual Water Quality Report was published and distributed to residents
(12001 statistics)
City Beat TV progam includes Solar Homes Tour and Utility Rebates
Assisted with City Green Business Certification
Employee Recognition Event October 8 at Mitchell Park
Participated in Emergency Operations Center (EOC) drills in December
Implemented Gallup Consulting recommendations to improve productivity and
employee satisfaction
Fiber loop connected to Fire Stations #1 through #5, Cubberley Community Center
campus, Lucie Stern Community Center campus, Mitchell Park Library/Community
Center campus, and the Main Library/Art Center campus
Electric Engineering and Operations
The Electric Engineering and Operations section has had a busy and successful six
months. New business remains constant and basically unchanged from two years ago, all
works orders and plan reviews were completed within target time frames. We have
completed scheduled design projects and have made good pro~ess on construction
projects. The construction projects are expected to be completed as planned and bid.
The Fiber Optics ~oup has expanded the fiber loop to several city facilities, sig-nificantly
increasing communications capabilities. The Fiber to the Home (FTTH) trial project has
been extended until this fall. Approval to proceed with the business case development
was received and has started.
Safety is one of our most important issu-~ The ¯ ’st significant achievement was
reaching 500 continuous days without alc . time a ent. This occurred while also
significantly reducing vehicle accidents an othe: eportable incidents. We are
continuing to exceed our goals. In a related issue we have completed an upgrade of
do~ ,~wn street lighting to improve public safety.
__.~ .....,.,,,oci c_u~aa
Attachrneat~
Water, Gas, Wastewater Engineering and Operations
The WGW Engineering and Operations section has been very busy. Customer sera, ice
wor~new business has been constant, all work orders and plan reviews were completed
within target time frames, An emphasis was placed on improving record keeping and
databases by scanning all written records and providing needed training. An Intranet site
was completed for internal use. Several .security improvements were made to gas and
water facilities, The resurfacing of the Arastradero access road was partially completed
with bad weather causing problems.
Safety is a major focus; the section has gone in excess of 240 days without a lost time
accident. Vehicle accidents and reportable incidents are down.
Water System
Water system projects are a major portion of the workload for WGW. The successful
emergency repairs for the pipeline at Matadero Creek had a significant impact on projects
in the first part of the last 6 months. Work on Phase t and Phase II of the Emergency
Water Supply capital improvements was started. Carollo Engineers was selected as the
design consultant for both phases. These phases are complex projects that will last for
multiple years.
Gas System
Gas system design projects were completed as scheduled. The construction of major
projects was held up while tie-ins from previous projects were being completed by the
operations ~oup. The Gas Distribution System map and the associated network analysis
model were updated. The annual gas leak survev was completed and all grade 1 leaks
dealt with immediately.
Wastewater System
The Wastewater desig-n and construction projects were on schedule for completion as
planned. A Cleaning and Inspection services contract for sewer lines was awarded and is
underway. A consultant was selected for the Wastewater Collection Plan Update and the
process has started with completion expected in August 2003. A pilot progam to test the
use of biological agents to remove fats oils and grease from the downtown system started
in December.
2
Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
Customer Support Services - Significant Accomplishments
Expanded Utilities Residential Rate Assistance Pro~am to subsidized housing
complexes resulting in customer participation level increase from 693 to 956
qualifying customers or a 38% increase. Goal for the fiscal year is 1000 participants.
Introduced automatic bank drafting to pay utility bills resulting in participation levels
of 1218 customers to date. Exceeded goal of 1000 customers.
Began fiscal year 2002-03 in sound financial condition with stron~ Utilities reser~Te
levels. Met goal to restore Gas Fund reserves within reser~,e ~uideline levels.
o Expanded Electric Fund Public Benefits Progam to include reimbursement of costs
for qualifying City owned shade trees in accordance with Council direction.
Continued record number of days (3,200 days) without a lost time accident in Field
Service.
Experienced 48 percent decline in high bill complaints. Higher decline than expected.
Experienced 5 percent decrease in customer call phone activity. Expected decrease in
post energy crisis period.
System Average Retail rates for water, gas, and electric within 0.2%, 0.7%, and 1.7%
of rate forecast. Easily met goa! to forecast rate revenue accurately within 5 percent.
Completed software upgade to Utilities Customer Information System (CIS) after
experiencing delays due to coordinating hardware upgrade, implementation issues
with vendor, and availability of staff resources during critical windows of testing.
Performed widespread testing of the CIS Customer Web Access functionality.
Testing took longer than planned due to significant modifications to customer screens
and availability of staff resources during critical windows of testing.
For the Palo Alto Chamber of Comme.rce Showcase, UMS sponsored 2 workshops.
