HomeMy WebLinkAboutStaff Report 6949
City of Palo Alto (ID # 6949)
City Council Staff Report
Report Type: Informational Report Meeting Date: 8/15/2016
City of Palo Alto Page 1
Summary Title: Utilities Policies and Plans
Title: Utilities Resource Management Operating Policies and Plans
From: City Manager
Lead Department: Utilities
Recommendation
This report is provided to the City Council for its information only.
Executive Summary
Several key Council-adopted policies and plans provide direction to staff on resource acquisition
and management. These policies and plans are updated periodically so staff prepares the
attached compendium of the relevant high-level plans and policies as a single document where
they can easily be reviewed by the Utilities Advisory Commission (UAC), the City Council, and
the public. The plans and policies included in the document are as follows:
1. The policies for management of Utilities financial reserves for the Electric, Gas,
Wastewater Collection and Water Funds;
2. The latest Legislative Policy Guidelines, which provide direction on the City’s positions
on legislative initiatives;
3. The long-term plans for resource acquisition and management including the Long-term
Electric Acquisition Plan (LEAP), the Gas Utility Long-term Plan (GULP), the Water
Integrated Resource Plan (WIRP), and the Carbon Neutral Plan for Electric Supply;
4. The Local Solar Plan;
5. The Utilities Strategic Plan; and
6. The long-term goals for water and energy efficiency programs.
There are other relevant plans and policies, but they either cover broader topics than Utilities
or are reported to the UAC and Council separately. These policies and plans include the Energy
Risk Management Policy, the Urban Water Management Plan, and the Demand-Side
Management Implementation Plan.
The changes from the prior version of this document (Staff Report 5927) include:
1. An update to the Utilities Legislative Policy Guidelines, which were approved by Council
in February 2016 (see Exhibit 2 to Attachment A).
City of Palo Alto Page 2
2. The long-term water efficiency goals, which are incorporated in the Council-adopted
2015 Urban Water Management Plan adopted by Council on May 16, 2016 (Staff Report
6851).
3. Updated Utility Reserve Management Practices for the Electric Fund were approved by
Council on June 13, 2016 when it adopted the FY 2017 Electric Financial Plan (Staff
Report 6932). The Reserve Management Practices for the Gas, Wastewater Collection
and Water Funds were last updated on June 15, 2015 when Council adopted the FY
2016 Financial Plans for the Gas, Wastewater Collection and Water Funds (See Exhibit 8
to Attachment A).
The parts of the document that did not change from last year include:
1. The Utilities Strategic Plan, which was updated by Council in May 2015 (see Exhibit 1 to
Attachment A).
2. GULP (see Exhibit 4 to Attachment A) and LEAP (see Exhibit 3 to Attachment A), which
were both last updated by Council in April 2012.
3. The WIRP, which was adopted by Council in December 2003 (see Exhibit 5 to
Attachment A).
4. The Carbon Neutral Plan for Electric Supply, which was adopted by Council on March 4,
2013 (see Exhibit 6 to Attachment A).
5. The new Local Solar Plan was adopted by Council on April 21, 2014 (see Exhibit 7 to
Attachment A.)
6. The 10-year gas and electricity energy efficiency (EE) goals were updated by Council in
December 2012.
Attachments:
Attachment A: Resource Management Operating Policies and Plans as of July 2016
(PDF)
Exhibits to Attachment A (PDF)
Attachment A
i
Resource Management Operating Policies and Plans
July 2015
Table of Contents
1. Introduction ............................................................................................................... 1
Purpose ............................................................................................................................... 1
2. Utilities Strategic Plan ................................................................................................ 1
3. Legislative Policy Guidelines ....................................................................................... 1
Background ......................................................................................................................... 1
Approved Guidelines ........................................................................................................... 2
4. Financial Reserves ...................................................................................................... 2
Reserve Management Practices ......................................................................................... 2
Electric Special Project Reserve .......................................................................................... 2
Fiber Fund Rate Stabilization Reserve ................................................................................ 3
5. Resource Plans ........................................................................................................... 3
Long-term Electric Acquisition Plan (LEAP) ......................................................................... 3
Gas Utility Long-term Plan (GULP) ...................................................................................... 3
Water Integrated Resource Plan (WIRP) ............................................................................ 3
Long-term Efficiency Goals ................................................................................................. 3
Water ............................................................................................................................ 3
Electricity ....................................................................................................................... 4
Natural Gas ................................................................................................................... 4
Carbon Neutral Plan ............................................................................................................ 5
Local Solar Plan ................................................................................................................... 5
6. List of Exhibits ............................................................................................................ 5
1. 2011 Utilities Strategic Plan ...................................................................................... 5
2. Utilities Legislative Policy Guidelines ........................................................................ 5
3. Long-term Electric Acquisition Plan (LEAP) ............................................................... 5
4. Gas Utility Long-term Plan (GULP) ............................................................................ 5
5. Water Integrated Resource Plan (WIRP) .................................................................. 5
6. Carbon Neutral Plan .................................................................................................. 5
7. Local Solar Plan ......................................................................................................... 5
8. Reserve Management Practices ............................................................................... 5
Attachment A
1
Resource Management Operating Policies and Plans
July 2015
1. Introduction
Purpose
This document is meant to collect all the Council-approved policies and plans that guide the
management of the Utilities water, gas, and electric commodity resources. The document will
be updated when new policies or plans are adopted, or existing ones are changed. Since a new
Council is seated in January every two years, the document is provided to Council annually so
that the new Council will be aware of Council policy. This practice will afford the Council with an
opportunity to review and direct revisions of any of the commodity resource management
policies and plans on an ongoing basis.
2. Utilities Strategic Plan
On July 18, 2011, Council adopted the 2011 Utilities Strategic Plan (Staff Report 1880). The 2011
plan replaced the prior plan, which was approved in 2005. The UAC reviewed the plan many
times during its development and established a subcommittee in April 2010 to assist staff in
developing the plan. Following a recommendation from the UAC subcommittee, staff
interviewed key stakeholders to assist in the development of an overall vision for CPAU.
Council adopted changes to the 2011 Utilities Strategic Plan on August 5, 2013 (Staff Report
3950). Council again adopted changes to the 2011 Utilities Strategic Plan on May 11, 2015 (Staff
Report 5709). The current Council-approved Utilities Strategic Plan (provided in Exhibit 1)
identifies strategic objectives, performance measures and targets under each of the four
perspectives:
1. Customer and community;
2. Internal business process;
3. People and technology; and
4. Financial.
The UAC and Council receive semi-annual updates on the Utilities Strategic Plan.
3. Legislative Policy Guidelines
Background
The utility industry is a high profile and heavily regulated industry that is subject to copious
legislative action at both the state and federal level. Such legislation can influence, among other
things, the reliability and security of the supply and distribution infrastructure, commodity
procurement practices, customer service and billing, program design, rate design, and activities
and costs associated with climate protection. Representatives of the City (elected officials and
staff) participate in Federal and State legislative forums to advocate positions on energy and
water-related issues that facilitate the City’s Utilities Department’s key objectives of providing
valued utility services to customers and dependable returns to the City, and employing
Attachment A
2
balanced environmental solutions. The City’s Utilities Department also participates in joint
action efforts to advocate for goals and objectives shared by other publically owned utilities.
A set of policy guidelines is developed each year that identifies the goals and priorities for the
Utilities Department to be applied by staff when evaluating legislation. While the guidelines are
used by staff for evaluating legislation, any advocacy positions taken in alignment with these
guidelines will be subject to the approval of the Utilities Director or City Manager per the City’s
legislative advocacy process.
Approved Guidelines
Council updated the Utilities Legislative Policy Guidelines on February 22, 2016 (Staff Report
6563). The current Legislative Policy Guidelines are provided as Exhibit 2.
4. Financial Reserves
Reserve Management Practices
The guidelines for managing the financial reserves for the Electric, Gas, Wastewater Collection,
and Water Funds were changed when Council adopted the first Financial Plans for those funds
in June 2014 (Staff Report 4799). The Reserve Management Practices that were adopted as part
of the Financial Plans set out how each of the new reserves will be managed.
There were minor updates to the Reserve Management Practices that were adopted by Council
when it adopted the FY 2016 Financial Plans along with the budget on June 15, 2015 (Staff
Report 5881). There was another minor update to the Electric Reserve Management Practices
that was adopted by Council when it adopted the FY 2017 Electric Financial Plan along with the
budget on June 13, 2016 (Staff Report 6932). The Reserve Management Practices for the Gas,
Wastewater Collection, and Water Funds were not changed from the FY 2016 Financial Plans.
The Reserve Management Practices are provided as Exhibit 8.
Electric Special Project Reserve
The guidelines for the Electric Special Project (ESP) Reserve (formerly the Calaveras Reserve)
were updated by Council on May 18, 2015 (Staff Report 5521) to defer the deadlines for
identifying projects for funding from the reserve. The updated guidelines are as follows:
a. The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers;
b. ESP Reserve funds are to be used for projects of significant impact;
c. Projects proposed for funding must demonstrate a need and/or value to electric
ratepayers. The projects must have verifiable value and not be speculative, or risky in
nature;
d. Projects proposed for funding must be substantial in size, requiring funding of at least
$1 million;
e. Set a goal to commit funds by end of FY 2017; and
f. Any uncommitted funds remaining at the end of FY 2022 will be transferred to the
Electric Supply Operation Reserve and the ESP Reserve will be closed.
Attachment A
3
Fiber Fund Rate Stabilization Reserve
Council adopted guidelines for the Fiber Optics Rate Stabilization Reserve for the Fiber Fund on
May 13, 2008 (Staff Report 233:08). The guidelines establish the minimum and maximum
reserve levels equal to 20% and 50% of the annual sales revenue of the Fiber Optics Fund
operations, respectively.
5. Resource Plans
Long-term Electric Acquisition Plan (LEAP)
The LEAP Objectives and Strategies were last approved by Council on April 16, 2012 (Staff
Report 2710). The changes since the prior year included updates to LEAP Strategy #3
(Renewable Portfolio Standard) to clarify the intent of the rate impact limit. The approved LEAP
Objectives, Strategies and Implementation Plan are provided as Exhibit 3.
Gas Utility Long-term Plan (GULP)
A major update to the GULP Objectives and Strategies was approved by Council on March 7,
2011 (Staff Report 1317). At its November 1, 2011 meeting, the Council directed staff to
develop market price-based, monthly-adjusted gas supply rates (Staff Report 2106). The
transition to market-based gas supply rates required revisions to GULP Objective 1, GULP
Strategies 1 and 2, and GULP Implementation Plan Items 1 and 3. On April 23, 2012, Council
approved those changes (Staff Report 2552). The approved GULP Objectives, Strategies and
Implementation Plan are provided as Exhibit 4.
Water Integrated Resource Plan (WIRP)
The WIRP Guidelines were adopted by Resolution by the City Council on December 8, 2003
(CMR:547:03). The approved WIRP Guidelines are provided as Exhibit 5.
Long-term Efficiency Goals
Water
Council approved the 2015 Urban Water Management Plan (UWMP) on May 16, 2016 (Staff
Report 6851). State law requires urban water suppliers to prepare, or update the UWMP every
five years to ensure adequate water supplies are available to meet existing and future water
demands over a 20-year planning horizon. One key element of the 2015 UWMP is the City’s
progress towards the SB X7-7 (The Water Conservation Act of 2009) “20X20” goal to reduce per
capita water use by 20% by 2020. The table below shows that the City’s per capital water usage
is well below the 2015 interim target and is projected to be well below the 2020 target.
2015 UWMP SB X7-7 Performance Metrics
(in Gallons per Capita per Day)
FY 2015 FY 2020
Baseline 225.3 225.3
Target 202.8 180.3
Actual 142 NA
Projected NA 150
Attachment A
4
Electricity
State law (AB 2021, 2006) requires municipal electric utilities to develop 10-year electric energy
efficiency (EE) plans and submit them to the California Energy Commission (CEC) every three
years. Consistent with state law, the City Council approved the 2007 Ten-Year Electric EE Plan in
April 2007. The 10-year goal was updated by Council in May 2010 and then again in December
2012.
The current 10-year goals, which Council approved on December 17, 2012 (Staff Report 3358),
include the annual and cumulative Electric Energy Efficiency Goals for the period 2014 to 2023
as shown in the table below.
Fiscal Year Annual Incremental Electric EE Savings
(% of total City customer usage)
2014 0.6%
2015 0.6%
2016 0.6%
2017 0.6%
2018 0.6%
2019 0.6%
2020 0.65%
2021 0.65%
2022 0.7%
2023 0.7%
Cumulative 10-year EE Goal 4.8%
The current cumulative 10-year Electric EE goal of saving 4.8% of the City’s electric usage is
lower than the 2010 goal of 7.2%, primarily due to the significant savings that are attributable
to changes in building codes and appliance standards, which can’t be counted for the City’s EE
program savings.
Natural Gas
In 2007, Council approved the first ten-year gas energy efficiency goals. The 10-year goal was
updated in April 2011 and, again in December 2012. On December 17, 2012, Council approved
updated annual and cumulative Gas EE Goals for the period 2014 to 2023 (Staff Report 3358) as
shown in the table below.
Attachment A
5
Fiscal Year Annual Incremental Gas EE Savings
(% of total City customer usage)
2014 0.5%
2015 0.5%
2016 0.5%
2017 0.55%
2018 0.55%
2019 0.6%
2020 0.6%
2021 0.65%
2022 0.65%
2023 0.65%
Cumulative 10-year EE Goal 2.75%
The current cumulative 10-year Gas EE goal of saving 2.75% of the City’s gas usage is lower than
the 2011 goal of 5.5%, primarily due to the significant savings that are attributable to changes
in building codes and appliance standards, which can’t be counted for the City’s EE program
savings.
Carbon Neutral Plan
The Carbon Neutral Plan for the Electric Supply Portfolio was adopted by Resolution by the City
Council on March 4, 2013 (Staff Report 3550). The approved Carbon Neutral Plan is provided as
Exhibit 6.
Local Solar Plan
The Local Solar Plan was adopted by Resolution by the City Council on April 21, 2014 (Staff
Report 4608). The approved Local Solar Plan is provided as Exhibit 7.
6. List of Exhibits
1. 2011 Utilities Strategic Plan
2. Utilities Legislative Policy Guidelines
3. Long-term Electric Acquisition Plan (LEAP)
4. Gas Utility Long-term Plan (GULP)
5. Water Integrated Resource Plan (WIRP)
6. Carbon Neutral Plan
7. Local Solar Plan
8. Reserve Management Practices
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
1
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
Customer and Community Perspective
C1. “I receive
safe and
reliable
service.”
Customers expect that Utilities services are provided on a continuous basis,
without interruption. In addition, customers expect that the Utilities
delivery systems are safe and will not harm them or put them in any danger.
We will listen to our customers and seek to understand their reliability and
safety concerns and implement programs and projects to address them.
