HomeMy WebLinkAboutStaff Report 3316
City of Palo Alto (ID # 3316)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 12/17/2012
City of Palo Alto Page 1
Summary Title: Continuation of Palo Alto CLEAN
Title: Finance Committee Recommendation that Council Adopt a Resolution
Approving the Continuation of the Palo Alto Clean Local Energy Accessible
Now (CLEAN) Program
From: City Manager
Lead Department: Utilities
Recommendation
The Finance Committee recommends that the City Council adopt a resolution (Attachment A)
approving the continuation of the Palo Alto CLEAN program with a price of 16.5 cents per
kilowatt-hour (¢/kWh) for a 20-year contract, a program cap of 2 megawatts (MW) of
generating capacity, and a review of the program in one year or at the time the program
capacity is filled.
Executive Summary
In March 2012 the Council adopted Palo Alto CLEAN, a CLEAN (Clean Local Energy Accessible
Now) program, also commonly referred to as a feed-in tariff (FIT) program. Though a large
number of solar developers have expressed interest in Palo Alto CLEAN, no project applications
have been submitted to date. The cost of purchasing renewable energy outside of Palo Alto has
also decreased in this time so that the comparative cost of the program is higher than it was at
the time of adoption.
The UAC recommended continuing the program at the 2012 CLEAN price (14 ¢/kWh) with the
existing 4 MW program cap. However, the Finance Committee recommended reducing the
program cap to 2 MW while increasing the price to 16.5 ¢/kWh. If 2 MW of local solar energy
were contracted through the CLEAN program at 16.5 ¢/kWh, the total costs would be about
$160,000 per year higher than buying renewable energy outside of Palo Alto.
City of Palo Alto Page 2
Background
The Palo Alto CLEAN program was designed to complement the City of Palo Alto Utilities
(CPAU’s) existing photovoltaic (PV) Partners solar rebate program, which was established in
1999 and which has one of the highest participation levels per customer in the country. Palo
Alto CLEAN created an additional alternative for property owners by enabling them to build a
new solar system and sell the energy to CPAU under a long-term, fixed-rate contract rather
than participate in the PV Partners program and use the energy on site. Though a large number
of solar developers have expressed interest in Palo Alto CLEAN, no project applications have
been submitted to date.
Discussion
The 2012 CLEAN price of 14 ¢/kWh for a 20 year contract was insufficient during the first year
of the Palo Alto CLEAN program to facilitate the most common business model used by project
developers, which involves a third-party investor leasing roof space from a property owner.
While it may be sufficient to provide a moderate return to a property owner who owns and
finances a solar system without the involvement of a third party investor, it would require
extensive outreach and education of potential participants.
The Finance Committee Report (Attachment C) includes additional discussion of the program
history and the costs of various alternative designs considered.
Committee Review and Recommendation
On October 3, 2012, the UAC recommended maintaining the current program (4 MW of
capacity with a 14 ¢/kWh price), removing the minimum 100 kW project size, and requiring a
review of the program after one year. Several commissioners expressed their support for
renewable energy within Palo Alto, but were concerned about allowing the CLEAN price to
deviate too far from the City’s avoided cost. Commissioners expressed some concern about
devoting staff resources to marketing the program instead of marketing other successful
programs, such as the PV Partners or energy efficiency programs. One commissioner supported
raising the program’s price to encourage more rapid participation. The draft minutes from the
UAC’s October 3, 2012 meeting are provided in Attachment D.
The Finance Committee discussed the CLEAN program at its November 14, 2012 meeting. At
that meeting several Committee members expressed a desire to generate some participation in
the program within the next year. The Finance Committee unanimously recommended, by a
4-0 vote, raising the price to 16.5 ¢/kWh to increase the likelihood of participation, but
reducing the program cap to 2 MW to limit the impact on utility costs.
City of Palo Alto Page 3
Resource Impact
Staff estimates the current cost of buying renewable energy outside of Palo Alto is 11.6 ¢/kWh
(including transmission) for a 20-year contract. Purchasing the energy generated from 2 MW of
local solar projects at 16.5 ¢/kWh is expected to cost about $160,000 per year more than
buying the same energy outside of Palo Alto. This is equivalent to a 0.1% increase in the
electric utility’s costs.
In addition to the energy costs described above, staff time is associated with marketing and
project review. The project review can be absorbed with existing staff over the life of the
program, and costs will be recovered through project review fees. The additional marketing
will require less than 0.25 FTE of staff time, and may involve an additional budget for marketing
materials, which would be requested through the annual budget process. The marketing work
will be absorbed by existing staff, but will decrease time spent on other account management
and efficiency program delivery activities.