The first workshop was "Surge Protection and UPS selection for Small Businesses."
The second workshop dealt with "In, proving Energy Efficiency in the Home" and
included t)~pical benefits from energy conser~,ation. The workshop also gave an
over,dew of CPA residential efficiency pro~ams and services.
Effective July 1, 2002, a new Water Rate Schedule was instituted for all dedicated
irrigation water meters at Palo Alto commercial/industrial sites.
Expanded "Power Quality" consulting sere’ices progam to cover small and medium
commercial customers in addition to larger customers.
Retained five large gas users on term contracts with the City of Palo Alto Utilities.
Initiated a new partnership between the City of Palo Alto Utilities and the Santa Clara
Valley Water District to: 1) create joint marketing of selected water efficiency "Best
Management Practices", and 2) hire the District to cost-effectively implement 7 other
selected "BMP’s" on behalf of the City.
Held the 2002 Palo Alto Solar Homes Tour with a record 400 attendees from 37
cities. The tour, sponsored by the City of Palo Alto Utilities (CPAU), featured 20
Palo Alto homes and businesses that have installed solar electric, or photovoltaic
(PV), systems.
Implemented the 2002 "Eichler Home" rebate pro~am, whichtargeted
approximately 2000 Eichler (and similar architecture) homes in Palo Alto.
Utilities Strategic Plan Performance July 2002 through December 2002
Attachm~
Initiated the new "Smart Energy" pro~am, a comprehensive residential rebate
pro~am.
Successfully completed a year-long study, in conjunction with the Department of
energy, of the water efficient technology represented by the "D’Mand Water
Recycling System." For homes and businesses, the undersink motor and pump injects
the cold water typically lost down the drain while the user waits for hot water, back
into the cold water line. This technology may be highlighted in a future CPAU
program.
For its efforts to develop a solar electric community, the City of Palo Alto Utilities
(CPAU) xvas recently awarded the Solar Electric Power Association (SEPA) Award
for Business Program Achievement in the "Development of a Solar Community."
The Solar Electric Power Association is a nonprofit organization whose membership
consists of more than 120 electric ser~,ice providers, utilities, associations,
manufacturers, government agencies, research organizations, and educational
institutions from eight countries. CPAU has a long-standing tradition of supporting
Photovoltaics (solar electricity) for use in large and small systems throughout Palo
Alto’s residential and business community.
On August 22, 2002, City of Palo Alto Utilities (CPAU) was presented with one of
the first California "Flex Your Power Energy Conservation Awards." The award
recognized CPAU for outstanding energy conservation efforts and organizational
leadership in conjunction with the state’s "Flex Your Power" energy conservation
campaign last year. The City was one of 18 public, private and non-profit
organizations in California to receive the award.
Resource Management - Significant Accomplishments
o Staff continued to be active in the electric and gas regulatory arenas. Significant
individual and joint action activity was undertaken in the PG&E bankruptcy
proceedings. The cost sharing arrangements with NCPA member agencies continued.
However, costs for this activity was more than expected. A mainstay of the joint
action was perfecting the City’s rights under the Stanislaus Commitments. An MOU
was negotiated with PG&E, within the aegis of the bankruptcy case, regarding the
City’s gas transportation and storage rights under a. FERC regulated market.
Additionally, a new agreement with the City of Alameda sharing approximately a
third of Palo Alto’s regulatory related costs for FY 01-02 and FY02-03 was
negotiated. Staff activity was also directed to Trinity River Fishery Restoration issue
with the Council and the public. The City has intervened in SMD and MD02
proceedings with the objective of slowing down the effort to impose an inequitable
market system. Staff has intervened at the CPUC AB970 hearings to enhance
regional transmission.
The Long Term Electric Acquisition Plan Guidelines (LEAP) were approved by
Council, on 10/21/02. This goes a long way in laying out a vi.sion for how the energy
deficit post-2005 will be addressed. A public forum on LEAP was held on 8/1/02.
An important aspect of the LEAP guidelines was the approval of the renewable
portfolio standard - 20% new geen power by 2015 and 10% by 2008. Council
increased the maximum rate impact from ~A C/kWh to ~ ¢/kV~q~. With regards to
Electric and Gas portfolio management, staff was active in implementing and
: Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
planning. A 25 MW Q1/Q4 5-year contract was executed with Coral Energy
Resources at a price of $36.60/MWh.
The Western contract continued to be managed and staff took an active role in
deferring Western’s attempted purchase of energy.for Project Use support for the
post-2005 period. MSS ageements were approved by Council on 7/15/2002 and
provided for a seamless, though work intensive, transition from the PG&E IA to an
operating regime that involves more interaction with the ISO.