Average time to
restore service per
interrupted
customer
Less than 90
minutes
Number of electric
system
interruptions per
year for average
customer
Ranks in the top
quartile
nationwide (less
than 0.9)
C2. “Be
responsive to all
my utilities‐
related service
needs.”
We understand that the customer wants clear, accurate bills with easy
methods of payment; access to usage history and enough understanding to
efficiently manage usage; to feel quickly and completely “taken care of”
when they have concerns, questions or requests and to be communicated
with effectively both as individuals and as CPAU’s owners. One of the ways
to achieve this is to elicit feedback from customers to help improve service.
Customer
satisfaction scores
on annual surveys
for overall value.
Residential and
commercial surveys
alternate every
other year.
Ranking in the
top two utilities
statewide
Establish
mechanisms to elicit
customer feedback
on their satisfaction
with all interactions
with CPAU.
C3. “I expect
to pay a
reasonable bill”
We understand that customers expect their bills to be comparable to those
in surrounding communities and do not expect to pay more than PG&E
customers. Customers believe it is reasonable to pay slightly more in
exchange for increased reliability, safety and protection of the environment.
However, customers’ overall bills for Utilities services must remain
reasonable and be reasonably stable and should not increase significantly in
any one year. Customers also want their bills to provide useful information
about their consumption of resources in addition to the rate so that they can
understand how they can influence their total cost for Utilities services. For
The average
combined
residential
customer bill for
electricity, water,
gas, and
wastewater services
Less than the
average of bills
for comparable
services in nearby
communities
(MP, MV, SC,
Hayward, RC,
Roseville, and
Alameda).
Improve the
electronic bill
presentment,
payment
functionality and
enhance the utility’s
online capabilities.
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
2
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
natural gas service, Palo Alto’s supply cost has been relatively stable due to a
laddered gas portfolio purchasing strategy; however, this strategy needs to
be re‐evaluated as gas prices are currently low and are projected to stay low
for the foreseeable future. Although, the average bill for all services should
be comparable to those in surrounding communities, staff will continue to
monitor and report the bills for each service separately on a quarterly basis.
Annual rate change Maximum of
10% per year for
electric and
wastewater
services.
Maximum of
20% per year for
water service.
C4. “Care for
our
environment”
Our community wants its customer‐owned utility to offer choices for them
to manage their resource use in ways that reflect their environmental
values. Utilities will improve existing programs and develop new programs
to meet customer needs and allow customers to manage their own
environmental footprint.
Percentage of
customers
participating in the
PaloAltoGreen Gas
program
20% of customers
Re‐evaluate the cost‐
effectiveness of
electrification
especially for new
construction and
evaluate whether
new programs or
incentives can or
should be offered,
consistent with all
applicable legal
requirements.
Percentage of
Greenhouse gas
reductions
10% GHG
reductions
Internal Business Process Perspective
Safety and Reliability
BP1. Ensure a
reliable supply
of utility
resources
We will implement strategies that ensure the reliable supply of utility
resources to meet present and future needs. To provide opportunities for
economic development within Palo Alto, we must provide sufficient
resources that meet the short and long‐term needs of our customers. To
achieve this we will maintain the utility system components, and provide for
Duration of electric
system interruption
per year for average
customer
Ranks in the top
quartile
nationwide (less
than 60 minutes
per customer)
Develop a plan to
complete a new
electric transmission
interconnection.
Complete the Water
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
3
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
adequate utility resource supplies to our current and future customers. We
will also develop new management practices and organizational structure to
ensure compliance with regulatory requirements.
Response time to all
emergency calls
Under 30 minutes Integrated Resource
Plan (WIRP) including
a comprehensive
evaluation of the use
of groundwater by
end of CY 2015.
BP2. Operate
the utility
systems safely
We will continue to ensure the safety of our customers, employees and the
community by the ongoing implementation of a safety programs. Protecting
customers and employees from injury and customer’s property from
damage is essential for delivering quality utility services to our customers.
The safety programs will be implemented by updating safety procedures,
educating customers via outreach materials and workshops, correcting
system deficiencies, operating in accordance with existing safety rules, and
ensuring that products delivered to customers are safe.
AGA (American Gas
Association)
Incidence Rate
Zero reportable
incidents
Customer
awareness of gas
safety issues
90% of customers
responding to
annual gas
customer safety
awareness survey
BP3. Replace
infrastructure
before the end
of its useful life
We will continue to implement a long‐term strategy for replacing
infrastructure before the end of its useful life. Reliable delivery of utility
services to our customers is critical for the success of business and the
quality of life for our residents. To accomplish this, we will focus on
reducing any backlog of infrastructure work and replace infrastructure
systems in a manner that spreads the expense across multiple years
resulting in program with even expenditures patterns in future years when
possible.
Backlog of
infrastructure
elements whose
ages are beyond
their useful lives.
Zero Complete long range
Gas and Water
master infrastructure
plans by end of
CY2015.
Customer Service Excellence
BP4. Serve
customers
promptly and
completely
We will provide customers with the highly responsive service they desire.
We will do this by reviewing and improving our processes for managing
accounts, handling payments, resolving billing issues, responding to
information and field service requests and notifying customers during
service disruptions. We will identify ways to streamline these processes and
implement changes. Specifically, we will review, document and improve
business processes that have been identified as having long customer
response times.
Average phone wait
time
Less than 90
seconds
Number of billing
adjustments
10% reduction
from number in
2009.
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
4
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
BP5. Communi
cate clearly and
pro‐actively
with all our
stakeholders
We will proactively communicate with all our stakeholders, including all
customer groups, civic leaders, community groups and the press. To achieve
this objective we will provide the information needed for our stakeholders
to effectively access, understand and utilize all utilities services and
programs. In addition, we will design communication vehicles and
dissemination processes that will enable our residents to be educated
owners of their municipal utilities system.
Time until informing
the public and local
media of a
disruption affecting
all sensitive major
customers
Less than 60
minutes after
becoming aware
of a disruption
BP6. Offer
programs to
meet the needs
of customers
and the
community
We will assist customers to lower their cost of utilities services and support
the environment. We will assist customers facing economic hardship by
offering bill payment assistance programs. We will educate customers on
the reasons for and their means of compliance with our safety and
regulatory requirements. We will also identify all customer groups, identify
any gaps in service provision to those customers, and propose new
programs or changes to existing programs to close those gaps.
Participant*
satisfaction with
Utilities programs
(*rebate recipients,
workshop
attendees, callers,
etc.)
At least 90% of
program
participants
satisfied with
their experience
Reduce Costs
BP7. Negotiate
supply contracts
to minimize
financial risk
We will continue to negotiate supply contracts to acquire supply resources
while managing supply portfolio cost uncertainty to meet rate and reserve
objectives and following sound risk management practices. To ensure that
we are buying commodities at as competitive prices as possible, we will
negotiate contracts with new counterparties to continue to have a sufficient
set of credit‐worthy trading partners. We will continue to develop long‐
term acquisition policies and plans (LEAP) and update those plans at least
every three years. We will also determine all that is necessary to execute a
gas prepay transaction as that is one clear way to lower the cost of gas
supply resources.
Number of
competitive bids
received for each
fixed‐price
transaction.
Minimum of
three bids for
electric power
Participate actively
in Northern
California Power
Agency’s (NCPA) on‐
going allocation of
cost, including new
cost allocation
studies if undertaken,
to ensure that the
City’s costs are fair.
Evaluate alternative
providers for services
provided by NCPA as
appropriate.
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
5
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
BP8. Reduce
cost of
delivering
service through
best
management
practices
We will reduce the cost of delivering service to customers. We will identify
opportunities to better coordinate between Utilities and other City
departments to improve efficient delivery of services. We will perform
benchmarking studies to identify potential modifications to procedures,
practices, materials, and plans and to ensure that we are following best
practices. One best practice is to increase calibration and replacement
schedules for gas and water meters since the meters slow over time causing
actual usage to be under‐recorded, resulting in lost revenue.
“lost and
unaccounted for”
volumes of gas and
water
80% of 2009
levels.
Complete Water
benchmarking study
by end of FY 2015.
BP9. Maximize
value of existing
generation
assets
Palo Alto owns significant supply resource assets including a portion of the
Calaveras Hydroelectric Project, a contract with the Western Area Power
Administration, a permanent allocation of water from the regional water
system managed by San Francisco, and allocated capacity on a gas
transportation pipeline. We will seek out both daily and operational and
long‐term opportunities to optimize the value of these assets to enhance
revenue and/or to reduce costs. We will work with joint‐owners of our
resource assets to leverage those resources and advocate to maintain or
improve the value of existing resources into the future (LEAP and GULP
strategies).
Value harvested
from Redwood gas
pipeline capacity
100%
BP10. Manage
implementation
of strategic plan
Completing the strategic plan is only the beginning of getting value from the
strategic planning process. Ongoing management of the strategies and
initiatives and reporting on progress of those initiatives is essential to
achieving positive results from the strategy. We will report to the UAC and
Council on this plan’s progress twice annually and we will review and revise
the objectives and develop new initiatives on an annual basis.
Number of strategic
initiatives
completed
100%
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
6
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
Environmental Sustainability
BP11. Increase
the
environmental
sustainability of
all Utilities
activities
Adding sustainable resources to the supply portfolios will help the City meet
its Climate Protection Plan goals by reducing the carbon footprint of the
utility services provided to our customers. We will achieve this by acquiring
renewable resources and promoting the development of local renewable
resources within the rate objectives in the Long‐term Electric Acquisition
Plan (LEAP). Sustainable practices will be pursued not just for the supply
portfolios, but across all the Utilities day‐to‐day operations.
Meet the state’s
20% per capita
water use reduction
by 2020 target
20% by 2020
Complete EIR and
financial plan for
expanding recycled
water system
BP12. Promote
efficient use of
resources
Resource efficiency programs meet our customers’ desire for environmental
solutions that save money as well as contributing towards the Climate
Protection Plan goals. We will promote resource efficiency by dedicating the
tactical staffing and budgetary resources necessary to reach maximum
deployment of economically feasible resource efficiency. We will revise and
document our long‐term efficiency strategies by updating our 10‐year
Energy Efficiency goals every three years and updating our water efficiency
goals every five years in the Urban Water Management Plan. To maximize
the savings potential for new development, coordinate with the City’s
Economic Development Manager to ensure that new developments
incorporate energy saving features in the design phase.
Actual electric
energy efficiency
achievement
At least as high as
goals Council set
in December
2012
Include all cost
effective water
efficiency measures
in 2015 Urban Water
Management Plan
(UWMP).
Actual gas energy
efficiency
achievement
At least as high as
goals Council set
in December
2012
People and Technology Perspective
PT1. Be an
attractive place
to work
We will create a positive values‐based work environment which attracts and
retains qualified staff. To achieve this objective we will try to better
understand employees desires and incentives, and will articulate our values
both internally and as we recruit.
Employee
satisfaction rating
Improvement
from prior year’s
level
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
7
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
PT2. Obtain,
develop and
train employees
to ensure an
adequate and
qualified
workforce
A properly sized, trained and certified workforce is essential to our
effectiveness. We will identify skill and staffing gaps at the individual and
organizational levels and seek to fill those gaps through the effective use of
opportunities including hiring, mentorship programs, role rotations,
knowledge transfer opportunities, long‐term developmental assignments
and both internal and external training opportunities. We will plan for
workforce succession and provide cross‐training opportunities for
employees to improve employee satisfaction and build a more robust work
force.
Percentage of
operations
personnel that has
appropriate
certification and
training required for
working in all areas
they may be
assigned
100% Update the 5‐year
succession plan for
each division.
PT3. Ensure
employees have
adequate tools
to perform job
duties
As major users of technology assets, we must have access to quality and
timely delivered IT services. We must build and maintain an effective
relationship with the City’s IT division that includes clear, frequent
communication as well as productive coordination. We will collaborate with
IT to identify barriers to providing support for technology projects and
remove them. In those instances in which our immediate technology needs
cannot be addressed by the City’s IT division in a timely or sufficiently‐
comprehensive fashion, we will utilize external expertise.
Employees have
adequate tools and
training to perform
their jobs
100% of
employees
Develop a Utilities‐
specific smart grid
and IT strategic plan.
PT4. Investigat
e and adopt
innovative
technologies
Our customers value Utilities embracing new technologies that will help
reduce costs and/or meet Climate Protection Plan goals. We will innovate
by researching technologies and cultivating relationships with entrepreneurs
and academics to identify new cost‐effective and environmentally
sustainable technologies to consider adopting. New technologies, programs,
and projects identified in the smart grid strategic plan will be implemented.
Number of new
technologies
evaluated per year
by an in‐depth
study or pilot
project
Three
Exhibit 1 to Attachment A
Utilities Strategic Plan – Strategic Objectives
Approved by Council July 18, 2011 (Staff Report 1880)
Updated by Council August 5, 2013 (Staff Report 3950)
Updated by Council May 11, 2015 (Staff Report 5709)
8
Strategic
Objective
Objective Statement Performance
Measure
2015 Target Strategic
Initiative
Financial Perspective
F1. Maintain
financial
strength
Maintaining a high credit rating reduces the cost of borrowing if needed for
capital projects. We will continue best practices for financial management,
adhere to energy risk management policies and guidelines to minimize
financial risk, and maintain sufficient reserves to cover debt obligations as
required to retain CPAU’s current favorable bond rating so that the cost of
capital is low for any bond funded capital projects.
Credit rating At least AA as
determined by
Fitch Ratings or
Standard and
Poor’s or at least
Aa3 as
determined by
Moody’s
F2. Maintain
adequate
reserves
Maintaining adequate cash reserves contributes to maintaining our overall
financial health and retaining our current favorable bond rating. We will
maintain Rate Stabilization Reserves levels within Council‐approved
guidelines and sufficient to provide rate stability as desired by ratepayers.
During the annual budget and rate setting process, the risks that each
Utilities fund is exposed to will be identified along with the trajectory of
costs and revenues to allow Council to determine appropriate reserve levels
and rate adjustments.
Operations Reserve
levels
Within guidelines
in Council‐
adopted long‐
term Financial
Plans
F3. Implement
rate structures
that balance
cost of service
and resource
conservation
Retail rates should be designed so that the revenues from a customer group
match the cost to serve those customers. Rates consist of fixed charges and
volumetric charges, which are based on usage. Fixed costs consist of
customer‐related costs (meter reading, billing, etc.) and costs related to
capital projects and operations while variable costs include the cost of
buying supplies (water, gas, or electricity). When fixed costs are recovered
through charges based on usage, costs will not be recovered if customers
reduce usage more than projected. To address this problem we will
examine alternate rate structures that strike a balance between the two
competing objectives (cost of service and resource efficiency) to ensure that
certain fixed costs are recovered with a fixed charge, but other costs are
recovered with charges that vary depending on usage (volumetric charges).
Complete Electric
cost of service
analysis (COSA) by
end of CY 2015.