Policy Implications
The recommendation implements Long-term Electric Acquisition Plan (LEAP) Strategy #4, Local
Generation, which states “promote and facilitate the deployment of cost-effective local
resources.” The program will facilitate the deployment of local resources, and the
recommended price, 16.5 ¢/kWh, is set to encourage the development of efficient local solar
projects. It also implements Climate Protection Plan Chapter 3 (Utilities), Goal 3, “Expand use
of renewable energy installed or purchased directly by customers.” The program also
implements Comprehensive Plan Goal N-9, “A clean, efficient, competitively-priced energy
supply that makes use of cost-effective renewable resources” and Policy N-48, “Encourage the
appropriate use of alternative energy technologies.”
Environmental Review
Adoption of this resolution is not subject to California Environmental Quality Act review under
California Public Resources Code section 21080(b)(8), because the rate adopted reflects the
reasonable cost of the CLEAN Program’s operating expenses, including the cost of purchasing
renewable energy from local solar generating systems and the value of local benefits to CPAU
and its ratepayers.
Attachments:
Attachment A: Resolution Approving Amendments to Palo Alto CLEAN (PDF)
Attachment B: Revised Palo Alto CLEAN program rules (PDF)
Attachment C: Staff Report ID 3200 Reso to Continue Palo Alto CLEAN Program - to
Finance 11-14-12 (PDF)
City of Palo Alto Page 4
Attachment D: Excerpted Final UAC Minutes of October 3, 2012 (PDF)
Attachment E: Excerpted Draft Minutes of the Finance Committee Meeting of 11-14-12
(PDF)
*NOT YET APPROVED*
121115 DM 6051788 1
Resolution No. _________
Resolution of the Council of the City of Palo Alto Approving
the Continuation of the Palo Alto Clean Local Energy Accessible Now
(CLEAN) Program
R E C I T A L S
A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible
Now Program, a CLEAN program (or feed-in tariff). Under the CLEAN Program, participants who
build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract
with the City to sell the energy from the system to the City’s electric utility.
B. The first program year of Palo Alto CLEAN commenced on April 2, 2012 and
terminates on the earlier of: 1) the date the City receives applications for contracts for 4 MW of
solar capacity, or 2) December 31, 2012. The City Council has not granted authority to staff to
enter in to contracts after December 31, 2012.
C. There have been no applications for the program to-date, but the City wants to
continue the program past December 31, 2012.
The Council of the City of Palo Alto (“City”) RESOLVES:
SECTION 1. Revised Program Eligibility Requirements for Palo Alto CLEAN are
adopted as shown in Exhibit A.
SECTION 2. The Council hereby authorizes the City Manager or his designee to sign
contracts for the output of one or more solar energy generating facilities meeting the Program
Eligibility Requirements described in Section 1. The total CLEAN Program cost commitment
made by the City during the life of the Program shall not exceed $16,700,000.
SECTION 3. The Council finds that the City of Palo Alto Utilities’ (CPAU’s) purchase of
energy from local renewable sources provides additional local benefits to CPAU when
compared to energy purchased outside Palo Alto, which in turn become benefits to CPAU
ratepayers and the local community. These benefits include a reduction in CPAU’s costs and
energy losses associated with energy transmission and distribution, and a reduction in CPAU’s
capacity requirements. When the City purchases energy from local sources, a portion of the
City’s electric expenditures remain within the community, which provides revenue for local
economic development. Locating generation near load centers can also reduce the need for
new transmission lines, thus reducing the environmental impacts of the electric system and
improving reliability in transmission-constrained regions like the Greater Bay Area. The Council
therefore finds that continued implementation of the Palo Alto CLEAN Program is a reasonable
cost of providing electric service to CPAU’s electric customers.
*NOT YET APPROVED*
121115 DM 6051788 2
SECTION 4. The Council finds that the adoption of this resolution is not subject to
California Environmental Quality Act review under California Public Resources Code section
21080(b)(8), because the rate adopted reflects the reasonable cost of the CLEAN Program’s
operating expenses, including the cost of purchasing renewable energy from local solar
generating systems, and the value of local benefits to CPAU and its ratepayers as described in
SECTION 3 of this resolution.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ _______________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _______________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM )
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS PROGRAM YEAR 2012
Effective January 1, 2013
A. PARTICIPATION ELIGIBILITY REQUIREMENT:
The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) , Program
Year 2012, is open to participation by any Eligible Renewable Energy Resource, as defined in
Section D.45, with a total generation capacity of at least 100 kilowatts (kW)..