The gas hedging pro~am (3-year laddering strategy), resulted in lower costs, and
possibly more stable costs, than PG&E this year. The IGS Gas
nominations/operations contract was approved by Council 12/9/02. This effectively
returns staff to a more stable operating regime, a regime that was upset when the
Enron gas contracts were cancelled. Staff continued to provide choice to large gas
customers while protecting pool customers through the fixed-term gas rate (G-11)
risk premium implemented and presented to UAC on November 6, 2002.
The Risk Management pro~am continues to evolve. Staff continued to implement the
auditor report recommendations; Energy Risk Management Policies were approved
by Council on 10/21/02 and a Risk Manager, reporting to ASD, was hired.
Staff, UAC and the Council actively participated in a regional effort with the Bay
Area Water Users Association (BAV~2JA) advocating to reduce the risks caused by
San Francisco’s deteriorated regiona! water system. Effort resulted in the passage of
three pieces of water legislation which: 1) require SF to commit to complete key
projects to improve the regional water system; 2) create a regional financing authority
allowing the BAWUA members to assist in the financing of projects to improve
regional system reliability; and 3) allow the creation of a regional water agency to
plan and finance projects including conservation, recycling, and the purchase of water
in dry years.
With five other retailers, successfully requested that the Santa Clara Valley Water
District (SCVWD) study the feasibility of either extending its West Pipeline to serve
water in emergencies or on an ongoing basis to the new retailers or to extend the
pipeline to interconnect with SF’s regional water system. Draft report delivered by
SCVWD in December 2002.
Initiated a Groundwater Supply Feasibility Study to evaluate the safe amount of
~oundwater that can be extracted without causing problems such as land surface
subsidence, saltwater intrusion, or the ruination of contaminated plumes.
B.Accomplishments by Strategic Plan Objectives
This section provides a summary of the key performance metrics for each of the four
Supporting Objectives of the Utilities Strategic Plan. More detail on these and other
impact measures are provided in the UAC quarterly reports.
Customer Satisfaction: Gap Analysis (Internally conducted research)
Utilities staff implements an ongoing customer satisfaction feedback process. Customers
are provided su~ey cards on which to describe their recent experience with Utilities
employees such as those performing routine field work, overseeing construction projects,
handling an onsite visit, administering an efficiency pro~am, etc. This data is collected
............ ~ ~’uu~ mr°ugt3 December 2,i02 Attachm ent~.~
on an ongoing basis and analyzed on a quarterly basis. The "gap is the difference ~
between the level of service "Expected" by the customer and the level of service
"Delivered To" the customez Customer Satisfaction is measured by comparing 1) the
customer’s scores on what they expected from the Utilities, to 2) their scores on what
Utilities delivered to them. A high number indicates a high level of delivered service.
The tables below show for the past five quarter~ (1) raw scores for delivered service and
(2) percent that delivered service exceeded customer expectations.
Gap Analysis -Average Raw Score for Delivered Service (Scale 1 to 7)
2002 (Calendar)
Calendar O ~I__Q 2__Q 3__Q 4__Q
WaterGasW’astewtr Ops 6.6 5.6 5.4 5.1
Energy Efficiency Program 6.6 6.7 5.8 6 6.4Utilities Engineering 5.6 5.6 6 6.3 7
OVERALL 6.2 6.0 5.7 5.8 6.T-
Gap Analysis - % Exceeding Customer Expectations at
WaterGasWastew tr Ops
Energy Efficiency Program
Utilities Engineering
OVERALL
Point of Contact
2002
"~o~-4%_ ~,o,,;-6%
9%10%1 1%13%10%
5%0%10%21%0%
1~ zo 6%5%10%~%
Conclusions:
Overall, Palo Alto utility customers give high ratings to the Utilities in meeting their
expectations. In the 4th Quarter of 2002, the Gap Analysis indicates that Utilities has
exceeded customer expectations by 5% percent overall.
In general, as in past reports, customers give Utilities very high ratings on Courtesy.’ and
satisfactory, ratinas on Timeliness in responding to their needs.
WGW Operations customers reported some perceived delays in repairs that affected
Timeliness scores, but customers continued to give high ratings on Courtesy to WGW.
Satisfaction ratings in Public Benefits / Energy Efficiency remain high. A significant
number of customers did not realize that their energy efficiency rebates had been credited
to their utility bills. The rebates were issued as credits on the bill rather than mailing
checks to the customers.
Customer Satisfaction: Benchmarking (via External consultant surveys)
There were no surveys conducted with.CPAU customers by external consultants for this
reporting period.
Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
Infrastructure Investment and ReliabiliD,:
Electric: System Average Interruptible Duration Index (SADI) is defined as the ratio of
annual customer-minutes off the system to the average total number of retail customers
served. (O1,S1)
Outage minutes are below the target goal of less than 60 minutes per customer average.