Exhibit 1 to Attachment A
9
Exhibit 1 to Attachment A
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Utilities’ Legislative Policy Guidelines
Formal advocacy positions taken in alignment with these guidelines will be subject to the
approval of the Utilities Director or City Manager as per the City’s Legislative Program Manual
ALL UTILITES
Goals
1. Preserve/enhance local accountability in the control and oversight of matters impacting
utility programs and rates for our customers while balancing statewide climate protection
goals.
2. Support efforts to maintain or improve the reliability and security of the supply,
transmission, storage, distribution/collection, and data infrastructures.
3. Support legislation that makes bold progress in cost effectively reducing greenhouse gas
(GHG) emissions, and recognizes early voluntary action.
4. Maintain the City of Palo Alto Utilities’ (CPAU’s) ability to provide safe, reliable, sustainable,
and competitively‐priced utility services.
Goals
Legislative Policy
Guidelines
Venue
1. Local
Accountability
2. Reliability,
Security &
Infrastructure
3. Climate
Protection
4. Service
& Cost
Control
1. Advocate goals through active
participation in joint action efforts.
Federal,
State, and
Regional
√√√ √
2. Support legislation that allows local
evaluation and design of more
efficient energy solutions, fuel
switching, and demand control
programs.
Federal,
State, and
Regional
√ √ √
3. Promote utility legislation and
regulations that support effective
and consistent compliance and
reporting requirements. Ensure such
legislation and regulations have
received stakeholder review and
cost benefit analysis.
Federal,
State, and
Regional
Reliability
Councils
√√ √
4. Oppose unreasonable and inequitable
financial burdens through active
participation in CMUA and NCPA
legislative activities.
Federal,
State, and
CPUC
√ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy
Guidelines
Venue
1. Local
Accountability
2. Reliability,
Security &
Infrastructure
3. Climate
Protection
4. Service
& Cost
Control
5. Advocate for state and federal grants
for local and regional energy
efficiency and conservation
measures, renewable resources, fiber
optic, fuel switching, wastewater
collection systems and recycled
water projects.
Federal
and State
√ √ √
6. Maintain right of way access for
utility infrastructure.
Federal
and State
√ √
7. Protect the financial and
operational value of utility assets
and contracts; preserve local
regulatory control of both.
Federal
and State
√√ √
8. Enhance utility customer protections
for data security and confidentiality.
Federal
and State
√
9. Maintain existing low cost municipal
financing options for infrastructure
projects and advocate for new
federal and state programs that
recognize critical infrastructure
needs.
Federal
and State
√√ √
10. Promote legislation and
regulations supporting reasonable
and consistent requirements for
utility notifications, , safety,
services, public communications,
billing, payments, and customer
assistance.
Federal
and State
√ √
11. Support Proposition 26 reform
efforts to provide ratemaking
flexibility to balance conservation,
revenue sustainability, and low
income assistance programs.
State √ √
12. Seek state and regional funding to
enhance the efficiency, security,
and reliability of infrastructure that
maintains utility customer data
security and confidentiality.
Federal
and State
√ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
ELECTRIC
Goals
1. Preserve/enhance the ability of municipal utilities to exercise local accountability and
oversight over matters impacting customer service, programs (such as demand side
efficiency and conservation programs), and rate structure.
2. Preserve/enhance the reliability and security of infrastructure.
3. Support legislation that recognizes early voluntary action in reducing GHG emissions
and specifically exempts a municipality from burdensome requirements that could
result from the early action.
4. Preserve just and reasonable utility rates/bills established by local governing bodies.
Goals
Legislative Policy Guidelines
Venue
1. Local
Accountability
2.
Reliability
3. GHG
Reduction
4. Cost
Control
1. Advocate goals through Northern California Power
Agency (NCPA), California Municipal Utilities
Association (CMUA), American Public Power
Association (APPA), Transmission Agency of
Northern California (TANC), and Bay Area
Municipal Transmission Group (BAMx) with
support from Palo Alto staff; strive to present the
same or substantially the same message
Federal
and
State
√√ √ √
2. Support NCPA in its continued efforts to
streamline the state regulatory reporting
responsibilities, to eliminate duplicative data
and report submittals to multiple state
regulatory agencies, including the CEC, CARB,
and the California Independent System
Operator (CAISO).
State √ √
3. Advocate for legislation/regulations that
provide local accountability and design of:
Net Energy Metering (NEM) successor
programs designed to fit local conditions and
priorities;
Electric Integrated Resource Plans
cost‐effective renewable distributed
generation and cogeneration projects, and
standards and permitting requirements for
connecting such resources to the local
distribution system;
balancing state and local policy
implementation and ratepayer equity;
equitable rate design and tariffs;
cost‐effective electric efficiency programs;
Federal
and
State
√√ √ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines
Venue
1. Local
Accountability
2.
Reliability
3. GHG
Reduction
4. Cost
Control
implementation of renewable portfolio
standards;
cost‐effective storage integration;
direct access requirements;
smart meters and smart grid design and
implementation; and
use of public benefit funds (as allowed in AB
1890 (1996)
4. Support cap‐and‐trade market designs that:
protect consumers from the exercise of
market power;
allocate allowances that help mitigate
impacts to Palo Alto customers while
providing incentives for utilities to lower GHG
emission portfolios;
provide flexible compliance mechanisms
such as banking and borrowing of
allowances; and
allocate funds generated from cap‐and‐ trade
markets to cost‐effective GHG‐reduction
related activities, not as a revenue source for
state or federal general funds.
Federal
and
State
√ √ √
5. Support legislation for renewable portfolio
standards that:
maintain local compliance authority;
avoid mandates for technology or source
specific carve outs, and minimum term
requirements;
allow utilities to pursue all cost‐effective
resources available to meet portfolio needs
including use of Renewable Energy
Certificates (RECs);
ensure uniform application of RPS standards,
avoiding punitive and/or duplicative non‐
compliance penalties;
restrict new regulations expanding CEC
jurisdiction over publicly owned utilities;
allow local distributed generation to
count in full towards RPS; and
prioritize the use of existing transmission
system assets over building new
transmission.
Local
and
State
√ √ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines
Venue
1. Local
Accountability
2.
Reliability
3. GHG
Reduction
4. Cost
Control
6. Support/encourage transmission, generation,
and demand‐reduction projects and solutions
including advocating for financing or funding
solutions/options for projects that:
enhance/ensure reliability;
ensure equitable cost allocation following
beneficiary pays principles (including
protection against imposition of state‐ owned
electric contract costs on municipal utility
customers);
improve procurement flexibility (e.g. resource
adequacy rules that ensure reliability and
provide flexibility in meeting operational
requirements or flexibility in meeting State
renewable portfolio standards);
support the continuation of federal and
state financial incentives that promote
increased renewable development;
improve market transparency (particularly
transparency of IOU’s transmission and
procurement planning and implementation
activities); and
reduce negative environmental impacts
on the Bay Area and the Peninsula.
Local,
State,
and
Federal
√√ √ √
7. Advocate for Congressional, legislative, or
administrative actions on matters impacting
costs or operations of the Western Area Power
Administration (Western) such as:
support of Congressional Field Hearings to
explore modernizing flood control strategies,
river regulation and generation strategies at
Central Valley Project (CVP) plants to
enhance generation, water delivery, flood
control and fisheries;
protection of the status of Western Power
Marketing Administration and cost‐based
rates;
provisions for preference customers’ first
take at available land with economic
potential for wind farms;
balancing efforts for competing
environmental improvements in rivers and
Delta conditions with water supply and
hydropower impacts;
support grid modernization without
Federal,
State
and
Regional
√ √ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines
Venue
1. Local
Accountability
2.
Reliability
3. GHG
Reduction
4. Cost
Control
compromising the primary mission of
Western and recognizing the achievements
already made in California without adding
duplicate costly efforts;
monitoring and evaluating impacts of Delta
conveyance proposals on Western Base
Resource allocation;
advocating for an equitable distribution of
costs between water and power customers
of the Central Valley Project; and
advocating for clear product provisions, fair
allocation of Base Resource Capacity and
fair contract terms under Western’s 2025
Power Marketing Plan and new Western
Base Resource contracts.
8. Advocate for Congressional or administrative
actions on matters relating to overly
burdensome reporting and compliance
requirements established by the North American
Reliability Corporation (NERC), the Federal
Energy Regulatory Commission (FERC) or the
Western Electricity Coordinating Council (WECC).
Federal,
State
and
Regional
√√ √
9. Support fair and reasonable application of grid
reliability requirements established by NERC,
WECC, or FERC and seek appropriate remedies (if
needed) for inequitable or punitive application of
fees and fines.
Federal
and
Regional
√√ √
10. Work with CAISO and/or FERC:
to give buyers of renewable intermittent
resources relief from imbalance penalties;
to promote financial and operational
changes that result in timely and accurate
settlement and billing; and
to provide critical input on the need for
various transmission projects in light of the
escalating costs to the City to import power
using the bulk transmission system.
Federal
and
State
√ √ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines
Venue
1. Local
Accountability
2.
Reliability
3. GHG
Reduction
4. Cost
Control
11. Work with NCPA, CMUA and NERC to ensure
that:
Federal, state and regional designations of
“critical cyber assets” are appropriately
applied to only truly critical local
distribution infrastructure; and
CPAU retains local control over
implementation of utility industry cyber
security standards, policies and procedures.
Federal
and
Regional
√ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
FIBER OPTIC
Goals
1. Preserve and enhance the authority of local government to (1) develop broadband solutions
that align with community needs and (2) expand consumer choice for competitive Internet
connectivity and other advanced services delivered over fiber‐optic networks.
2. Encourage the competitive delivery of broadband services by permitting the use of public
rights‐of‐ way and Utilities infrastructure in a responsible manner, provided that local rights of
way authority and management is preserved and contractual or other use does not
compromise the City’s existing utility safety, service, and operational s obligations.
3. Support local government authority over zoning‐related land use for communications
infrastructure in accordance with reasonable and non‐discriminatory regulations.
4. Support the Council’s Technology and the Connected City initiative of 2013, to fully leverage
the City’s fiber‐optic and infrastructure assets such as public rights‐of‐way, utility poles and
conduit for the broadband expansion.
Goals
Legislative Policy Guidelines
Venue
1.
Support
Municipal
Delivery
2.
Competitive
Delivery
3. Local
Authority
over Land
Use
4. Support
Council
Initiatives
1. Advocate for these goals through the
American Public Power Association (APPA),
California Municipal Utilities Association
(CMUA), National Association of
Telecommunications Officers and Advisors
(NATOA), National League of Cities (NLC),
and the Next Century Cities initiative (NCC),
with support from City staff.
Federal
and
State
√√ √ √
2. Support legislation and regulations that
preserve and enhance municipal delivery
of conventional and advanced
telecommunication services as prescribed
by the Telecommunications Act of 1996.
Federal
and
State
√ √ √
3. Support the goals of the Federal
Communications Commission’s (FCC),
National Broadband Plan to improve
Internet access nationwide.
Federal
and
State
√√ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines
Venue
1.
Support
Municipal
Delivery
2.
Competitive
Delivery
3. Local
Authority
over Land
Use
4. Support
Council
Initiatives
4. Oppose legislation and regulations that
benefit the incumbent cable TV,
telephone, and telecommunications
companies at the expense of community‐
owned fiber‐optic and wireless networks.
Federal
and
State
√√ √
5. Support legislation and regulations that
preserve and enhance utility customer
data security and confidentiality
protections by the providers of
telecommunication services.
Federal
and
State
√√ √
6. Support the Council’s directive to
concurrently pursue the findings and
recommendations in the Fiber‐to‐the‐
Premises Master Plan and Wireless
Network Plan and continue discussions and
negotiations with third parties considering
new service deployments in Palo Alto.
Local √ √
7. Support legislation and regulations that:
Permit the contractual use of public
right‐of‐ way and Utilities
infrastructure;
Preserve local rights‐of‐way authority
and management;
Preserve local government zoning and
siting authority for wireless and
wireline communication facilities;
Support local “dig once” policies to
ensure conduit and fiber are available
for lease on reasonable terms; and
Oppose legislation and regulations that
arbitrarily reduce compensation
received by local governments from
other entities for the economic use of
the public rights‐of‐way and other
public properties required for
communication infrastructure (e.g.,
utility poles, streetlight poles, ducts
and conduits).
Federal,
State
and
Local
√√ √ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
NATURAL GAS
Goals
1. Preserve/enhance the ability of municipal utilities to develop and implement demand side
efficiency and conservation programs, alternative gas supplies, and rate structures.
2. Increase the security and reliability of the gas supply and transmission infrastructure. This
includes retaining access to intra‐ and interstate gas transmission systems to reliably serve
customers.
3. Support efforts to reduce greenhouse gas emissions and protect the environment.
4. Preserve just and reasonable utility rates/bills established by local governing bodies.
Goals
Legislative Policy Guidelines Venue 1. Local
Accountability
2. Reliability of
Infrastructure
3. Environ‐
ment
4. Cost
Control
1. Advocate most of these goals
mainly through the American
Public Gas Association (APGA) with
minor support from Palo Alto staff.
Primarily
Federal with
minor
advocacy at
State level
√√√ √
2. Work with Northern California
Power Agency (NCPA) and
California Municipal Utilities
Association (CMUA) to the extent
that the City’s goals as a gas
distributor align with generators’
use of natural gas.
Federal and
State
√√√ √
3. Support cost effective renewable
gas supplies from in or out of state
sources. In case of mandated
renewable portfolio standards,
advocate for controls and off‐
ramps similar to the electric RPS
that minimize customer cost
impact.
Federal and
State
√√√ √
4. Advocate for financing or funding
for cost‐effective natural gas
efficiency and solar water heating
end uses.
Federal and
State
√√√ √
5. Support market transparency and
efforts to eliminate market
manipulation through reasonable
oversight.
Federal √
6. Support municipal utilities’ ability
to enter into pre‐pay transactions
for gas supplies.
Federal √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines Venue 1. Local
Accountability
2. Reliability of
Infrastructure
3. Environ‐
ment
4. Cost
Control
7. Support efforts to improve pipeline
safety.
Federal and
State
√√ √
8. Work with partners to discourage
extension of CPUC regulatory
authority over municipal gas
operations.
State √√ √
9. Support cap‐and‐trade market
designs that:
protect consumers from the
exercise of market power;
allocate allowances that
mitigate impacts to Palo Alto
customers while preserving
City environmental goals;
advocate for an allowance
allocation methodology that
provides flexibility for Palo Alto
to structure rates to align GHG
costs and revenues;
provide flexible compliance
mechanisms such as banking
and borrowing of allowances;
and
allocate funds generated from
cap‐and‐trade markets to GHG
related activities, not as a
revenue source for state or
federal general funds.
Federal and
State
√ √ √
10. Support legislation that aims to
protect public health and
encourages transparency regarding
the practice of hydraulic fracturing
or “fracking” for natural gas
development, while opposing
blanket moratoriums that aren’t
supported by science.