B. TERRITORIALITY REQUIREMENT:
In order to be eligible to participate in the CLEAN Program during Program Year 2012, an Eligible
Renewable Energy Resource must be located in and generating electricity from within the utility
service area of the City of Palo Alto.
C. PRICES FOR CERTIFIED RENEWABLE POWER:
The following purchase prices (“Program Prices”) shall apply to the electricity produced by an
Eligible Renewable Energy Resource participating in the Program starting in Program Year 2012,
except as provided in Sections D.5 D.3 and D.6.
Solar generation facilities:
Contract Term Price
10 years 12.360 ¢ / kWh
15 years 13.216 ¢ / kWh
20 years 14.00316.5 ¢ / kWh
D. ADDITIONAL RULES AND REQUIREMENTS:
1. The owner of the Eligible Renewable Energy Resource shall enter into a Eligible Renewable
Energy Resource Power Purchase Agreement, Eligible Renewable Energy Resource (“PPA”)
with the City of Palo Alto.
2. The last Eligible Renewable Energy Resource that is eligible for participation in the CLEAN
Program during Program Year 2012 will be the Eligible Renewable Energy Resource that first
causes the total capacity of Eligible Renewable Energy Resources receiving payments under
the Program to exceed four (4) two (2) MW (the “Program Capacity”).
3. An application for participation in the CLEAN Program to sell output to the City (the
“Application”) may be submitted at any time. Applications will be considered in the order
received. during the month. Any number of PPAs may be awarded at the end of each
month. If the City can accept all Applications submitted without exceeding the Program
Capacity, then all Applications will be accepted at the applicable Program Price(s). If, in any
month, the City cannot accept all Applications submitted during that month without
exceeding the Program Capacity, then the PPAs will be awarded in the following order of
precedence:
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM )
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS PROGRAM YEAR 2012
Effective January 1, 2013
a. The City will provide notification to all applicants that apply in the current month
that there is insufficient capacity to accept all Applications. All applicants that apply
for participation in the current month will be afforded two (2) weeks from the
notification date to submit bid prices at which electricity from its proposed resource
will be sold to the City. The bid price must be less than the price for the applicable
term described in Section C, or the City will reject or will be deemed to have
rejected the bid price.
b. The City will award one or more PPAs based upon the proposed bid prices. The first
award will be made to the applicant offering the lowest bid price and any
subsequent award(s) will be made to the next higher prices, until the Program
Capacity has been attained.
c. Nothing in this ‘bid price’ process will affect the status of applications accepted in
previous months.
2. In order for an Eligible Renewable Energy Resource to be eligible for participation in the
CLEAN Program during Program Year 2012, the City must receive an Application on or
before December 31, 2012 or, if that day does not fall on a regular business day of the City,
on the business day immediately preceding December 31, 2012.
4. For the purposes of Program Year 2012, an Eligible Renewable Energy Resource means an
electric generating facility that: (a) is defined and qualifies as an “eligible renewable energy
resource” under California Public Utilities Code Section 399.12(e) and California Public
Resources Code Section 25471, respectively, as amended; (b) uses a solar fuel source; and
(c) meets the territoriality requirement set forth in Section B.
5. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable Energy
Resource shall be required within six (6) months of the commercial operation date of the
electric generating facility; the facility’s owner shall provide written notice of the CEC’s
certification to the City within ten (10) business days. If the City takes delivery of the
facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity cannot be
considered in fulfillment of the City’s RPS requirements, the price that the City will pay for
the facility’s electricity (the “Pre-Certification Price”) will be set at 65% of the applicable
Contract Price. Upon the CEC’s certification of the facility, the City will pay the applicable
Contract Price for the facility’s electricity delivered on and after the date of the CEC’s
certification. The City will “true-up”, as appropriate, the difference between the Contract
Price and the Pre-Certification Price for any electricity received and paid for by the City,
effective as of the date of certification of the Resource.
6. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN Program,
then that Resource shall not be entitled to receive any rebate or other incentive from the
City’s Photovoltaic (PV) Partners Program, Power from Local Ultra-Clean Generation
Incentive (PLUG-In) Program, or other similar programs funded by the City’s ratepayers. To
the extent any rebate or incentive is paid to the owner of the Resource, that rebate or
incentive shall be disgorged and refunded to the City if the Eligible Renewable Energy
Resource continues to participate in the CLEAN Program. If a rebate or an incentive has
been paid to the Eligible Renewable Energy Resource, then that Resource shall be ineligible
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM )
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS PROGRAM YEAR 2012
Effective January 1, 2013
to participate in the CLEAN Program.
7. All electricity generated by the Eligible Renewable Energy Resource shall be delivered only
to the City. No portion of the electricity may be used to offset any load of the generating
facility (other than incidental loads associated with operating the generating facility).