These numbers below are shown m;o ways: with storm outages (the higher blue line) and
without storm outages (the lower red line).
120 --
Electric Service Interruptions FY 02-03
114
All outage data
100
.p.o80-
r.O [ ~oo~ i~-~-ut e-s per
~e’-
60 -I customer per year j
21
~4O
._=
~; 20 12 15 15
July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Customer perception of outages and interruptions will be measured in 2003 via a
telephone sura’ey conducted by RKS Research. Their last survey was conducted in April
2002 and results were reported in the previous Strategic Plan Performance report. From a
customer satisfaction viewpoint, RKS Research reported that while residential CPAU
customer perception of reliability regarding outages and interruptions is good, it is
slightly lower than levels at other municipal utilities throughout California. CPAU has
held senior staff meetings and brainstorming sessions to help find ways to increase
reliability, as well as ways to communicate with the community and increase our
customer’s confidence in reliability efforts.
WGW: Service Restoration times. (O1,S1)
Gas se~,ice restoration times are better than target. (Charts next page)
........ ~’~ ~ ’~ renormance July 2002 through December 2002
Water service restoration times exceeded target.
Gas S~ em O&M Mainline Leak R~airs
FY G2-03 (through January ’0
i ,,- .....~ ur LeSS
3s /t /\ .......-------
1.5 -~
12 !3 14 15 16
1 2 3 4 5 6 7 8 9 10 11
Break Number
100% of repair completed within 4 hours
Total Number of Leaks = 20
Avg. hours to repair = 2.4
Water System O&M Mainline Leak Repairs
FY 02-03 (as of January 2003)
.,- 35 T--
-
z o~~,--.~
I 2 3 4 5 6 7 8 9 I0 11Break Number
84% services restored within 4 hours
12
Total No. of breaks: 12
Avg. Hrs. to Repair: 6.7
Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
Financial Performance and Competitive Rates: Rate Comparisons
Palo Alto’s utility rates are benchmarked against PG&E for electric and gas rates, and
against nearby cities for water and wastewater rates. Comparisons are shown for total
monthly bills of an average residential, commercial and industrial customer for electric,
gas, and water, and for an average residential customer for wastewater. As part of this
year’s budget review for FY2002-03, Utilities proposed three rate changes effective July
1, 2002, which Council approved. The net impact of the adopted rate changes is expected
to be an overall decrease of nearly 9 percent or $262 per year in residential customer
bills. The changes xvere for a natural gas decrease of 26.7%, a water increase of 20% and
a wastewater increase of 25% .
Staffis currently evaluating rate changes for FY 2003-04 and 2004-05.
(Graphs are shown on following pages)
9
Utilities Strategic Plan Performance July 2002 through December 2002
Attachmer
History of Average Residential Electric Bills
650 kwh/month
$10o
$90
$80
$70
$60
$50
$40
$30
$20
$10
$-
98-99 99-00 00-01
Fiscal Year
01-02 02-03
EIPalo Alto QPG&E
History of Average Commercial .rc Bills200,000 kwh & 500 kw /mor~
$30.000
S25.000
$20,000
~ s~s.ooo
Sl0.000
$5.000
98-99 99-00 00-01 01-02
Fiscal Year
[3Palo Alto QPG&E
02-03
History of Average Industrial Electric Bills
5,500,000 kwh & 10,000 kw /month
$700.000
$600.000
$500.000
$400.000
$300.000
$200.000
$100.000
98-99 99-00 00-01 01-02
Fiscal Year
02-03
~Palo Alto I~PG&E
Utilities Strategic Plan Performance July 2002 through December 2002
History of Average Residential Gas Bills
30 therms summer, 100 therms winter
$1oo
$90
SSO
$70
$60
$50
$40
$30
$20
$1o
$-
98-99 99-00 00-01 01-02 02-03
Fiscal Year
(F~gures for 02-03 are an average of JuIy 02 - Feb 03)
EgPalo Alto ~PG&E
History of Average Commercial Gas Bills
5000 therms / month; bills averaged for summer/winter
$5,000
$4,OOO
$3,000
$2,000
$1,000
$-
98-99 99-00 00-01 01-02
Fiscal Year
(F~gures for 02-03 are an average of July 02 - Feb
mPalo Alto laPG&E
02-03
Attachment C
History of Average Industrial Gas Bills
30,000 therms / month; bills averaged for summer/winter
$40.000
$35,000
S30,000
525,000
$20,000
S15,000
$10,000
$5.000
$-
98-99 99-00 00-01 01-02
Fiscal Year
(F~gues for 02-03 are an average of July 02 - Feb
02-03
Utilities Strategic Plan Performance July 2002 through December 2002
$45 -
$40
$35
$30
$25
$20
$15
$10
$5
$-
History of Average Residential Water Bills
14 ccf / month
98-99 99-00 00-01
Fiscal Year
01-02 02-03
E3Palo Alto I~Menlo Park E3 Redwood City ciLos Altos 8Mountian View
History of Average Commercial Water Bills
300 ccf/month, 3" meter
Attachment
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
98-99 99-00 00-01 01-02 02-03
Fiscal Year
History of Average Industrial Water Bills
3000 ccf/month, 6" meter
$1o,000
$9,00o
$8,000 .........