Federal and
State
√ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
WASTEWATER COLLECTION
Goals
1. Support ability of municipal utilities to develop and manage their own conservation and
efficiency programs and retain authority over ratemaking, including the imposition of non‐
volumetric customer meter or infrastructure charges for wastewater collection service.
2. Encourage efforts to increase the reliability of the local wastewater collection systems.
3. Maintain the provision of reliable and sustainable wastewater collection service at a fair price.
4. Support equal comparisons of wastewater collection systems by regulatory agencies in
order to minimize and reduce onerous, costly, time‐intensive reporting requirements and
improve value and accuracy of information reported to the public.
Goal
Legislative Policy Guidelines Venue
1. Local
Accountability
2. Reliable
Infrastructure
3.
Maintain
service
4.
Valuable
reporting
1. Advocate goals through active
participation in the Association of
Bay Area Governments (ABAG).
Local,
Regional
& State
√√√ √
2. Support regulations of wastewater
collection systems that recognize:
local jurisdictions’ proactive
efforts to replace and maintain
wastewater collections systems;
the need to provide affordable and
cost based collection service; and
the unique characteristics of
each collection system.
Local,
Regional
& State
√√ √
3. Support regional agencies in their
pursuit of:
environmentally sustainable,
reliable wastewater collection
service at a fair price; and
regional comparisons of
wastewater collection projects for
future state grant funding.
Local and
Regional
√√ √
5. Advocate for funding and local
regulations for wastewater collection
system projects and requirements
that reduce overflows and improve
collection system efficiency.
Regional,
State and
Federal
√√
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
WATER
Goals
1. Support the ability of public utilities and districts to develop and implement their own
water efficiency and conservation programs while retaining authority over ratemaking,
including the ability to optimize volumetric, fixed, and drought‐related pricing and balance
the goals of revenue certainty and water use efficiency.
2. Increase the security and reliability of the regional water system owned and operated by
the San Francisco Public Utilities Commission (SFPUC).
3. Support efficiency and recycled water programs in order to minimize the use of imported
supplies.
4. Provide environmentally sustainable and reliable supplies of high quality water.
Goals
Legislative Policy Guidelines Venue 1. Local
Authority
2. Reliable
Infrastructure
3. Minimize
imports
4. Supplies
at fair cost
1. Advocate goals through active participation
in the Bay Area Water Supply and
Conservation Agency (BAWSCA), California
Urban Water Conservation Council
(CUWCC), and California Municipal Utilities
Association (CMUA), with support from
Palo Alto staff for BAWSCA
Local,
Regional
and
State
√√ √ √
2. Participate in CUWCC Best Management
Practice (BMP) revisions and development
to ensure that aggressive and cost‐
effective efficiency goals are incorporated
and operating proposals are reasonable,
achievable, and cost‐effective.
State √√ √ √
3. Advocate to ensure that legislative actions
regarding the Hetch Hetchy Regional
Water System include:
timely rebuilding of the regional water
system;
maintenance of the quality of
delivered water;
minimization of any increase in the
cost of water;
no additional exposure to more
frequent or severe water
shortages;
increased real‐time monitoring
data availability to ensure water
quality;
support for the existing water system
Local,
Regional
and
State
√ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines Venue 1. Local
Authority
2. Reliable
Infrastructure
3. Minimize
imports
4. Supplies
at fair cost
and its operation;
SWRCB responsiveness to SFPUC water
quality issues;
4. Advocate for interpretations or
implementation of Water Code provisions
that maintain or reinforce the authorities
and protections available to the City and
BAWSCA members outside of San
Francisco.
Local,
Regional
and
State
√√ √
5. Support BAWSCA to enable it to
advocate for:
an environmentally sustainable,
reliable supply of high quality water at
a fair price;
for Wholesale Customers’ rights under
the Water Supply Agreement for water
from SFPUC that meets quality
standards;
a SFPUC rate structure that is
consistent with the Water Supply
Agreement and is based on water
usage;
preservation of Palo Alto’s existing
contractual water allocation and
transportation rights on the SFPUC
Hetch Hetchy system; and
regional planning for conservation,
recycled water, and other water supply
projects.
Local
and
Regional
√√ √ √
6. Advocate for actions that:
preserve Palo Alto’s existing
contractual rights; and
preserve local control over water use
and limit encroachment from outside
jurisdictions.
Local
and
Regional
√ √
7. Support infrastructure security and
reliability including an interconnection
between the SCVWD West Pipeline with
the SFPUC’s Bay Division Pipelines 3 and 4.
Regional
and
State
√
8. Support notification requirements that
inform residents/customers but do not
inflict undue or unobtainable requirements
on the utility.
State √ √
9. Support local control of public benefit State √ √
Utilities Legislative Policy Guidelines – February 2016 Update Exhibit 2 to Attachment A
Adopted by Council on February 22, 2016 (Staff Report 6563)
Goals
Legislative Policy Guidelines Venue 1. Local
Authority
2. Reliable
Infrastructure
3. Minimize
imports
4. Supplies
at fair cost
funds, funding levels and program design.
10. Support beneficiary pays methodologies to
prevent taxes or fees imposed on SFPUC
customers to fund infrastructure
improvements and costs of water sources
that do not serve Palo Alto customers.
State
and
Regional
√√ √
11. Advocate for financing or funding for water
conservation programs and recycled water
projects that meet end‐use needs and
conserve potable water and oppose
legislation that would reduce such funding.
State,
Region
al and
Federal
√√ √ √
12. Support infrastructure security and
reliability that includes equitable allocation
of funds for increasing the security of
infrastructure and that protects the City
from unnecessary regulations.
Local,
State
and
Federal
√√ √
13. Support legislation that promotes
responsible groundwater management
while recognizing Palo Alto’s existing and
historical groundwater extraction
practices.
State √√ √ √
14. Support Proposition 218 reform efforts to
provide ratemaking flexibility to balance
conservation, revenue sustainability, and
low income assistance programs.
State √√ √
15. Advocate for reasonable statewide water
conservation efforts (both drought
response and long term) that achieve
required water savings while minimizing
customer and commercial impact,
protecting the City’s urban canopy and
minimizing the City’s enforcement costs.
State √√ √
16. Protect the City and County of San
Francisco’s water rights as well as those of
the co‐grantees of the Raker Act.
State √√ √
17. Support legislation that would protect the
City’s infrastructure and treatment
investments from future state‐wide cuts
in water use.
State √ √
Exhibit 3 to Attachment A
1
Long-term Electric Acquisition Plan (LEAP)
Objectives, Strategies and Implementation Plan
Approved March 7, 2011 (Resolution No. 9152)
Modified by Council March 19, 2012 (Staff Report No. 2581)
Modified by Council April 16, 2012 (Staff Report No. 2710)
LEAP Objectives:
1. Meet customer electricity needs through the acquisition of least total cost energy and
demand resources including an assessment of the environmental costs and benefits
2. Manage supply portfolio cost uncertainty to meet rate and reserve objectives.
3. Enhance supply reliability to meet City and customer needs by pursuing opportunities
including transmission system upgrades and local generation.
LEAP Strategies and Implementation Plan Steps:
1. Resource Acquisition – Pursue the least total cost resources including an assessment of
environmental costs and benefits to meet the City’s needs in the long term by:
a. Evaluating each potential resource on an equal basis by evaluating rate impacts and
establishing costs and values for location, time of day and year, carbon, value of
renewable supplies and any secondary benefits attributed to the resource; and
b. Including all resources – conventional energy, local and remote renewable energy
supplies, energy efficiency, cogeneration, and demand reduction – in the evaluation.
Implementation Plan Items for Strategy #1 – Resource Acquisition Estimated
Completion
1. Adjust planning and portfolio models to include an integrated and least cost
planning perspective which evaluates demand and supply side resources in an
integrated manner and includes time of delivery, locational and
environmental costs and benefits.
Dec. 2010
2. Evaluate the impacts of energy efficiency, demand reductions and electric
vehicle penetration in Palo Alto in the annual development of the electric
load forecast.
Dec. 2010
2. Electric Energy Efficiency and Demand Reduction – Fund programs that maximize the
deployment of cost-effective, reliable and feasible energy efficiency and demand
reduction opportunities as the highest priority resources by:
a. Every three years, preparing a ten-year energy efficiency plan that identifies all cost-
effective energy efficiency opportunities;
b. Using the cost of long-term renewable energy resources adjusted for time of day
factors and location as the avoided cost when evaluating cost effectiveness of energy
efficiency measures;
c. Designing and making energy efficiency programs available to all customers; and
Exhibit 3 to Attachment A
2
d. Considering the impacts (costs, benefits and GHG emissions) of substituting
electricity-using appliances for natural gas-using appliances and vice versa in the ten-
year energy efficiency plan.
Implementation Plan Items for Strategy #2 – Electric Energy Efficiency and
Demand Reduction
Estimated
Completion
3. Provide quarterly updates on electric efficiency program achievements
including tracking against 10-Year Energy Efficiency goals to the UAC and
annual updates to the City Council.
quarterly
4. Develop Energy Efficiency Implementation Plan for the 2010 10-Year Electric
EE Plan addressing certain items identified in the May 2010 Council
Colleagues Memo and identification of resources and funding needed to
achieve EE goals.
Apr. 2011
5. Evaluate fuel switching energy efficiency measures and include them, if cost-
effective, in the Electric and Gas EE Implementation Plans.
Feb. 2011
6. Develop a pilot Demand Response Program for large commercial industrial
customers for implementation in summer 2011.
Apr. 2011
7. Assess the feasibility and cost-effectiveness of using current and potential
thermal energy storage (TES) systems to shift load from on-peak periods to
off-peak periods, for use in a demand response program, or for meeting any
energy storage needs. Coordinate with task 21 to develop targets, if
appropriate.
Sep. 2011
3. Renewable Portfolio Standard (RPS) – Reduce the carbon intensity of the electric
portfolio by acquiring renewable energy supplies by:
a. Pursuing a minimum level of renewable purchases of at least 33% of retail sales by
2015 with the following attributes:
i. The contracts for investment in renewable resources shall not exceed 30 years in
term.
ii. Pursue only renewable resources deemed to be eligible by the California Energy
Commission (CEC).
iii. Evaluate use of Renewable Energy Certificates (RECs) to meet RPS.
b. Ensuring that the retail rate impact for renewable purchases does not exceed 0.5
¢/kWh on average; and
c. Performing an ongoing evaluation of the Palo Alto Clean Local Energy Accessible Now
(CLEAN) program.
Proposed Implementation Plan Items for Strategy #3 – Renewable Portfolio
Standard (RPS)
Estimated
Completion
8. Fully integrate the effects on energy efficiency in the long-term electric load
forecast.
Nov. 2010
9. Evaluate the merits of implementing a feed-in-tariff (FIT) and the potential to
meet RPS goals through local renewable resources.
Jan. 2011
Exhibit 3 to Attachment A
3
Proposed Implementation Plan Items for Strategy #3 – Renewable Portfolio
Standard (RPS)
Estimated
Completion
10. Seek UAC recommendation and Council approval of the policy elements of a
FIT to encourage local renewable resource projects.
May 2011
11. Continue working with NCPA to identify opportunities, including joint-
ownership, for developing qualifying renewable resources.
On-going
12. Evaluate the use of renewable energy credits (REC) to meet a portion of the
City’s RPS goal and/or greenhouse gas emission reduction goals and monitor
the regulations and requirements regarding the use of RECs to meet RPS
goals.
On-going
13. Evaluate a proposed geothermal project being considered by NCPA, including
a pre-pay option and the benefit, costs, and risks of a pre-pay structure.
June 2011
14. Conduct a Request for Proposal for eligible renewable resources including
RECs and evaluate alternative renewable resource technologies and
contracting mechanisms.
RFP in June
2011
4. Local Generation – Promote and facilitate the deployment of cost-effective local
resources by:
a. Using the renewable market price referent (MPR) adjusted for time of day factors
and location as the avoided cost when evaluating cost effectiveness of local
resources;
b. Considering energy delivery cost uncertainty and strategic value options when
evaluating opportunities;
c. Evaluating a Feed-in-Tariff to promote locally sited renewable resources;
d. Evaluating cost-effective energy storage resources; and
e. Evaluating the feasibility of developing a 25 to 50 MW generating facility connect to
the City’s distribution system.
Proposed Implementation Plan Items for Strategy #4 – Local Generation Estimated
Completion
15. Provide an update of past local generation feasibility studies and actions to
UAC and Council
Dec. 2010
16. Assess the potential for and feasibility of small local distributed and non-
distributed, renewable and cogeneration projects, including using a FIT to
encourage these projects.
Jan. 2011
17. Assess the potential, benefits and costs of developing and/or joint ownership
of a 25 to 50 MW gas-fired power plant located in or near Palo Alto to meet
load, reliability and local capacity needs.
Jun. 2011
18. Evaluate the City’s PLUG-In Program to encourage cogeneration including
rules, regulations, and buy back rates and recommend modifications as
needed.
Dec. 2011
Exhibit 3 to Attachment A
4
Proposed Implementation Plan Items for Strategy #4 – Local Generation Estimated
Completion
19. Following receiving Council direction from Implementation Plan Initiative #10,
develop a FIT proposal including rate, rules, regulations, standard contract
form and limits.
To be
determined
20. Assess the economics and potential of the anaerobic digester as a local
generation resource for CPAU
Sep. 2011
21. Assess the need for and value of energy storage to support local renewable
distributed generation resources. Determine any appropriate energy storage
targets to be achieved by December 31, 2016, and December 31, 2021.
Report back to the Council regarding what procurement targets, if any, are
deemed to be appropriate so that the Council may adopt such procurement
targets, if determined to be appropriate, by October 1, 2014.
Jun. 2012
5. Climate Protection – Reduce the electric portfolio’s carbon intensity by:
a. Supporting the City municipal government’s climate protection goals;
b. Promoting the use of technologies (e.g. incentives for cogeneration systems,
promotion of EVs, in-home energy displays) and programs that will reduce the
community’s carbon footprint at a cost of up to the City’s value of carbon;
c. Continuing to offer a renewable resource-based retail rate for all customers who
want to voluntarily select an increased content of non-hydro renewable energy; and.
d. Evaluating quantitative goals for possible future implementation.
Proposed Implementation Plan Items for Strategy #5 – Climate Protection Estimated
Completion
22. Promote the City’s Plug-in program to encourage development of
cogeneration systems.
On-going
23. Analyze electric vehicle (EV) charging patterns and evaluate rates to incent
nighttime EV charging.
Jun. 2011
24. Meet AB32 mandated annual reporting requirements to California Air
Resources Board on annual volumes of electricity purchases by resource.
Annually,
next in Jun.