8. A metering and administration fee of $34.73/month will be charged to each Eligible
Renewable Energy Resource that participates in the CLEAN Program during Program Year
2012. . See Utilities Rate Schedule E-15 (Electric Service Connection Fees).
City of Palo Alto (ID # 3200)
Finance Committee Staff Report
Report Type: Action ItemsMeeting Date: 11/14/2012
City of Palo Alto Page 1
Summary Title: Resolution to Continue Palo Alto CLEAN Program
Title: Utilities Advisory Commission Recommendation that Council Adopt a
Resolution Approving the Continuation of the Palo Alto Clean Local Energy
Accessible Now (CLEAN) Program
From: City Manager
Lead Department: Utilities
Recommendation
Staff and the Utilities Advisory Commission (UAC) recommend that the Finance Committee
recommend that the City Council adopt a resolution (Attachment A) approving the continuation
of the Palo Alto CLEAN program, with a review of the program by the UAC in one year.
Executive Summary
In March 2012 the Council adopted Palo Alto CLEAN, a CLEAN (Clean Local Energy Accessible
Now program (also commonly referred to as a feed-in tariff, or FIT, program). The program was
designed to complement the City of Palo Alto Utilities (CPAU’s) existing photovoltaic (PV)
Partners solar rebate program, which was established in 1999 and which has one of the highest
participation levels per customer in the country. Palo Alto CLEAN created an additional
alternative for property owners by enabling them to build a new solar system and sell the
energy to CPAU under a long-term, fixed-rate contract rather than participate in the PV
Partners program and use the energy on site.
Though a large number of solar developers have expressed interest in Palo Alto CLEAN, no
project applications have been submitted to date. Staff believes the current price (14 cents per
kilowatt-hour (¢/kWh) for a 20 year contract) is insufficient at this time to facilitate the most
common business model used by project developers, which involves a 3rd party investor
leasing roof space from a property owner. It may, however, be sufficient to provide a moderate
return to a property owner who owns and finances a solar system without the involvement of a
third party investor. A property owner using this business model is participating in Marin
Energy Authority’s FIT, which is priced at roughly 13.7 ¢/kWh.
City of Palo Alto Page 2
Staff therefore recommends continuing Palo Alto CLEAN at the current price and making it
available to any property owner interested in participating. CPAU staff would increase its
marketing efforts to commercial customers and property owners, both for the PV Partners
program and Palo Alto CLEAN, and will also investigate ways to help commercial customers
decrease the cost of installing solar. Staff expects that most growth in commercial solar
installations over the next 2-3 years will come from customers participating in the PV Partners
program, with Palo Alto CLEAN participation increasing slowly as property owners are educated
about how to make the program work for them. Palo Alto CLEAN will be available to residential
customers as well, but staff expects PV Partners will continue to be their preferred program.
When it was adopted, Palo Alto CLEAN was considered nearly cost neutral, since the 14 ¢/kWh
price was close to 13.55 ¢/kWh, staff’s estimate of the cost of buying renewable energy outside
Palo Alto and transmitting it here. However, since the program was adopted, the price of
renewable energy delivered to Palo Alto has dropped to roughly 11.6 ¢/kWh. Based on its
experience and research, staff believes that 14 ¢/kWh is the lowest price that can make local
solar projects viable. This means that buying energy from 4 MW of local solar projects through
the Palo Alto CLEAN program will cost about $158,000 per year more than buying the same
energy outside of Palo Alto. This is equivalent to a 0.1% increase in the electric utility’s costs.
At its October 2012 meeting, the UAC supported the proposal to continue the Palo Alto CLEAN
Program at the same price.
Background
CPAU has a long history of supporting solar power. It initiated the PV Partners program in
1999, and in 2007 the program was expanded to meet the requirements of the State’s Million
Solar Roofs Bill (Senate Bill 1, 2006). Under the PV Partners program CPAU provides rebates to
residential and commercial customers who install solar for their own use. The program has
been successful at stimulating solar development, with more than 3.4 megawatts (MW) of local
solar capacity installed by nearly 500 participants over the program’s life. New participants
have entered the program at a rate of 50-100 per year in recent years, and Palo Alto is one of
the top ten utilities nationwide in installations per customer.