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$-
98-99 99-00 00-01 01-02
Fiscal Year
02-03
~ Pa!o Alto 8 Menlo Park [] Redwood C~ty [] Los Altos 8 Mounti~q V~
]2
Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
History of Average ResidentiaIWastewaterBills
$25
$20
$15
$10
$5
98-99 99-00 00-01 01 ’02 02-03
Fiscal Year
Unique Advantages of Municipal Ownership
Here is a review of accomplishments that show sig-nificant progress towards Strategic
Plan Supporting Objective 4, "To identify’ and maintain the unique advantages of
municipal ownership."
CPAU installed energy efficient lighting in the California Avenue tunnel for increased
safety and enjoyment of the art murals.
Public Power Week and Natural Gas Week celebrated the community utilities and
CPAU’s unique municipal value.
The City Beat TV program explored the Solar Homes of Palo Alto Tour and the popular
topic of Utility Rebates.
CPAU participated in Emergency Operations Center (EOC) drills in December.
The CPAU fiber loop was connected to Fire Stations #1 through #5, Cubberlev
Community Center campus, Lucie Stern Community Center campus, Mitchell Par~
Library!Community Center campus, and the Main Library/Art Center campus for speed
and efficiency in city-wide communications.
13
Utilities Strategic Plan Performance July 2002 through December 2002
CPAU expanded the Utilities Residential Rate Assistance Program to subsidized housing
complexes, resulting in customer participation level increase fiom 693 to 956 qualifying
customers or a !!% increase.
CPAU expande., the Electric Fund Public Benefits Program to include reimbursement for
qualifying City owned shade trees.
For the Palo Alto Chamber of Commerce Showcase, Utility Marketing Services (UMS)
sponsored 2 workshops. "Surge Protection and UPS selection for Small Bu " "
"Improving Energy Efficiency in the Home". s~nesses, and
UMS Held the 2002 Palo Alto Solar Homes Tour on October 26, a sunny success with a
record 400 at.tendees from 37 cities.
UMS implemented the 2002 "Eichler Home" rebate program, which targeted the
approximately 2000 Eichler (and similar architecture) homes in Palo Alto.
CPAU initiated the new "Smart Energy," residential rebate pro~am.
As a demonstration of water savings measures, CPAU successfully completed a year-
long study, in conjunction with the Department of Energy, of the water efficient
technology represented by the "D’Mand Water Recycling System."
CPAU was awarded the Solar Electric Power Association (SEPA) Award for Business
Program Achievement in the "Development of a Solar Community."
CPAU was presented with one of the first California "Flex Your Power Energy
Conservation Awards." The award recognized CPAU for outstanding energv
conservation efforts and organizational leadership.
CPAU’s leadership on the BAWUA Water Resources Committee helped with in
implementation of water legislation that was sig-ned by Governor in Sept.
especially to set up BAWSCA. - ~,
Resource Management initiated a Groundwater Supply, Feasibility Study to determine the
safety of producing groundwater without adversely affecting land surface subsidence,
saltwater intrusion, or contaminated plumesmigration.
Safety
Although safety activities are not mentioned specifically in the Utilities Strategic Plan,
proper safety’ equipment, training activities, and statistics are monitored and reported on
an ongoing basis.
Electric Operations has had a 500+ day’ period free of any Lost Time injuries. This
achievement extended throughout the reporting period of Jt]ly 2002 to December 2002
and continues through today’s report date (March 05, 2003). It represents a record for the
department, and will be celebrated with a Frank’s Memo announcement to keep the
community informed.
Additionally, Customers Service Division - Field Setwice has completed "~ "~’~ ,
.~,~.~ 7~- dayswithout a lost time accident.
OSHA recordable injuries fell below department goals by ten injuries. These goals were
set as a percentage decrease from the previous year’s actuals. Each Department
determines their own goals and creates a program to motivate and challenge their
employees in an effort to achieve or exceed the department’s goals.