2011
25. Track and report annually on 6 major greenhouse gas emissions (CO2, CH4,
N2O, SF6, HFCs, PFCs) for all of the City’s municipal operations and calculate
electric portfolio’s overall emissions coefficients (lbs of CO2, CH4, and N2O
per MWh of purchases).
Annually,
next in Sep.
2011
26. Evaluate the costs, benefits and impacts of the implementation of an electric
portfolio carbon neutral policy and the setting of quantitative goals (e.g.
carbon intensity, total GHG emissions).
Jan. 2012
27. Evaluate PaloAltoGreen program design and recommend modifications, as
appropriate, including constructing PaloAltoGreen to assist in meeting
Renewable Portfolio Standard goals.
Jun. 2012
Exhibit 3 to Attachment A
5
6. Hydro Resource Management – Actively monitor and manage cost uncertainty related
to variations in hydroelectric supply and maximize value of hydro resources by:
a. Planning for an average hydro year on a long-term basis;
b. Utilizing cost effective hydro resource management products; and
c. Implementing opportunities to maximize benefits and reduce costs of the Western
Base Resource and Calaveras hydroelectric resources.
Proposed Implementation Plan Items for Strategy #6 – Hydro Resource
Management
Estimated
Completion
28. Evaluate potential rate adjustment mechanisms that would adjust electric
rates based on hydrologic year type and develop a recommendation for a
rate.
Apr. 2011
29. Assess the value related to Palo Alto’s participation in the CAISO’s Metered
Subsystem Agreement and the use of the Calaveras hydroelectric project for
load following.
On-going
30. Identify long-term opportunities to maximize the value of the Calaveras
hydroelectric project as an energy storage resource.
On-going
31. Work with NCPA to seek opportunities to increase the efficiency of the
Calaveras hydroelectric project and implement operational value maximizing
strategies.
On-going
7. Market Price Exposure Management – Actively monitor and manage operational,
counterparty and wholesale energy price risk in the short-term (up to three to five years)
by:
a. Maintaining an adequate pool of creditworthy suppliers; and
b. Diversifying supply purchases across commitment date, start date, duration,
suppliers and pricing terms in alignment with rate stability objectives and reserve
guideline.
Proposed Implementation Plan Items for Strategy #7 – Market Price Exposure
Management
Estimated
Completion
32. Evaluate a block purchase of up to 25 MW to meet base load needs for Jan-
Mar and Nov-Dec for a term of up to 5 years.
Feb. 2011
33. Conduct an RFP for new electric master agreement counterparties. Dec. 2011
34. Explore opportunities with NCPA, other municipal utilities and/or third party
suppliers to reduce scheduling and/or operating costs.
On-going
35. Continue to implement a 3-year laddering strategy to manage market price
uncertainty.
On-going
8. Transmission and Reliability – Pursue the reliability of supply at fair and reasonable
transmission and delivery costs by:
a. Actively participating through collaborative efforts with other entities, in local,
regional, statewide and federal regulatory and legislative forums;
Exhibit 3 to Attachment A
6
b. Participating in transmission and reliability market design forums to ensure that
adopted market designs result in adequate reliability, workably competitive markets
and equitable cost allocation;
c. Evaluating interconnection options to the City to increase service reliability and
lower delivery costs; and
d. Exploring transmission opportunities and strategies to meet long-term renewable
portfolio objectives beyond 2020.
Proposed Implementation Plan Items for Strategy #8 – Transmission and
Reliability
Estimated
Completion
36. Investigate transmission connection voltage upgrade from 115 to 230 kV, and
the potential for a transmission reliability connection to west side.
On-going
37. Explore transmission opportunities and strategies to meet long-term
renewable portfolio objectives beyond 2020.
On-going
38. Evaluate joint efforts for power plant ownership opportunities or long-term
agreements to meet the City’s Resource Adequacy Program requirements.
On-going
Exhibit 4 to Attachment A
1
Gas Utility Long-term Plan (GULP)
Objectives, Strategies and Implementation Plan
Approved by Council on April 23, 2012 (Staff Report 2552 – Resolution 9244)
GULP Objectives:
1. Market price transparency – Pass a market supply cost signal through to customers.
2. Supply Cost Management – Lower delivered gas cost over the long term.
3. Energy Efficiency – Ensure the deployment of all feasible, reliable, cost-effective energy
efficiency measures.
4. Climate Protection – Reduce the carbon intensity of the gas portfolio in accordance with
the Climate Protection Plan.
5. Parity with PG&E – At a reasonable cost, protect the City’s interests and maintain access
to transportation on par with PG&E’s core customers.
GULP Strategies:
1. Pass a market supply cost signal through to customers by:
a. Purchasing natural gas at monthly and daily market index prices; and
b. Changing gas supply rates monthly to reflect market prices.
2. Lower delivered gas cost over the long term by:
a. Acquiring pipeline assets that yield supply costs below market and meet operational
needs;
b. Taking advantage of the City’s low cost of capital to acquire gas supply and assets;
and
c. Optimizing existing assets.
3. Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures
by:
a. Developing and implementing a ten-year gas efficiency plan every three years that
includes a reasonable carbon price premium for traditional gas supplies; and
b. Considering the impacts (cost, benefits, and GHG emissions) of substituting
electricity-using appliances for gas-using appliances and vice versa in the ten-year
gas efficiency plan.
4. Reduce the carbon intensity of the gas portfolio in accordance with the Climate
Protection Plan by:
a. Designing and implementing a voluntary retail program using reasonably priced non-
fossil fuel gas resources; and
b. Purchasing non-fossil fuel gas for the portfolio as long as it can be done with no rate
impact.
5. At a reasonable cost, protect the City’s interests and maintain access to transportation
on par with PG&E’s core customers by:
a. Participating in the regulatory and legislative arenas when the potential impact on
the City is aligned with the cost to intervene and the probability of success;
Exhibit 4 to Attachment A
2
a. Negotiating with PG&E for fair access to transportation and storage; and
b. Exploring potential joint action with other public agencies.
GULP Implementation Plan:
1. Transition to market price-based, monthly-adjusted gas supply rates by:
a. Developing a new purchasing plan to be approved by the Director of Utilities;
b. Designing a new monthly-adjusted gas supply rate;
c. Revising the reserve guidelines for Council approval; and
d. Conducting customer communication and outreach.
2. Pursue below-market assets available through the Gas Transportation and Storage
Settlement by:
a. Evaluating the pipeline capacity reservation options available; and
b. Contracting with PG&E for any pipeline capacity with an estimated cost below the
forecasted market value.
3. Pursue opportunities for natural gas prepay transactions by:
a. Hiring a consultant to help staff with:
i. Identifying any internal policy changes needed including the policy on the use
of financial instruments;
ii. Identifying system and internal processes required;
iii. Identifying opportunities; and
iv. Evaluating opportunities and quantifying the benefits and costs; and
b. Seeking UAC recommendation and Council approval regarding whether to proceed
with a gas prepay transaction.
4. Develop an implementation plan to meet the gas efficiency targets by summer 2011
including the:
a. Evaluation of the cost-effectiveness of substituting gas-using appliance for electric-
using appliances and vice versa and the greenhouse gas impacts of such
substitutions; and
b. Incorporation of any cost-effective substitution measures in the implementation plan
to meet the gas efficiency targets.
5. Track and report progress against adopted gas efficiency goals by:
a. Providing quarterly updates on the gas efficiency program achievements to the UAC;
and
b. Providing annual updates on gas efficiency program achievements to the UAC and
the City Council.
6. Continue evaluating new gas efficiency technologies and undertake pilot studies where
appropriate.
7. Pursue reasonably priced non-fossil gas for a voluntary program through NGPP by:
a. Reviewing the due diligence report to be provided to NGPP participants by the end
of October 2010; and
b. Based on the results, recommending whether to continue participating in the
projects.
Exhibit 5 to Attachment A
1
Water Integrated Resource Plan Guidelines
Approved by the City Council on December 8, 2003 (CMR:547:03)
Guideline 1 – Preserve and enhance SFPUC supplies: With respect to the City of Palo Alto
Utilities’ (CPAU’s) primary water supply source, the San Francisco Public Utilities Commission
(SFPUC), continue to actively participate in the Bay Area Water Supply and Conservation Agency
(BAWSCA) to assist in achieving BAWSCA’s stated goal: “A reliable supply of water, with high
quality, and at a fair price.” Objectives in support of that overall goal include:
A. That the regional water system gets rebuilt cost-effectively and that BAWSCA
monitor implementation of AB 1823 – San Francisco should safeguard the water
system against damage from earthquakes and other foreseeable hazards. BAWSCA
will monitor progress on the system repairs and on completing the requirements of
the legislation that the BAWSCA agencies supported to oblige San Francisco to repair
and rebuild the regional system.
B. That the cost of improvements is fairly allocated – San Francisco should commit to
maintaining cost-based pricing, with the costs of the wholesale water system shared
between the City and its wholesale customers based on their proportionate share.
C. That future water needs can be met – San Francisco must evaluate the ability of the
regional system to meet future supply and capacity requirements and must use the
BAWSCA agencies’ long-term water demand forecasts as the basis for regional water
demand projections.
D. That there are adequate supplies during droughts – San Francisco should arrange
back-up supplies for dry years and should “drought proof” the entire service area,
not just San Francisco itself. If rationing becomes necessary, San Francisco should
use a system that allocates available water between San Francisco and wholesale
customers in a way that (1) is fair and (2) avoids penalizing long-term conservation
efforts and/or development of alternative supplies, such as recycled water.
E. That communities prepare for potential water outages – San Francisco should
coordinate with the BAWSCA agencies to develop a crisis management plan.
F. That agencies implement cost-effective water conservation activities – San Francisco
should provide agencies enough information so that they can prepare for possible
outages, including the provision of conservation programs for their communities.
BAWSCA can act as coordinator for these programs to improve the cost-
effectiveness of agencies offering such programs.
Exhibit 5 to Attachment A
2
G. That water received must meet drinking water standards – San Francisco should
continue to protect the purity of Hetch Hetchy water and commit to provide its
wholesale customers with water that meets EPA and California drinking water
standards.
H. That the Master Contract is properly implemented and a new Master Contract is in
place prior to 2009 – San Francisco should commit to maintaining cost-based pricing,
with the costs of the wholesale water system shared between the City and its
wholesale customers based on their proportionate share.
I. That there is ongoing support of efforts to protect health, safety and economic well
being of the water customers and communities – BAWSCA should maintain the
support of the many allies who supported the legislative effort to ensure San
Francisco repairs, rebuilds, and maintains the regional system.
Guideline 2 – Advocate for an interconnection between SFPUC and the District: Work with
the Santa Clara Valley Water District (District) and the SFPUC to pursue the extension of the
District’s West Pipeline to an interconnection with the SFPUC Bay Division Pipelines 3&4.
Continue to re-evaluate the attractiveness of a connection to an extension of the District’s West
Pipeline.
Guideline 3 – Actively participate in development of cost-effective regional recycled water
plans: Re-initiate discussions with the owners of the Palo Alto Regional Water Quality Control
Plant (PARWQCP) on recycled water development. In concert with the PARWQCP owners,
conduct a new feasibility study for recycled water development. Since the feasibility of a
recycled water system depends upon sufficient end-user interest, determine how much water
Stanford and the Stanford Research Park would take.
Guideline 4 – Focus water DSM programs to comply with BMPs: Continue implementation of
water efficiency programs with the primary focus to achieve compliance with the Best
Management Practices (BMPs) promoted by the California Urban Water Conservation Coalition.
Guideline 5 – Maintain emergency water conservation measures to be activated in case of
droughts: Review, retain, and prioritize CPAU’s emergency water conservation measures that
would be put into place in a drought time emergency.
Guideline 6 – Retain groundwater supply options in case of changed future conditions: Using
groundwater on a continuous basis does not appear to be attractive at this time due to the
availability of adequate, high quality supplies from the SFPUC in normal years. However, SFPUC
supplies are not adequate in drought years and circumstances could change in the future such
that groundwater supplies could become an attractive, cost-effective option. Examples of
changing circumstances could be that the amount of water available to CPAU from the SFPUC
for the long-term is reduced. This could occur if regulations or legislation require additional
water to be made available to the Tuolumne River fisheries. In addition, in the future
Exhibit 5 to Attachment A
3
allocations or entitlements to SFPUC water may be developed. If those allocations are based on
the dry-year yield of the system, allocations to all the users of the system, including CPAU,
could be well below their current and projected future needs. CPAU should retain the option of
using groundwater in amounts that would not result in land surface subsidence, saltwater
intrusion, or migration of contaminated plumes.
Guideline 7 – Survey community to determine its preferences regarding the best water
resource portfolio: Seek feedback from all classes of water customers on the question of
whether to use groundwater during drought to improve drought year supply reliability. At the
same time, seek feedback on the appropriate level of water treatment for groundwater if it
were to be used in droughts. Survey all classes of water customers to determine their
preferences as to the appropriate balance between cost, quality, reliability, and environmental
impact.
Note: WIRP Guidelines approved with the proviso that when determining the economic
feasibility of alternative water sources relative to SFPUC water, consideration will be given to
the possibility that SFPUC water may have a fixed cost component independent of usage, which
may be unavoidable when SFPUC water use is reduced.
Exhibit 6 to Attachment A
1
Adopted by City Council on March 4, 2013 (Staff Report 3550)
City of Palo Alto Utilities
Electric Supply Portfolio Carbon Neutral Plan
1. Carbon Neutral Definition
A carbon neutral electric supply portfolio will demonstrate annual net zero greenhouse gas
(GHG) emissions, measured at the Citygate1, in accordance with The Climate Registry’s Electric
Power Sector protocol for GHG emissions measurement and reporting.
2. Carbon Neutral Plan Objective
Reduce the City of Palo Alto’s overall community GHG emissions by achieving carbon neutrality
for the Electric Supply Portfolio starting in calendar year 2013 within an annual rate impact not
to exceed 0.15 cents per kilowatt-hour (₵/kWh) primarily through the: 1) engagement of
customers to increase energy efficiency; 2) expansion of long-term renewable resource
commitments; 3) promotion of local renewable resources; 4) continued reliance on existing
hydroelectric resources; and 5) meeting short-term balancing requirements and/or neutralizing
residual carbon through the use of short-term purchases of renewable resources and/or
renewable energy certificates (RECs).
3. Resource Strategies
a. Energy Efficiency
i. Continue to pursue energy efficiency strategies as identified in the Council-
approved ten-year Energy Efficiency Plan.
b. Long-term Renewable Resources
i. Continue to pursue the City’s Renewable Portfolio Standard (RPS) goal to
purchase renewable energy to supply at least 33% of retail sales by 2015 while
ensuring that the retail rate impact of these purchases does not exceed
0.5₵/kWh.
ii. Continue to pursue local renewable resources through the Palo Alto CLEAN and
PV Partners programs.
iii. Pursue additional RPS-eligible, long-term renewable resources (beyond the RPS
goals) to achieve a target of 100% carbon-free resources based on average year
hydroelectric generation.
c. Short-term Renewable Resources and Renewable Energy Certificates
i. For calendar years 2013 through 2016, procure short-term renewables, if the
price is comparable to that of an un-bundled REC;
1 Citygate is the location of the City’s main meter where the City interconnects to the Pacific Gas and Electric
transmission system. Emissions associated with of the output of the locally sited fossil gas fired combustions units
(COBUG), while not measured at Citygate, will be neutralized.