Through PV Partners CPAU already provides substantial financial support for local solar. The
total CPAU SB1 program budget for 2008-2017 is $13 million and the total program goal is 6.6
MW. When this goal is achieved the energy generated by the program annually will be 11.2
GWh (1.1% of Palo Alto load). The average annual cost to ratepayers of these rebate payments
is roughly $1.1 million per year, which does not include the cost of administration or the lost
distribution system revenue associated with net metering. The rate impact of this program is
City of Palo Alto Page 3
roughly 1-1.5% per year while rebates are being paid. Once all rebates have been paid the rate
impact of lost revenue due to net metering will continue to be 0.3-0.5% per year. Due to SB1,
PV Partners is now a state mandated program, and regardless of the rate impact, CPAU is
required to offer it.
In April 2012 CPAU expanded its support for local distributed generation by launching Palo Alto
CLEAN. That program expanded the options available to property owners by enabling them to
sell energy directly to CPAU under a long term contract instead of using the energy on site. This
business model facilitates certain types of projects that could not happen otherwise, such as
installations by property owners who have no use for on-site solar energy or whose tenants are
uninterested in using the energy. It also can lower certain project costs. For example, banks
consider publicly owned utilities to be good counterparties for energy purchases so project
owners can more easily obtain financing.
In the first few months Palo Alto CLEAN generated a high level of interest from solar developers
who wanted to lease rooftops in Palo Alto in order to build a solar system and sell the energy to
CPAU. There was also some interest from property owners looking to invest in a system on
their own rooftops. It soon became apparent, though, that the 14 ¢/kWh price was insufficient
to enable 3rd party developers to earn their target returns while still offering attractive rooftop
lease rates. The property owners who have investigated the program to-date either chose not
to participate or chose to evaluate projects under the PV Partners program instead. The level
of new interest has decreased, though staff still regularly receives new inquiries from
developers and property owners.
Despite the lack of participation, there have been some positive results from the program. By
adopting the program CPAU prompted developers to take a serious look at the cost of
developing solar projects in Palo Alto, and some of them shared that information with CPAU
staff. Staff has gained considerable insight into the cost of building large solar systems in Palo
Alto. The program also created new excitement around local solar, prompting several property
owners to evaluate whether solar could be feasible for them. At least one large property owner
is expected to proceed with a PV Partners application as a result. In addition, many public
utilities across the country have called to discuss how to follow Palo Alto’s lead and develop a
CLEAN program in their own service areas.
There are encouraging indications that Palo Alto CLEAN, as currently priced, will generate some
participation in the future. As mentioned above, the 14 ¢/kWh price was insufficient to enable
a business model involving a 3rd party developer, but if a property owner invested in a system
partially financed with debt, a project could generate a reasonable return. In Marin County the
owner of the San Rafael Airport recently chose to participate in Marin Energy Authority’s (MEA)
FIT program by installing a 1 MW project on the rooftop of his hangers. The property owner
City of Palo Alto Page 4
financed the project himself, assisted by a loan from a local bank. With those terms the project
generated a modest return at the FIT price MEA offered, 13.7 ¢/kWh, and showed that a
project can work at that price when properly structured. MEA’s FIT program commenced in
late 2010, but the San Rafael Airport project did not get started until 2012. A similar project
may work in Palo Alto, but as in Marin, it may take some time to find the right site or collection
of sites.
Based on staff’s analysis and the result of the MEA FIT, staff believes 14 ¢/kWh is a reasonable
price for the program. Still, even if it is possible to see results at the current Palo Alto CLEAN
price of 14 ¢/kWh, the City must decide whether to seek out such projects. At the program’s
inception the Palo Alto CLEAN price was considered nearly cost-neutral, but the results of
CPAU’s recent renewable RFP, as well as publicly available data from other renewable
procurements in the state, has revealed that the price of renewable energy has dropped since
staff’s original calculations. Staff now estimates the cost of buying renewable energy outside of
Palo Alto and transmitting it here to be 11.6 ¢/kWh, compared to the Palo Alto CLEAN price of
14 ¢/kWh.
Discussion
The first Palo Alto CLEAN program year expires on December 31, 2012, and staff has no
authority to make purchases after that date. Staff recommends that Council authorize the
program’s continuation, but rather than changing the price, staff recommends giving the
program time to work at the current price. The attached resolution (Attachment A) would
extend the program deadline until the 4 MW program capacity is filled. Staff also recommends
removing the minimum project size of 100 kW. If Council adopts this strategy, staff predicts
that program participation will increase slowly, with a modest impact on utility costs (see
“Program Cost,” below). In 2013 and 2014 there might be minimal or no uptake. During this
time growth in local distributed generation would come primarily from the PV Partners
program, which still has over 4 MW of capacity available. Meanwhile, staff would reach out to
local property owners and educate them on the benefits of investing in a Palo Alto CLEAN
project while looking for opportunities to help customers lower the cost of installation. Staff
believes this recommendation represents the best compromise between two competing
objectives: 1) expanding support for local distributed generation and 2) pursuing the least
costly method of fulfilling the CPAU electric portfolio objectives.