14
Utilities Strategic Plan Performance July 2002 through December 2002
Attachment C
TOTAL - ALL UTILITIES SAFETY RECORDS
July 2002 - December 2002
Actual Goal Over/under Goal
OSHA Recordable Injuries 4 14 -10
Lost Work Day Case 0 0 0
Vehicle Incident 7 ~o -2
Draft Excerpt UAC Minutes 3/5/03
Utilities Strategic Plan Update
Ulrich: Yes we do. As you can tellwe have a full evening. As part of our obligation and
communication plan is we put together a semi annual update on our Water-Gas-Electric Strategic
Plan. Since we have a very detailed strategic plan that you all are familiar with, it allows us to
take those strategies and convert them into measurable performance. What you have this
evening is another attempt to quanti~" and take the quantified results and put them into a way
that is easy to track and give you and City Council and the residents of Palo Alto a good idea of
how well we are doing, or what areas we are not doing as well. So the report this evening is
broken down into ~o parts. The first part deals with the Implementation approach for the
tracking prowess on the Strategic Plan and referring to that is a "balanced scorecard." This
approach will be implemented starting in the next semi annual update. For the second major
part, this report deals with on reporting on the accomplistv-nents. We are going to focus on the
balanced scorecard for the brief presentation that Girish will give you. Then we’ll jump off into
questions and answers.
Balachandran: I would like to introduce Kevin Kelly who just helped me with this heavy
equipment. He prepared this presentation. He was the main staff member who developed, who
coordinated this report. Your report actually has two sections to it. Basically one section talks
about the balance score card. The second section talks about accomplishments over July 02
through December 02. I am not going to spend any time actually going through the
accomplishments. I will be open to questions. I am going to limit this presentation to the
balanced scorecard approach.
In past strategic plan updates we have given you, we have told you that we would be working
towards developing measures and concentrate on some targets so that you ~know qualitatively in
some cases and quantitavely in some other cases how we are doing. Also we needed a way to
present to the public inte~ating our performances over several areas and previous attempts tend
to be pretty verbose is what we have come up with. This chart basically shows 4 different
perspective of the balanced scorecard. Customer and Community, Environn~ent, Financial and
People. What you see is essentially this chart with a plus zero or minus attached to each box that
is going to be basically an appraisal of the utility’s prowess in these four perspectives. It doesn’t
get any more compressed than this. But below this, if you drill down into each of these
perspectives, it gets into a greater level of detail.
Each of these perspectives maps into the seven strategies and objectives as this slide and the next
one x~ show you. We have these four objectives and on the left hand side and on the right hand
side we have the map into which we bounce our four perspectives and rnaps into. The other
piece -- that we couldn’t put up on the chart over here on the slide but you have it in your report
and we also have it on the extreme left of those handouts stuck up against the wall -- under each
of these perspectives we have a set of measures and we have given a plus and minus to each of
those measures. Essentially at the end of the year we fall in between the plus and the minus, we
can say okay we have a neutral score on that particular measure. We do better than neutral, then
Page 21 of 40
~ve ~ve a plus and so on. We also plan to have the budget key impacts, impact plans and the
measures replace with the balance score card measures so that the entire utilities department will
have essentially one set of measures where you can look at across the divisional work that goes
on in the utilities department. That’s basically it. The only other thing I need to mention is in
future maybe reinte~ating what John already said. The future reports that you are going to get
~vhere essentially we are going to the balance score card, the four boxes of the pluses and
minuses. Then you are going to get this table which is in the extreme left of the wall with how
we have done with each of those different measures. That is all that I have in my presentation.
Open for questions.
Carlson: Okay, go ahead Dexter.
Dawes: I think this is terrific. The list of accomplishments in prior years has left me sort of
cold. It looked very awesome and ovepa, helming but you never know what you really didn’t get
done or how it is stacked up with others. The way I look at your detailed list is basically
benchmarking what it does -- on lots of different levels for each of these items. It is an
outstanding approach and I am looking forward for the first actual one. I hope that you do it at
the same level that you show on the Table in other words customer satisfaction is 3 gades
reliability to 6 and so forth. You don’t try it summarize at all into just a few line items. I think
that having that level of detail is absolutely necessary.
Balachandran: We will have both.
Dawes: Thanks. Great job.
Fer~uson: Also, great job. Pro~ess in the right direction. A question and a comment. The
question is -- when you look at the balanced scorecard design, does it move us closer to the way
other utilities really do measure themselves? Dexter mentioned benchn~arking. Does it really
get us squarely into the benchmarking regime?
Balachandran: Actually I would say, we would probably be among the minority of utilities that
measure themselves this way. We are going to be taking a lot of information from the APPA
standards benchmarks to measure ourselves. But the structure, the model that we have chosen
lends itself to policy level folks like you, and the council and the public being able to see what
direction we are going. There are not too many public utilities which do this. But the data that is
going to feed into this final measurement is used by many utilities.