Exhibit 6 to Attachment A
2
ii. For calendar years 2013 through 2016, procure RPS-eligible, un-bundled RECs as
needed to achieve carbon neutrality based on actual load and resources;
iii. Neutralize anthropogenic GHG emissions associated with renewable resources
with unbundled-RECs, which may or may not be RPS-eligible.
d. Banking and Truing Up
i. In the event that there are surplus renewables beyond the load in a particular
year, bank as many RECs as allowable under the TCR EPS protocol from
qualifying renewables from that year to minimize the need for purchasing RECs
in subsequent years.
ii. Neutralize emissions associated with market purchases resulting from deviations
between expected and actual load and renewable and hydroelectric generation
resources with unbundled-RECs, which may or may not be RPS-eligible.
4. Hydroelectric Resources
a. Continue to preserve and advocate for existing carbon-neutral hydroelectric generation
resources that provide approximately 50% of average year resource needs.
b. Plan for and acquire carbon neutral resources assuming average hydroelectric
conditions going forward.
c. Under adverse hydroelectric conditions, procure unbundled-RECs, which may or may
not be RPS-eligible, to achieve carbon neutrality up to the 0.15₵/kWh rate impact limit
and seek Council direction if carbon neutrality cannot be achieved within the rate
impact limit.
d. Under favorable hydroelectric conditions, where carbon neutral resources are expected
to be surplus to needs, even after allowable banking, then pursue selling short-term
renewable energy, or the renewable attributes, associated with one or more carbon-
neutral resources in the portfolio.
5. Financial and Rate Payer Impacts
a. In addition to the RPS annual rate impact limit of 0.5₵/kWh, the cost of achieving carbon
neutrality shall not exceed 0.15₵/kWh based on an average hydro year.
b. Revenues collected from surplus energy sales related to hydroelectric resources under
favorable conditions (e.g. wet years), will be maintained within reserves to adjust for the
cost of achieving carbon neutrality under adverse hydroelectric years.
c. To the extent available and allowable, revenues from the auction of cap-and-trade
allowances may be used to fund resources acquired to meet the carbon neutrality goals.
6. Reporting and Communication
a. Develop a communication plan for stakeholders to inform them of the City’s efforts
towards achieving a carbon neutral electric supply.
b. Submit an annual, verified report of the carbon content of the electric supply portfolio
to The Climate Registry.
c. Provide customers a report of the electric supply portfolio’s carbon content to
supplement the mandated Power Content Label.
Exhibit 6 to Attachment A
3
d. Inform large commercial and/or corporate customers of the City’s carbon neutral
portfolio and its relevance to their individual corporate sustainability goals.
7. Implementation Plan
The tasks that need to be completed in the next two years pending Council approval of the
Carbon Neutral Plan in February 2013 are listed in the table below.
Item Timeframe
1. Modify electric supply portfolio models and Energy Risk
Management Policies, Guidelines and Procedures to account for
Carbon Neutral objectives, balancing, banking of renewable
attributes, reporting and financial impacts.
By April 2013
2. Modify the Long-term Electric Acquisition Plan (LEAP) to include
the carbon neutral objective
By June 2013
3. Develop communication plan to inform customers and
stakeholders of Carbon Neutral Plan and efforts.
February to April
2013
4. Based on response to the Fall 2012 request for proposals, seek
approval of new renewable power purchase agreements to meet
the City’s RPS up to approximately 100% of the long-term resource
needs in average hydro years.
December 2012 to
June 2013
5. Determine resource needs for CY 2013 through CY 2016 and
develop plan to acquire short-term renewable resources.
By June 2013
6. Determine long-term renewable purchase volumes for beyond CY
2016 and develop plan to acquire long-term renewable resources.
By September 2013
7. Procure RECs as needed to neutralize carbon emissions based on
actual load and resources for CY 2013.
By May 2014
8. Along with annual Power Content Label, produce and report to
customers the carbon intensity of the electric supply portfolio.
May/June 2014 and
annually thereafter
9. Produce and submit Electric Power Sector (EPS) and Local
Governments Operation Protocol (LGOP) reports to The Climate
Registry (TCR) for CY 2013.
July and October
2014 and annually
thereafter
10. Get independent verification of TCR reports and submit audited
reports to TCR.
By December 2014
and annually
thereafter
11. Redesign the PaloAltoGreen program according to Council
direction.
By December 2013
Exhibit 7 to Attachment A
Adopted by Council on April 21, 2014 (Staff Report 4608) 1
City of Palo Alto Utilities – Local Solar Plan
Goal
To increase the installation of local solar photovoltaic facilities to provide 4 percent of the City’s
total energy needs by 2023.
Objectives
1. Facilitate the development of local, safe and cost‐effective solar in Palo Alto to meet the
diverse needs of the community
2. Reduce the cost of installing solar in Palo Alto and become a leader in promoting renewable
distributed generation through solar installations
3. Understand the community’s solar potential and diverse needs and develop solar programs
accordingly
4. Remove internal obstacles to minimize cost and achieve greater solar potential
5. Promote solar installations in a cost effective and safe manner
6. Leverage industry resources to the extent possible
7. Deploy industry best practices
Strategies
1. Remove internal system and institutional barriers which increase “soft” costs and may
impede adoption of solar in Palo Alto
a. Work with the Development Center, Planning and Utilities to identify further
improvements to streamline the solar permitting process.
b. Promote advancements in the City’s permitting process to community and solar
developers.
2. Develop proper policies, incentives, price signals and rates to encourage solar installation
a. Solar Policy and Rate Design – explore rate structures that balance cost of service
with the City’s policy to promote the development of new solar systems in Palo Alto.
i. When evaluating new solar policies, evaluate the impact, if any, on non‐solar
ratepayers.
b. City of Palo Alto Utilities (CPAU) Billing System – explore modifications to the billing
system and/or evaluate:
i. Incorporating net metering information on the monthly bills
ii. Virtual net metering to allow the sharing of net metering bill credits across
accounts
c. CPAU Incentives – assess providing rebates or other incentives after the SB1
mandated expenditures are exhausted, the Federal Investment Tax Credit has been
reduced from 30% to 10% and the net‐metering cap has been met, to continue to
encourage local solar installations.
d. Leverage available resources for solar policy and program development
Exhibit 7 to Attachment A
Adopted by Council on April 21, 2014 (Staff Report 4608) 2
i. Participate in the Federal Department of Energy’s American Solar
Transformation Initiative to receive free services including development of a
customized solar road map
ii. Request assistance from existing membership in Solar Electric Power
Association and ESource
iii. Consider partnering with regional cities, counties and the State of California
in developing solar programs
e. Advocate at a local, regional and state level for effective rules, regulations and
legislation to promote cost effective and fair solar development
i. Coordinate with other municipal utilities through the Northern California
Power Agency (NCPA) and the California Municipal Utilities Association
(CMUA) on state legislation related to solar
3. Assess technical and market potential of solar in Palo Alto
a. Review commercial and residential sites to determine solar technical potential
b. Determine cost drivers for installing solar in Palo Alto
c. Utilize other industry studies to develop a feasible and marketable potential
d. Develop a database of solar potential
e. Assess the impacts of PV on CPAU’s distribution system
4. Implement policies and programs to increase solar system installations on CPAU customer
sites with good solar access
a. Continue to promote the PV Partners program to achieve the 6.5 MW of installation
by 2017, per CA SB1
b. Continue to promote the Palo Alto CLEAN (feed‐in‐tariff) program and revamp the
marketing of Palo Alto CLEAN to facilitate the coordination of potential sites with
developers and property owners/managers to achieve some level of participation
i. Annually re‐assess the avoided cost of local renewable energy and
recommend adjustments to the CLEAN offer price and contract terms, as
appropriate
ii. Investigate developers’ concerns with Palo Alto CLEAN program rules
iii. Continue to educate commercial property owners about the CLEAN program
c. Evaluate solar project financing options
i. Coordinate with the California FIRST Property Assessed Clean Energy (PACE)
program which allows solar system owners to borrow funds for the PV
installation and pay it back on their property tax bills over a term equal to
the expected system life (20 years).
ii. Partner with local lenders to offer solar financing1
1 See an example of such a program from New Jersey’s Public Service Enterprise Group her:
http://www.pseg.com/home/save/solar/index.jsp
Exhibit 7 to Attachment A
Adopted by Council on April 21, 2014 (Staff Report 4608) 3
5. Facilitate and/or develop new programs to encourage new participants to develop local
solar installations.
a. Develop a solar donation program for community members to donate to public
sector and non‐profit organizations which may benefit from solar, but can’t afford
the investment on their own.
i. Work with PAUSD and other non‐profits to identify sites. Potential
installation sites include public sector and non‐profit locations which are
ineligible to receive federal tax subsidies.
ii. Evaluate alternative mechanisms to provide donations to sustain the
program, including:
(1) Reformulating the suspended PaloAltoGreen electric program as a
mechanism to provide ongoing donations;
(2) Developing a bill donation mechanism to raise funds; or
(3) Developing on‐line or crowd‐funded sources to raise ongoing funds.
b. Develop a community solar share program for the benefit of community members
that do not have good solar access but have the desire to invest in local solar.
i. Evaluate program design options that allow CPAU customers to invest in a
share of a new larger‐scale solar PV installations located in Palo Alto
ii. Evaluate options for providing value back to customer investors, including:
(1) Evaluate CPAU’s ability to provide monthly payments (in $) on the
customer’s Utilities bill
(2) Evaluate CPAU’s ability to offer “virtual net metering” so that energy
produced (in kWh) from a solar system could be reflected on customers’
Utilities bills. [Note that the billing system challenges may be substantial
for this option.]
(3) Evaluate providing payments to customers via a third‐party administrator
separate from the Utilities bill.
iii. Evaluate outsourcing the administration of the community solar program to
provide the following:
(1) Develop the community solar program
(2) Perform program marketing
(3) Identify installation sites
(4) Manage the solar installation contract
(5) Own, operate and maintain the PV installation (or contract with a third‐
party)
c. Investigate group‐discount solar PV program options to allow/facilitate Palo Alto
residents to pool their buying power to secure significant discounts, making
installing solar on their home simple and more affordable.
i. Leverage existing group‐discount programs offered to regional residents and
company employees.
6. Maximize solar installations on City‐owned facilities
a. Assist Public Works in evaluating leasing City‐owned facilities with low electric
consumption (elevated garages and surface parking lots) to a solar developer who
Exhibit 7 to Attachment A
Adopted by Council on April 21, 2014 (Staff Report 4608) 4
could install solar PV systems and would be compensated under the Palo Alto CLEAN
program.
b. Assist Public Works in investigating installing net‐metered solar on City‐owned sites
to reduce the City’s annual electric costs (and benefit the General fund).
7. Educate the community on the benefits of solar through information and demonstration
projects
a. Develop solar demonstration projects on City and public facilities
b. Promote the benefits of PV systems together with fuel switching (replacing end‐of‐
life gas appliances with electric appliances or replacing a gasoline vehicle with an
electric vehicle or a plug‐in hybrid vehicle) strategies to reduce greenhouse gas
emissions.
c. Investigate developing a “one‐stop‐shop” model (e.g., Wave‐one).
d. Develop "how to go solar" promotional materials which allows customers to
evaluate several solar options.
e. Develop direct marketing for small commercial/business customers.
f. Develop a database of solar projects installed throughout the community as “case
studies” and promote them through CPAU’s web site.
g. Promote new innovative solar technologies using the CPAU Emerging technology
Program
i. Thermoelectric paint
ii. PV & batteries
iii. Building‐integrated PV (BIPV)
iv. White roofs
v. Microgrids
vi. Solar shingles
vii. Solar thermal
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2017 Electric Financial Plan
ELECTRIC UTILITY RESERVES MANAGEMENT PRACTICES
The following reserves management practices are used when developing the Electric Utility
Financial Plan:
Section 1. Definitions
a) “Financial Planning Period” – The Financial Planning Period is the range of future fiscal
years covered by the Financial Plan. For example, if the Financial Plan delivered in
conjunction with the FY 2015 budget includes projections for FY 2015 to FY 2019,
FY 2015 to FY 2019 would be the Financial Planning Period.
b) “Fund Balance” – As used in these Reserves Management Practices, Fund Balance refers
to the Utility’s Unrestricted Net Assets.
c) “Net Assets” - The Government Accounting Standards Board defines a Utility’s Net
Assets as the difference between its assets and liabilities.
d) “Unrestricted Net Assets” - The portion of the Utility’s Net Assets not invested in capital
assets (net of related debt) or restricted for debt service or other restricted purposes.
Section 2. Supply Fund Reserves
The Electric Supply Fund Balance is reserved for the following purposes:
a) For existing contracts, as described in Section 4 (Reserve for Commitments)
b) For operating budgets reappropriated from previous years, as described in Section 5
(Reserve for Reappropriations)
c) For special projects for the benefit of the Electric Utility ratepayers, as described in
Section 6 (Electric Special Projects Reserve)
d) For year to year balancing of costs associated with the Electric Utility’s hydroelectric
resources, as described in Section 7 (Hydroelectric Stabilization Reserve)
e) For rate stabilization, as described in Section 1.d) (Rate Stabilization Reserves)
f) For operating contingencies, as described in Section 12 (Operations Reserves)
g) Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 13 (Unassigned Reserves).
Section 3. Distribution Fund Reserves
The Electric Distribution Fund Balance is reserved for the following purposes:
a) For existing contracts, as described in Section 4 (Reserves for Commitments)
b) For operating and capital budgets reappropriated from previous years, as described in
Section 5 (Reserves for Reappropriations)
c) As an offset to underground loan receivables, as described in Section 8 (Underground
Loan Reserve)
d) To hold Public Benefit Program funds collected but not yet spent, as described in Section
9 (Public Benefits Reserve)
e) For cash flow management and contingencies related to the Electric Utility’s Capital
Improvement Program (CIP), as described in Section 10 (CIP Reserve)
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2017 Electric Financial Plan
f) For rate stabilization, as described in Section 1.d) (Rate Stabilization Reserves)
g) For operating contingencies, as described in Section 12 (Operations Reserves)
h) Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 14 (Unassigned Reserves).
Section 4. Reserves for Commitments
At the end of each fiscal year the Electric Supply Fund and Electric Distribution Fund
Reserves for Commitments will be set to an amount equal to the total remaining spending
authority for all contracts in force for the Electric Supply Fund and Electric Distribution
Fund, respectively, at that time.