Program Cost
Buying the energy from 4 MW of local solar generating systems through Palo Alto CLEAN would
be more expensive than buying the same amount of renewable energy from solar projects
outside of Palo Alto, but because the amount of energy is small, the total impact on the utility’s
costs would also be small. Using the cost of renewable energy as a baseline, and assuming the
full program capacity is used, the City’s cost of renewable energy would be an additional
City of Palo Alto Page 5
$158,000 per year. This is equivalent to a 0.1% increase in the electric utility’s costs. See
Table 2 in the following section for examples of bills for various customer types and how those
costs compare to their monthly bills.
This represents a change from CPAU staff’s original assessment of the program. When the price
for the 2012 Palo Alto CLEAN program was adopted, it was determined to be nearly cost
neutral. In late 2011, the cost of buying renewable energy outside of Palo Alto and transmitting
it here was estimated to be 13.55 ¢/kWh. This price is referred to as the City’s “avoided cost,”
since these costs are avoided by buying local renewable energy. Council approved a
0.45 ¢/kWh adder to bring the Palo Alto CLEAN program price to 14 ¢/kWh (for a 20 year
contract term). The adopted Palo Alto CLEAN price was so close to the CPAU avoided costs that
the program could be considered to have negligible impact on the utility’s costs. Since then,
however, prices for renewable energy have fallen considerably as evidenced by proposals
submitted into the last Request for Proposals (RFP) for renewable energy. Based on that
indication of the cost of renewable energy outside of Palo Alto, the avoided costs are about
11.6 ¢/kWh. This means that the Palo Alto CLEAN price of 14 ¢/kWh is 2.4 ¢/kWh higher than
the cost of buying renewable energy outside of Palo Alto and paying the transmission and other
related costs to bring it here.
There are several reasons that local solar projects are more expensive than remote solar
projects:
1. Palo Alto does not have developable open land, and installing solar on rooftops is more
expensive than installing it on the ground.
A number of solar developers have noted that the cost associated with leasing a roof is
higher than the cost of purchasing open land. Many large solar projects outside of Palo Alto
are located on disturbed land (marginal farmland) outside of urban areas. The land costs
associated with these projects are far lower than the lease costs associated with a rooftop.
2. Owners of office space require a higher rate of return for the use of their rooftops than
owners of warehouses or other similar facilities.
Most of the facilities in California that host large wholesale commercial solar installations
are warehouses or similar facilities with large rooftops, little rooftop equipment, and low
lease rates. The revenue owners of these facilities receive for hosting a solar system is
small but substantial when compared to the revenue from leasing the facility itself. In Palo
Alto, however, Class A office facilities command much higher revenue per square foot, and
the facilities themselves are generally much smaller than a warehouse. The revenue from
leasing a solar system can appear relatively small, and therefore not worth the potential
problems associated with a rooftop lease. Depending on the contract terms, a long term
City of Palo Alto Page 6
rooftop lease can reduce the property owner’s flexibility in reconfiguring the site. Office
space owners are also concerned about potential disruptions to tenants during installation
of the solar system, something that is less of a problem with other types of facilities.
3. Remote solar projects can be located where there is more sun.
Palo Alto receives excellent amounts of solar energy, but other parts of California receive
even more. This can make a significant difference in the price of solar energy because the
developer can generate more energy from every panel they install.
Cost of Solar Installations in Palo Alto
Staff has estimated the cost of installing solar in Palo Alto based on discussions with developers,
property owners, other utilities, and using data from existing systems installed in Palo Alto and
throughout the Bay Area. The prices below assume that the projects will be financed by a 3rd
party developer leasing a rooftop, or by a customer or facility owner willing to commit capital
to the project. They do not assume any debt financing. While larger systems can achieve
certain economies of scale on a per unit (kW) basis, the cost of installing small commercial solar
systems (<30 kW) and residential systems is substantially higher than the cost of installing the
larger systems that have been evaluated for the existing Palo Alto CLEAN program.
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
2013 2014 2015 2016
$/
k
W
h
Cost of solar in Palo Alto
Residential
Small Commercial
Large Commercial
RPS-eligible
Avoided Cost
Brown Power
Avoided Cost
Alternatives Considered
In developing its recommendation, staff considered several other alternatives for the future of
Palo Alto CLEAN. The first two alternatives listed below are priced to attract rapid participation
City of Palo Alto Page 7
by efficient 3rd party developers. The prices would be high enough to provide an attractive
return to a facility owner who invests in an efficient, low-priced solar system, and would also be
enough to enable a 3rd party developer to earn a moderate return while paying a moderate
lease rate for a Palo Alto rooftop. These program alternatives increase the chance of rapid
uptake in the program by setting a price that is attractive to those facility owners willing to
commit capital to build their own solar systems, but also provides enough of a return to enable
3rd party developers to lease rooftops on facilities whose owners are not willing to commit
capital.