Ferguson: And the comment or suggestion is: you are putting the Table page following the
scorecard. I would suggest that the page following the scorecard be nothing more than the
"minus" items, with your proposed action for cleaning up those acts. Then proceed on to the
’°bragging-rights" page 3.
Balachandran: Actually I forgot to mention one thing. When we have the pluses, the zeros and
the minuses, the next thing that we also have is the Action Plan. Essentially, what are we doing
to maintain the pluses and what are we doing to move us from the minuses and the zeroes to a
Page 22 of 40
plus? That is our goal to have a plu ~ each of the different perspectives. So there will be an
Action Plan associated with that.
Ferguson: Again, it is all headed in the direction. My preference would be to zero in on the
"minuses." The average is always goin: :o be a plus on Page 1. But turn immediately to the
things that deser~e attention. Then the rest follows logically.
Balachandran: Thanks.
Fer~uson: Great stuff.
Carlson: Go ahead Dick.
Rosenbaum: Staff was kind enough to present everybody with this Auditors Report that came
out in January, the service efforts and accomplishments. In it you probably noticed there was a
plot of the average bill for 10 different communities. I previously brought up if we wanted to
continue simply comparing our rates with PG&E rather than saying including Santa Clara and
similarly placed Muni. Are you having any second thoughts about them? That is, including
another comparison in addition to the comparison with PG&E.
Ulrich: I don’t think we have any second thoughts in the sense of dropping a local muni from a
comparison. I think it is good idea, too.
Rosenbaum: The other way around. Your report just includes PG&E. It was the auditor that
said.
Ulrich: I think ours does include it, if not should include the comparison you are referring to.
Rosenbaum: But, I mean it doesn’t. The last time I brought it up there was some reluctance on
part of the staff to include comparisons.
Balachandran: If you look at Attachment B. Look at C4. Items 2 and 3. There are comparisons
to Munis.
Ulrich: Of this Attachment B, page 2.
Balachandran: We do have a comparison with PG&E. We continued comparing with PG&E but
we are also including the average of the NCPA Members. For gas it is more difficult because
there is no real competitor.
Rosenbaum: There is only one other competitor. That one had gone right by me. I do think
direct comparison with Santa Clara might help. Actually I ordered a chart. Santa Clara is
showing lower residential costs than ours, and I think Randy had some concerns whether or not
that was really accurate. Thank you.
Carlson: Any more questions on this item. Go ahead.
Page 23 of 40
Dawes: C4 again. You talk about electric supply versus PG&E. Are you talking about our
purchase cost or are you talking about our billing to our customers versus PG&E bills.
Balachandran: We are just talking about commodity costs. Are you talking about what we
charge our customers versus what it costs us?
Dawes: I am trying to figure out whether or not -- C1 for instance Electric Supply Versus PG&E
-- you are comparing our costs of electricity to PG&E’s cost or prices we charge our customers
to the prices that PG&E charges its customers.
Balachandran: W ell, in PG&E’s case, I think it needs to be apples to apples. Let’s look at
another Muni. Say you are comparing ourselves to the average; the only data we get relatively
easily is the price they charge the customers. We can’t go in and then ....
Dawes: That’s what I hope the answer would be. It says supply would be electric rate versus
PG&I~.
Balachandran: Here we are just talking about the supply component of the rate.
Dawes: So you are going to try to discover what PG&E pays for their electricity.
Balachandran: Yeah, that is easily discoverable. What they charge their customers for supply is
pretty easily discoverable -- on my electric bill at home, I see that. They tell us what the
distribution rate is and what the supply rate is.
Dawes: Are you also showing what we charge versus what PG& E charges? That is much more
relevant to our customers.
Balachandran: We may be in intense a~eement over here, Commissioner Dawes.
Dawes: I see one is rates versus local utilities. But it doesn’t talk about -- then you are
averaging normal rates rather than specifically against PG&E, Santa Clara and others. It would
be as a fix, more relevant to have the specifics.
Ulrich: We can do about anything you want. This is our approach we are bringing. I personally
don’t have a particular bent why we want to compare with Santa Clara, but if that’s what you
want to do that’s what we can do. So?
Dawes: I would bencl~nark. That’s all.
Balachandran: There are additional rate comparisons if you look at C1. I compared rates and
that’s the entire bundle rate comparisons.
Dawes: So one set of data shows rates versus rates and another set shows supply costs versus
supply costs.
Page 24 of 40
Balachandran: The ~, ,~t is v ,:en may be, I would say at this point would be supply prices,
the price we charge for ~:pply vc ~us the price that PG&E charges for supply what C4 is.