Section 5. Reserves for Reappropriations
At the end of each fiscal year the Electric Supply Fund and Electric Distribution Fund
Reserves for Reappropriations will be set to an amount equal to the amount of all remaining
capital and non-capital budgets that will be reappropriated to the following fiscal year for
each Fund in accordance with Palo Alto Municipal Code Section 2.28.090.
Section 6. Electric Special Projects Reserve
The Electric Special Projects Reserve (ESP Reserve) will be managed in accordance with the
policies and timelines set forth in Resolution 9206 (Resolution of the Council of the City of
Palo Alto Approving Renaming the Calaveras Reserve to the Electric Special Project Reserve
and Adoption of Electric Special Project Reserve Guidelines). These policies and timelines
are included from Resolution 9206 as amended to refer to the reserves structure set forth
in these Reserves Management Practices:
a) The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers;
b) The ESP Reserve funds must be used for projects of significant impact;
c) Projects proposed for funding must demonstrate a need and value to electric
ratepayers. The projects must have verifiable value and must not be speculative, or
high-risk in nature;
d) Projects proposed for funding must be substantial in size, requiring funding of at least
$1 million;
e) The preferred projects to be funded by the ESP Reserve must be identified by end of
FY 2015;
f) Any uncommitted funds remaining at the end of FY 2020 will be transferred to the
Electric Supply Operations Reserve and the ESP Reserve will be closed; and
g) Funds may be used for analysis and pilot projects which would be the basis for planned
large projects.
Section 7. Hydroelectric Stabilization Reserve
Supply cost savings and surplus energy sales revenue associated with higher than average
generation from hydroelectric resources may be added to the Electric Supply Fund’s
Hydroelectric Stabilization Reserve by action of the City Council and held to offset higher
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2017 Electric Financial Plan
commodity supply costs during years of lower than average generation. Withdrawal of
funds from the Hydroelectric Stabilization Reserve requires action by the City Council.
Section 8. Underground Loan Reserve
At the end of each fiscal year, the Underground Loan Reserve will be adjusted by the
principal payments made against outstanding underground loans.
Section 9. Public Benefits Reserve
The Public Benefits Reserve will be increased by the amount of unspent Public Benefits
Revenues remaining at the end of each fiscal year. Expenditure of these funds requires
action by the City Council.
Section 10. CIP Reserve
The CIP Reserve is used to manage cash flow for capital projects and acts as a reserve for
capital contingencies. Staff will manage the CIP Reserve according to the following
practices:
a) The following guideline levels are set forth for the CIP Reserve. These guideline levels
are calculated for each fiscal year of the Financial Planning Period based on the levels of
CIP expense budgeted for that year.
Minimum Level 60 days of budgeted CIP expense
Maximum Level 120 days of budgeted CIP expense
b) Changes in Reserves: Staff is authorized to transfer funds between the CIP Reserve and
the Reserve for Commitments when funds are added to or removed from the Reserve
for Commitments as a result of a change in contractual commitments related to CIP
projects. Any other additions to or withdrawals from the CIP reserve require Council
action.
c) Minimum Level:
i) Funds held in the Reserve for Commitments may be counted as part of the CIP
Reserve for the purpose of determining compliance with the CIP Reserve minimum
guideline level.
ii) If, at the end of any fiscal year, the minimum guideline is not met, staff shall present
a plan to the City Council to replenish the reserve. The plan shall be delivered by the
end of the following fiscal year, and shall, at a minimum, result in the reserve
reaching its minimum level by the end of the next fiscal year. For example, if the CIP
Reserve is below its minimum level at the end of FY 2017, staff must present a plan
by June 30, 2018 to return the reserve to its minimum level by June 30, 2019. In
addition, staff may present, and the Council may adopt, an alternative plan that
takes longer than one year to replenish the reserve, or that does so in a shorter
period of time.
d) Maximum Level: If, at any time, the CIP Reserve reaches its maximum level, no funds
may be added to this reserve. If there are funds in this reserve in excess of the
maximum level staff must propose to transfer these funds to another reserve or return
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2017 Electric Financial Plan
them to ratepayers in the next Financial Plan. Staff may also seek City Council to
approve holding funds in this reserve in excess of the maximum level if they are held for
a specific future purpose related to the CIP.
Section 11. Rate Stabilization Reserves
Funds may be added to the Electric Supply or Distribution Fund’s Rate Stabilization Reserves
by action of the City Council and held to manage the trajectory of future year rate increases.
Withdrawal of funds from either Rate Stabilization Reserve requires action by the City
Council. If there are funds in either Rate Stabilization Reserve at the end of any fiscal year,
any subsequent Electric Utility Financial Plan must result in the withdrawal of all funds from
this Reserve by the end of the Financial Planning Period.
Section 12. Operations Reserves
The Electric Supply Fund and Electric Distribution Fund Operations Reserves are used to
manage normal variations in the costs of providing electric service and as a reserve for
contingencies. Any portion of the Electric Utility’s Fund Balance not included in the reserves
described in Section 4 to d) above will be included in the appropriate Operations Reserve
unless the reserve has reached its maximum level as set forth in Section 12 (e) below. Staff
will manage the Operations Reserves according to the following practices:
a) The following guideline levels are set forth for the Electric Supply Fund Operations
Reserve. These guideline levels are calculated for each fiscal year of the Financial
Planning Period based on the levels of Operations and Maintenance (O&M) and
commodity expense forecasted for that year in the Financial Plan.
Minimum Level 60 days of Supply Fund O&M and commodity expense
Target Level 90 days of Supply Fund O&M and commodity expense
Maximum Level 120 days of Supply Fund O&M and commodity expense
b) The following guideline levels are set forth for the Electric Distribution Fund Operations
Reserve. These guideline levels are calculated for each fiscal year of the Financial
Planning Period based on the levels of O&M expense forecasted for that year in the
Financial Plan.
Minimum Level 60 days of Distribution Fund O&M expense
Target Level 90 days of Distribution Fund O&M expense
Maximum Level 120 days of Distribution Fund O&M expense
c) Minimum Level: If, at the end of any fiscal year, the funds remaining in the Supply Fund
or Distribution Fund’s Operations Reserve are lower than the minimum level set forth
above, staff shall present a plan to the City Council to replenish the reserve. The plan
shall be delivered within six months of the end of the fiscal year, and shall, at a
minimum, result in the reserve reaching its minimum level by the end of the following
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2017 Electric Financial Plan
fiscal year. For example, if the Operations Reserve is below its minimum level at the end
of FY 2014, staff must present a plan by December 31, 2014 to return the reserve to its
minimum level by June 30, 2015. In addition, staff may present an alternative plan that
takes longer than one year to replenish the reserve.
d) Target Level: If, at the end of any fiscal year, either Operations Reserve is higher or
lower than the target level, any Financial Plan created for the Electric Utility shall be
designed to return both Operations Reserves to their target levels by the end of the
forecast period.
e) Maximum Level: If, at any time, either Operations Reserve reaches its maximum level,
no funds may be added to this Reserve. Any further increase in that fund’s Fund
Balance shall be automatically included in the Unassigned Reserve described in Section
13, below.
Section 13. Unassigned Reserves
If the Operations Reserve in either the Electric Supply Fund or the Electric Distribution Fund
reaches its maximum level, any further additions to that fund’s Fund Balance will be held in
the Unassigned Reserve. If there are any funds in either Unassigned Reserve at the end of
any fiscal year, the next Financial Plan presented to the City Council must include a plan to
assign them to a specific purpose or return them to the Electric Utility ratepayers by the end
of the first fiscal year of the next Financial Planning Period. For example, if there were
funds in the Unassigned Reserves at the end of FY 2016, and the next Financial Planning
Period is FY 2017 through FY 2021, the Financial Plan shall include a plan to return or assign
the funds in the Unassigned Reserve by the end of FY 2017. Staff may present an
alternative plan that retains these funds or returns them over a longer period of time.
Section 14. Intra-Utility Transfers between Supply and Distribution Funds
Transfers between Electric Distribution Fund Reserves and Electric Supply Fund Reserves are
permitted if consistent with the purposes of the two reserves involved in the transfer. Such
transfers require action by the City Council.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Gas Financial Plan
GAS UTILITY RESERVES MANAGEMENT PRACTICES
The following reserves management practices shall be used when developing the Gas Utility
Financial Plan:
Section 1. Definitions
a) “Financial Planning Period” – The Financial Planning Period is the range of future fiscal
years covered by the Financial Plan. For example, if the Financial Plan delivered in
conjunction with the FY 2015 budget includes projections for FY 2015 to FY 2019, FY
2015 to FY 2019 would be the Financial Planning Period.
b) “Fund Balance” – As used in these Reserves Management Practices, Fund Balance refers
to the Utility’s Unrestricted Net Assets.
c) “Net Assets” - The Government Accounting Standards Board defines a Utility’s Net
Assets as the difference between its assets and liabilities.
d) “Unrestricted Net Assets” - The portion of the Utility’s Net Assets not invested in capital
assets (net of related debt) or restricted for debt service or other restricted purposes.
Section 2. Supply Fund Reserves
The Gas Utility’s Supply Fund Balance is reserved for the following purposes:
a) For existing contracts, as described in Section 4 (Reserve for Commitments)
b) For operating and capital budgets re-appropriated from previous years, as described in
Section 5 (Reserve for Re-appropriations)
Section 3. Distribution Fund Reserves
a) For existing contracts, as described in Section 4 (Reserve for Commitments)
b) For operating and capital budgets re-appropriated from previous years, as described in
Section 5 (Reserve for Re-appropriations)
c) For cash flow management and contingencies related to the Gas Utility’s Capital
Improvement Program (CIP), as described in Section 6 (CIP Reserve)
d) For rate stabilization, as described in Section 7 (Rate Stabilization Reserve)
e) For operating contingencies, as described in Section 8 (Operations Reserve)
f) Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 9 (Unassigned Reserves)
Section 4. Reserve for Commitments
At the end of each fiscal year the Gas Supply Fund and Gas Distribution Fund Reserve for
Commitments will be set to an amount equal to the total remaining spending authority for
all contracts in force for the Wastewater Collection Utility at that time.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Gas Financial Plan
Section 5. Reserve for Reappropriations
At the end of each fiscal year the Gas Supply Fund and Gas Distribution Fund Reserve for
Reappropriations will be set to an amount equal to the amount of all remaining capital and
non-capital budgets, if any, that will be re-appropriated to the following fiscal year for each
fund in accordance with Palo Alto Municipal Code Section 2.28.090.
Section 6. CIP Reserve
The CIP Reserve is used to manage cash flow for capital projects and acts as a reserve for
capital contingencies. Staff will manage the CIP Reserve according to the following
practices:
e) The following guideline levels are set forth for the CIP Reserve. These guideline levels
are calculated for each fiscal year of the Financial Planning Period based on the levels of
CIP expense budgeted for that year.
Minimum Level 12 months of budgeted CIP expense
Maximum Level 24 months of budgeted CIP expense
f) Changes in Reserves: Staff is authorized to transfer funds between the CIP Reserve and
the Reserve for Commitments when funds are added to or removed from the Reserve
for Commitments as a result of a change in contractual commitments related to CIP
projects. Any other additions to or withdrawals from the CIP reserve require Council
action.
g) Minimum Level:
i) Funds held in the Reserve for Commitments may be counted as part of the CIP
Reserve for the purpose of determining compliance with the CIP Reserve minimum
guideline level.
ii) If, at the end of any fiscal year, the minimum guideline is not met, staff shall present
a plan to the City Council to replenish the reserve. The plan shall be delivered by the
end of the following fiscal year, and shall, at a minimum, result in the reserve
reaching its minimum level by the end of the next fiscal year. For example, if the CIP
Reserve is below its minimum level at the end of FY 2017, staff must present a plan
by June 30, 2018 to return the reserve to its minimum level by June 30, 2019. In
addition, staff may present, and the Council may adopt, an alternative plan that
takes longer than one year to replenish the reserve, or that does so in a shorter
period of time.
h) Maximum Level: If, at any time, the CIP Reserve reaches its maximum level, no funds
may be added to this reserve. If there are funds in this reserve in excess of the
maximum level staff must propose to transfer these funds to another reserve or return
them to ratepayers in the next Financial Plan. Staff may also seek Council approval to
hold funds in this reserve in excess of the maximum level, if they are held for a specific
future purpose related to the CIP.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Gas Financial Plan
Section 7. Rate Stabilization Reserve
Funds may be added to the Rate Stabilization Reserve by action of the City Council and held
to manage the trajectory of future year rate increases. Withdrawal of funds from the Rate
Stabilization Reserve requires Council action. If there are funds in the Rate Stabilization
Reserve at the end of any fiscal year, any subsequent Gas Utility Financial Plan must result
in the withdrawal of all funds from this Reserve by the end of the Financial Planning Period.
Section 8. Operations Reserve
The Operations Reserve is used to manage normal variations in costs and as a reserve for
contingencies. Any portion of the Gas Utility’s Fund Balance not included in the reserves
described in Section 4-Section 7 above will be included in the Operations Reserve unless this
reserve has reached its maximum level as set forth in Section 8 d) below. Staff will manage
the Operations Reserve according to the following practices:
a) The following guideline levels are set forth for the Operations Reserve. These guideline
levels are calculated for each fiscal year of the Financial Planning Period based on the
levels of Operations and Maintenance (O&M) and commodity expense forecasted for
that year in the Financial Plan.
Minimum Level 60 days of O&M and commodity expense
Target Level 90 days of O&M and commodity expense
Maximum Level 120 days of O&M and commodity expense
b) Minimum Level: If, at the end of any fiscal year, the funds remaining in the Operations
Reserve are lower than the minimum level set forth above, staff shall present a plan to
the City Council to replenish the reserve. The plan shall be delivered within six months
of the end of the fiscal year, and shall, at a minimum, result in the reserve reaching its
minimum level by the end of the following fiscal year. For example, if the Operations
Reserve is below its minimum level at the end of FY 2014, staff must present a plan by
December 31, 2014 to return the reserve to its minimum level by June 30, 2015. In
addition, staff may present, and the Council may adopt, an alternative plan that takes
longer than one year to replenish the reserve.
c) Target Level: If, at the end of any fiscal year, the Operations Reserve is higher or lower
than the target level, any Financial Plan created for the Gas Utility shall be designed to
return the Operations Reserve to its target level by the end of the forecast period.
d) Maximum Level: If, at any time, the Operations Reserve reaches its maximum level, no
funds may be added to this reserve. Any further increase in the Gas Utility’s Fund
Balance shall be automatically included in the Unassigned Reserve described in Section
9, below.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Gas Financial Plan
Section 9. Unassigned Reserve
If the Operations Reserve reaches its maximum level, any further additions to the Gas
Utility’s Fund Balance will be held in the Unassigned Reserve. If there are any funds in the
Unassigned Reserve at the end of any fiscal year, the next Financial Plan presented to the
City Council must include a plan to assign them to a specific purpose or return them to the
Gas Utility ratepayers by the end of the first fiscal year of the next Financial Planning Period.