The third alternative is the staff recommendation, which relies on efficient systems financed
partially by property owners and partially using debt financing. The fourth and fifth alternatives
minimize CPAU’s cost and eventual ratepayer impact, but are expected to result in little or no
program uptake.
The five alternatives are described below:
1) Program that accommodates 3rd party developers, with prices differentiated by
system size: Adopt a CLEAN program with different prices for residents, small
commercial property owners, and large commercial property owners. The program
would include separate capacity allocations for large systems, small systems, and
residential systems, and the price would be set to reflect the different costs of
development for each type of system (32.4 ¢/kWh for residents, 28.1 ¢/kWh for small
commercial customers less than 35 kW in size, and 18.8 ¢/kWh for large commercial
customers for a 20-year contract).
2) Program that accommodates 3rd party developers, with a single price: Adopt a CLEAN
program intended to promote participation primarily by large commercial property
owners. The program would be open to all property owners, but it would be priced so
that only larger systems or aggregations of smaller systems would be economically
feasible (18.8 ¢/kWh for a 20-year contract).
3) Current Program (Staff Recommendation): Extend the current program at the same
rate (14 ¢/kWh for a 20-year contract).
4) Cost-neutral Program: Extend Palo Alto CLEAN, but price it at the cost of buying
renewable energy and transporting it to Palo Alto (11.6 ¢/kWh for a 20-year contract).
5) No Program: Eliminate Palo Alto CLEAN.
City of Palo Alto Page 8
Staff believes that Program Alternatives 1 and 2 would be rapidly subscribed, but would cost
substantially more than the other alternatives. Program Alternative 3, the staff
recommendation, may take some time to generate results, but has a very small cost and
eventual rate impact compared to adding other types of renewable generation to the supply
portfolio. Program Alternative 4 does not increase utility costs, but staff believes the price
would not be adequate to generate any response.
The costs of the five program alternatives are summarized in Table 1 below, and are compared
to the CPAU avoided cost of energy. The annual budgets below are calculated based on a
4 MW program, but they vary linearly, so doubling the program size would double the budgets
and rate impacts below, and halving it would halve the budgets and rate impacts.
TABLE 1: Annual Cost of Program Alternatives
Program
Alternative Description
Energy Cost
(₵/kWh)
Annual Excess Cost*
$ and % increase in utility costs
1 Accommodates 3rd party
development, price varies
based on system size
25.0** $874,000 (0.7%)
2 Accommodates 3rd party
development, single price
18.8 $483,000 (0.4%)
3 Extend the current
program at the current
price
14.0 $158,000 (0.1%)
4 Extend the program,
reprice at avoided cost
11.6 N/A
5 Eliminate the program
N/A N/A
Renewable
Avoided Cost
Buying renewable energy
outside Palo Alto
11.6 N/A
Non-renewable
Avoided Cost
Buying non-renewable
energy outside Palo Alto
9.7 N/A
* This figure represents the cost of each program alternative compared to the cost of buying renewable energy
outside of Palo Alto.
** Average energy cost for this program alternative. Detailed costs: $324/MWh for the residential portion,
$281/MWh for the small commercial portion (35 kW or less) and $188 for the large commercial portion (>35 kw).
City of Palo Alto Page 9
To give some perspective on the costs for each program alternative, staff has prepared Table 2,
below, which shows what would happen if the annual costs of each program alternative were
allocated to customers on a per-kWh basis. These costs are calculated for a 4 MW program, but
it is possible to vary the program size. The costs vary linearly, so doubling the program size
would double the costs below, and halving it would halve the costs.
TABLE 2: Program Costs Compared to Customer Bills
Customer Type /
Monthly
Consumption
# of
Customers
Current
Average
Monthly Bill
Monthly Program Costs by Alternative*:
1 2 3 4 5
Residential Customers:
Summer (365 kWh) 25,678 $37 $0.33 $0.18 $0.06 $0 $0
Winter (453 kWh) 25,678 $48 $0.41 $0.23 $0.07 $0 $0
Commercial Customers:
0-1,000 kWh 1,844 $45 $0.30 $0.17 $0.06 $0 $0
1,001-8,000 kWh 1,481 $427 $3 $2 $1 $0 $0
8,001-100,000 kWh 606 $3,198 $27 $15 $4 $0 $0
> 100,000 kWh 101 $48,893 $405 $224 $74 $0 $0
*If allocated on a per-kWh basis.