Ulrich: It is the rate minus the distribution cost. So you are just looking at the supply
component of the entire rate. It is in C4. The supply part of it. The C1 part is the entire cost that
the customer pays and their rate.
Beecham: As I understand that it follows the fact that your strategic objective which is lower
supply cost. So you .~re measuring your supply cost.
Ulrich: Correct.
Dawes: Thanks. I would be interested to see how the first one works out. There will be a lot of
wrinkles to iron out.
Balacht dran: We completely expect that.
Ulrich: We will be pleased to reduce the amount of these mat we look at. Let me just go back
and as I think as a reminder of what we are trying to do is that we want to and my goal and the
departments goal is to have reallv 4 key items that we measure. Let me see if I can count them
all in one hand and they should be reflective of why we are here and be able to measure that.
Then below that is all of the measurements that we have to build up towards this balance score
card so you should be able to drill do~vn and look at all the details. But our objective is not to
build so many measurements that when we spend huge amount of time trying to gather all the
data then we start to lose focus or we divert our resources of people into measurements rather
than g oing o f and doing a h igi~ priority work. S o i f you h ave ideas o n things t hat a re m ore
important than what we have the way to build up towards these score cards then that would be
great, too.
Carlson: Clearly, a lot of thought that went into this. It is a geat job. It is important to include
the two different aspects like the ~and total rates. Are we getting lower supplies too? And
measuring against IOUs and Northern California Munis -- it is a great combination of things, so
it is pretty good.
Ulrich: The whole idea is that we want to have the trust and confidence of our customers that
they are getting geat value for the money they pay. Where else in California anyway do you
have a utility that provides virtually all the utility services, where you can make comparisons
with, where we sit here and methodically try to work out the rate structure so that we are not
blasting the customer with significant rate increases. This is a ~vhole attempt to try out measure
and balance that and be able to answer questions and give the customers confidence that we are
doing a great job -- or if we are not in some areas, then we have a plan to make improvements. I
just returned from a trip where I was with about 70 other utilities comparable size and they were
all municipalities like Palo Alto. There were few other cities that have measurement systems.
But when you talk about strategic plan -- and while you are here, there are very very few utilities
Page 25 of 40
that have gone to the point of being as clear about why we do things and then get to buy in and
report to the City Council on the strategic plan. So it is quite a direction that we have taken.
L.E.A.P.
Carlson: Long Range Electric Plan. Last but by far not least. A very important item.
Ulrich: By far the most important area that we have for the foreseeable future. You know our
supply is going to change si~o-nificantly at the end of 04. We think it is extremely important to
communicate into the community what is happening with our energy supply at the end of 04.
You know that, and it gets confirmed to me virtually everyday as I talk to others. There is
probably no other utility in a very big geo~aphic area that has had a firm contract to supply
virtually all of its energy on around-the-clock firm basis for the last 40 years. Now that has been
an extremely important asset for us. But we are going to go into an area where, we have enjoyed
such good rates, that anything that we go out and buy to replace a portion of it is going to come
at a higher p rice and a dditional risk. T he diversity and because o f w here t hat energy comes
from, reliability of the transmission system to deliver it, the impacts that FERC is trying to have
with locational marginal pricing and a number of other factors will increase cost.
If there is one area that we have to do an extremely good job is one to have a very wel! thought-
out plan for the long term supply. Commitments that will be made in the next year or so will live
with us for a long period of time particularly if we take an ag~essive role in renewables and
make commitments o n energy resources t hat we purchase h ave 1 ong t erm contracts o r equity
shares. You are going to see tonight the next step and that methodical process to plan and
execute this. You will see on the first page under progress to date, the items that are in yellow
have been accomplished and what we are doing now on the presentation this evening will be the
final LEAP implementation process. This evening this is presented as an information item -- but
with gathering input of various you think a week or need more work need to be explode more or
focus that says we are going in the right direction. Because then our next step would be to take
this forward to the City Council and put this all in place. So Jane is here with us. She and other
members of the supply staff have put a lot of time into this and we are here for a dress rehearsal.
Jane.
Balachandran: Just an introductory comment over here. Of course you know Jane Ratchye, but
you also know Swami Shivanathan sitting right back there, Karl Knapp upfront and Tom Kabat.
They were all involved in putting this together. Jane did pretty much all the modeling and
putting the report together. It was a team effort. I think John mentioned that this is a
presentation and the report is also for information and we are looking forward for a feedback
from you. We plan to come back next month pretty much incorporating your comments. The
report that will be an action item and then taking it to the City Council. With that I hand over to
Jane.
Ratchye: Good evening and it was a kind of big report and it had a lot of detailed appendices
and I don’t know how detailed you want to get today but this presentation just kind of walks
Page 26 of 40