For example, if there were funds in the Unassigned Reserves at the end of FY 2015, and the
next Financial Planning Period is FY 2016 through FY 2020, the Financial Plan shall include a
plan to return or assign any funds in the Unassigned Reserve by the end of FY 2016. Staff
may present an alternative plan that retains these funds or returns them over a longer
period of time.
Section 10. Intra-Utility Transfers Between Supply and Distribution Funds
The Gas Utility records costs in two separate funds: the Gas Supply Fund and the Gas
Distribution Fund. At the end of each fiscal year staff is authorized to transfer an amount
equal to the difference between Gas Supply Fund costs and Gas Supply Fund Revenues from
the Gas Distribution Fund Operations Reserve to the Gas Supply Fund, or vice versa. Such
transfers shall be included in the ordinance closing the budget for the fiscal year.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Wastewater Collection Financial Plan
WASTEWATER COLLECTION UTILITY RESERVES MANAGEMENT PRACTICES
The following reserves management practices shall be used when developing the Wastewater
Collection Utility Financial Plan:
Section 1. Definitions
e) “Financial Planning Period” – The Financial Planning Period is the range of future fiscal
years covered by the Financial Plan. For example, if the Financial Plan delivered in
conjunction with the FY 2015 budget includes projections for FY 2015 to FY 2019, FY
2015 to FY 2019 would be the Financial Planning Period.
f) “Fund Balance” – As used in these Reserves Management Practices, Fund Balance refers
to the Utility’s Unrestricted Net Assets.
g) “Net Assets” - The Government Accounting Standards Board defines a Utility’s Net
Assets as the difference between its assets and liabilities.
h) “Unrestricted Net Assets” - The portion of the Utility’s Net Assets not invested in capital
assets (net of related debt) or restricted for debt service or other restricted purposes.
Section 2. Reserves
The Wastewater Collection Utility’s Fund Balance is reserved for the following purposes:
c) For existing contracts, as described in Section 3 (Reserve for Commitments)
d) For operating and capital budgets re-appropriated from previous years, as described in
Section 4 (Reserve for Re-appropriations)
e) For cash flow management and contingencies related to the Wastewater Collection
Utility’s Capital Improvement Program (CIP), as described in Section 5 (CIP Reserve)
f) For rate stabilization, as described in Section 6 (Rate Stabilization Reserve)
g) For operating contingencies, as described in Section 7 (Operations Reserve)
h) Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 8 (Unassigned Reserves).
Section 3. Reserve for Commitments
At the end of each fiscal year the Reserve for Commitments will be set to an amount equal
to the total remaining spending authority for all contracts in force for the Wastewater
Collection Utility at that time.
Section 4. Reserve for Re-appropriations
At the end of each fiscal year the Reserve for Re-appropriations will be set to an amount
equal to the amount of all remaining capital and non-capital budgets, if any, that will be re-
appropriated to the following fiscal year in accordance with Palo Alto Municipal Code
Section 2.28.090.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Wastewater Collection Financial Plan
Section 5. CIP Reserve
The CIP Reserve is used to manage cash flow for capital projects and acts as a reserve for
capital contingencies. Staff will manage the CIP Reserve according to the following
practices:
i) The following guideline levels are set forth for the CIP Reserve. These guideline levels
are calculated for each fiscal year of the Financial Planning Period based on the levels of
CIP expense budgeted for that year.
Minimum Level 12 months of budgeted CIP expense
Maximum Level 24 months of budgeted CIP expense
j) Changes in Reserves: Staff is authorized to transfer funds between the CIP Reserve and
the Reserve for Commitments when funds are added or removed from to that reserve
as a result of a change in contractual commitments related to CIP projects. Any other
additions to or withdrawals from the CIP reserve require Council action.
k) Minimum Level:
i) Funds held in the Reserve for Commitments may be counted as part of the CIP
Reserve for the purpose of determining compliance with the CIP Reserve minimum
guideline level.
ii) If, at the end of any fiscal year, the minimum guideline is not met, staff shall present
a plan to the City Council to replenish the reserve. The plan shall be delivered by the
end of the following fiscal year, and shall, at a minimum, result in the reserve
reaching its minimum level by the end of the next fiscal year. For example, if the CIP
Reserve is below its minimum level at the end of FY 2017, staff must present a plan
by June 30, 2018 to return the reserve to its minimum level by June 30, 2019. In
addition, staff may present, and the Council may adopt, an alternative plan that
takes longer than one year to replenish the reserve, or that does so in a shorter
period of time.
l) Maximum Level: If, at any time, the CIP Reserve reaches its maximum level, no funds
may be added to this reserve. If there are funds in this reserve in excess of the
maximum level staff must propose to transfer these funds to another reserve or return
them to ratepayers in the next Financial Plan. Staff may also seek City Council to
approve holding funds in this reserve in excess of the maximum level if they are held for
a specific future purpose related to the CIP.
Section 6. Rate Stabilization Reserve
Funds may be added to the Rate Stabilization Reserve by action of the City Council and held
to manage the trajectory of future year rate increases. Withdrawal of funds from the Rate
Stabilization Reserve requires Council action. If there are funds in the Rate Stabilization
Reserve at the end of any fiscal year, any subsequent Wastewater Collection Utility
Financial Plan must result in the withdrawal of all funds from this Reserve by the end of the
Financial Planning Period.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Wastewater Collection Financial Plan
Section 7. Operations Reserve
The Operations Reserve is used to manage normal variations in costs and as a reserve for
contingencies. Any portion of the Wastewater Collection Utility’s Fund Balance not
included in the reserves described in Section 3-Section 6 above will be included in the
Operations Reserve unless this reserve has reached its maximum level as set forth in Section
7(d) below. Staff will manage the Operations Reserve according to the following practices:
e) The following guideline levels are set forth for the Operations Reserve. These guideline
levels are calculated for each fiscal year of the Financial Planning Period based on the
levels of Operations and Maintenance (O&M) and commodity expense forecasted for
that year in the Financial Plan.
Minimum Level 60 days of O&M and commodity expense
Target Level 105 days of O&M and commodity expense
Maximum Level 150 days of O&M and commodity expense
f) Minimum Level: If, at the end of any fiscal year, the funds remaining in the Operations
Reserve are lower than the minimum level set forth above, staff shall present a plan to
the City Council to replenish the reserve. The plan shall be delivered within six months
of the end of the fiscal year, and shall, at a minimum, result in the reserve reaching its
minimum level by the end of the following fiscal year. For example, if the Operations
Reserve is below its minimum level at the end of FY 2014, staff must present a plan by
December 31, 2014 to return the reserve to its minimum level by June 30, 2015. In
addition, staff may present, and the Council may adopt, an alternative plan that takes
longer than one year to replenish the reserve.
g) Target Level: If, at the end of any fiscal year, the Operations Reserve is higher or lower
than the target level, any Financial Plan created for the Wastewater Collection Utility
shall be designed to return the Operations Reserve to its target level within four years.
h) Maximum Level: If, at any time, the Operations Reserve reaches its maximum level, no
funds may be added to this reserve. Any further increase in the Wastewater Collection
Utility’s Fund Balance shall be automatically included in the Unassigned Reserve
described in Section 8, below.
Section 8. Unassigned Reserve
If the Operations Reserve reaches its maximum level, any further additions to the
Wastewater Collection Utility’s Fund Balance will be held in the Unassigned Reserve. If
there are any funds in the Unassigned Reserve at the end of any fiscal year, the next
Financial Plan presented to the City Council must include a plan to assign them to a specific
purpose or return them to the Wastewater Collection Utility ratepayers by the end of the
first fiscal year of the next Financial Planning Period. For example, if there were funds in the
Unassigned Reserves at the end of FY 2015, and the next Financial Planning Period is
FY 2016 through FY 2020, the Financial Plan shall include a plan to return or assign any
funds in the Unassigned Reserve by the end of FY 2016. Staff may present an alternative
plan that retains these funds or returns them over a longer period of time.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Water Financial Plan
WATER UTILITY RESERVES MANAGEMENT PRACTICES
The following reserves management practices shall be used when developing the Water Utility
Financial Plan:
Section 1. Definitions
i) “Financial Planning Period” – The Financial Planning Period is the range of future fiscal
years covered by the Financial Plan. For example, for the Water Utility Financial Plan
delivered in conjunction with the FY 2015 budget, FY 2015 to FY 2021 is the Financial
Planning Period.
j) “Fund Balance” – As used in these Reserves Management Practices, Fund Balance refers
to the Utility’s Unrestricted Net Assets.
k) “Net Assets” - The Government Accounting Standards Board defines a Utility’s Net
Assets as the difference between its assets and liabilities.
l) “Unrestricted Net Assets” - The portion of the Utility’s Net Assets not invested in capital
assets (net of related debt) or restricted for debt service or other restricted purposes.
Section 2. Reserves
The Water Utility’s Fund Balance is reserved for the following purposes:
i) For existing contracts, as described in Section 3 (Reserve for Commitments)
j) For operating and capital budgets re-appropriated from previous years, as described in
Section 4 (Reserve for Re-appropriations)
k) For cash flow management and contingencies related to the Water Utility’s Capital
Improvement Program (CIP), as described in Section 5 (CIP Reserve)
l) For rate stabilization, as described in Section 6 (Rate Stabilization Reserve)
m) For operating contingencies, as described in Section 7 (Operations Reserve)
n) Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 8 (Unassigned Reserves).
Section 3. Reserve for Commitments
At the end of each fiscal year the Reserve for Commitments will be set to an amount equal
to the total remaining spending authority for all contracts in force for the Water Utility at
that time.
Section 4. Reserve for Re-appropriations
At the end of each fiscal year the Reserve for Re-appropriations will be set to an amount
equal to the amount of all remaining capital and non-capital budgets, if any, that will be re-
appropriated to the following fiscal year in accordance with Palo Alto Municipal Code
Section 2.28.090.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Water Financial Plan
Section 5. CIP Reserve
The CIP Reserve is used to manage cash flow for capital projects and acts as a reserve for
capital contingencies. Staff will manage the CIP Reserve according to the following
practices:
m) The following guideline levels are set forth for the CIP Reserve. These guideline levels
are calculated for each fiscal year of the Financial Planning Period based on the levels of
CIP expense budgeted for that year.
Minimum Level 12 months of budgeted CIP expense
Maximum Level 24 months of budgeted CIP expense
n) Changes in Reserves: Staff is authorized to transfer funds between the CIP Reserve and
the Reserve for Commitments when funds are added or removed from to that reserve
as a result of a change in contractual commitments related to CIP projects. Any other
additions to or withdrawals from the CIP reserve require Council action.
o) Minimum Level:
i) Funds held in the Reserve for Commitments may be counted as part of the CIP
Reserve for the purpose of determining compliance with the CIP Reserve minimum
guideline level.
ii) If, at the end of any fiscal year, the minimum guideline is not met, staff shall present
a plan to the City Council to replenish the reserve. The plan shall be delivered by the
end of the following fiscal year, and shall, at a minimum, result in the reserve
reaching its minimum level by the end of the next fiscal year. For example, if the CIP
Reserve is below its minimum level at the end of FY 2017, staff must present a plan
by June 30, 2018 to return the reserve to its minimum level by June 30, 2019. In
addition, staff may present, and the Council may adopt, an alternative plan that
takes longer than one year to replenish the reserve, or that does so in a shorter
period of time.
p) Maximum Level: If, at any time, the CIP Reserve reaches its maximum level, no funds
may be added to this reserve. If there are funds in this reserve in excess of the
maximum level staff must propose to transfer these funds to another reserve or return
them to ratepayers in the next Financial Plan. Staff may also seek City Council to
approve holding funds in this reserve in excess of the maximum level if they are held for
a specific future purpose related to the CIP.
Section 6. Rate Stabilization Reserve
Funds may be added to the Rate Stabilization Reserve by action of the City Council and
held to manage the trajectory of future year rate increases. Withdrawal of funds from
the Rate Stabilization Reserve requires Council action. If there are funds in the Rate
Stabilization Reserve at the end of any fiscal year, any subsequent Water Utility
Financial Plan must result in the withdrawal of all funds from this Reserve by the end of
the next Financial Planning Period.
Reserves Management Practices Exhibit 8 to Attachment A
Updated by Council with the adoption of the FY 2016 Water Financial Plan
Section 7. Operations Reserve
The Operations Reserve is used to manage normal variations in costs and as a reserve for
contingencies. Any portion of the Water Utility’s Fund Balance not included in the reserves
described in Section 3-Section 6 above will be included in the Operations Reserve unless this
reserve has reached its maximum level as set forth in Section 7(d) below. Staff will manage
the Operations Reserve according to the following practices:
i) The following guideline levels are set forth for the Operations Reserve. These guideline
levels are calculated for each fiscal year of the Financial Planning Period based on the
levels of Operations and Maintenance (O&M) and commodity expense forecasted for
that year in the Financial Plan.
Minimum Level 60 days of O&M and commodity expense
Target Level 90 days of O&M and commodity expense
Maximum Level 120 days of O&M and commodity expense
j) Minimum Level: If, at the end of any fiscal year, the funds remaining in the Operations
Reserve are lower than the minimum level set forth above, staff shall present a plan to
the City Council to replenish the reserve. The plan shall be delivered within six months
of the end of the fiscal year, and shall, at a minimum, result in the reserve reaching its
minimum level by the end of the following fiscal year. For example, if the Operations
Reserve is below its minimum level at the end of FY 2014, staff must present a plan by
December 31, 2014 to return the reserve to its minimum level by June 30, 2015. In
addition, staff may present, and the Council may adopt, an alternative plan that takes
longer than one year to replenish the reserve.
k) Target Level: If, at the end of any fiscal year, the Operations Reserve is higher or lower
than the target level, any Financial Plan created for the Water Utility shall be designed
to return the Operations Reserve to its target level within four years.
l) Maximum Level: If, at any time, the Operations Reserve reaches its maximum level, no
funds may be added to this reserve. Any further increase in the Water Utility’s Fund
Balance shall be automatically included in the Unassigned Reserve described in Section
8, below.
Section 8. Unassigned Reserve
If the Operations Reserve reaches its maximum level, any further additions to the Water
Utility’s Fund Balance will be held in the Unassigned Reserve. If there are any funds in the
Unassigned Reserve at the end of any fiscal year, the next Financial Plan presented to the
City Council must include a plan to assign them to a specific purpose or return them to the
Water Utility ratepayers by the end of the first fiscal year of the next Financial Planning
Period. For example, if there were funds in the Unassigned Reserves at the end of FY 2015,
and the next Financial Planning Period is FY 2016 through FY 2021, the Financial Plan shall
include a plan to return or assign any funds in the Unassigned Reserve by the end of
FY 2016. Staff may present an alternative plan that retains these funds or returns them over
a longer period of time.