Resource Impact
In addition to the energy costs described above, the staff recommendation will require staff
time associated with marketing and project review. The project review can be absorbed with
existing staff over the life of the program, and costs will be recovered through project review
fees. The additional marketing will require less than 0.25 FTE of staff time, and may involve an
additional budget for marketing materials, which would be requested through the annual
budget process. The marketing work will be absorbed by existing staff, but will decrease time
spent on other account management and efficiency program delivery.
Commission Review and Recommendation
On October 3, 2012, the UAC reviewed the staff proposal and on a 5-1 vote (with Commissioner
Waldfogel voting no) recommended that Council approve the staff recommendation with a
review of the program after one year. Several commissioners expressed their support for
renewable energy within Palo Alto, but were concerned about allowing the CLEAN price to
deviate too far from the City’s avoided cost. Commissioners expressed some concern about
City of Palo Alto Page 10
devoting staff resources to marketing the program instead of marketing other successful
programs, such as the PV Partners or energy efficiency programs. One commissioner supported
raising the program’s price to encourage more rapid participation. The draft minutes from the
UAC’s October 3, 2012 meeting are provided in Attachment C.
Policy Implications
The staff recommendation implements Long-term Electric Acquisition Plan (LEAP) Strategy #4,
Local Generation, which states “promote and facilitate the deployment of cost-effective local
resources.” The program will facilitate the deployment of local resources, but the
recommended price, 14 ¢/kWh, will only support the most efficient local solar projects. It also
implements Climate Protection Plan Chapter 3 (Utilities), Goal 3, “Expand use of renewable
energy installed or purchased directly by customers.” The program also implements
Comprehensive Plan Goal N-9, “A clean, efficient, competitively-priced energy supply that
makes use of cost-effective renewable resources” and Policy N-48, “Encourage the appropriate
use of alternative energy technologies.”
Environmental Review
The adoption of this resolution does not constitute a project under the California
Environmental Quality Act, California Public Resources Code section 21080, subdivision (b)(8).
Attachments:
Attachment A: Resolution Approving Amendments to Palo Alto CLEAN (PDF)
Attachment B: Revised Palo Alto CLEAN program rules (PDF)
Attachment C: Draft Excerpt of October 3, 2012 UAC Meeting Minutes (PDF)
*NOT YET APPROVED*
120925 DM 6051788
Resolution No. _________
Resolution of the Council of the City of Palo Alto Approving the
Continuation of The Palo Alto Clean Local Energy Accessible Now (CLEAN)
Program
R E C I T A L S
A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible
Now Program, a CLEAN program (or feed-in tariff). Under the CLEAN Program, participants who
build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract
with the City to sell the energy from the system to the City’s electric utility.
B. The first program year of Palo Alto CLEAN commenced on April 2, 2012 and
terminates on the earlier of: 1) the date the City receives applications for contracts for 4 MW of
solar capacity, or 2) December 31, 2012. The City Council has not granted authority to staff to
enter in to contracts after December 31, 2012.
C. There have been no applications for the program to-date, but the City wants to
continue the program past December 31, 2012.
The Council of the City of Palo Alto (“City”) RESOLVES:
SECTION 1. Revised Program Eligibility Requirements for Palo Alto CLEAN are
adopted as shown in Exhibit A.
SECTION 2. The Council hereby authorizes the City Manager or his designee to sign
contracts for the output of one or more solar energy generating facilities meeting the Program
Eligibility Requirements described in Section 1. The total CLEAN Program cost commitment
made by the City during the life of the Program shall not exceed $23,600,000.
SECTION 3. The Council finds that the City of Palo Alto Utilities’ (CPAU’s) purchase of
energy from local renewable sources provides additional local benefits to CPAU when
compared to energy purchased outside Palo Alto, which in turn become benefits to CPAU
ratepayers and the local community. These benefits include a reduction in CPAU’s costs and
energy losses associated with energy transmission and distribution, and a reduction in CPAU’s
capacity requirements. When the City purchases energy from local sources, a portion of the
City’s electric expenditures remain within the community, which provides revenue for local
economic development. Locating generation near load centers can also reduce the need for
new transmission lines, thus reducing the environmental impacts of the electric system and
improving reliability in transmission-constrained regions like the Greater Bay Area. The Council
therefore finds that continued implementation of the Palo Alto CLEAN Program is a reasonable
cost of providing electric service to CPAU’s electric customers.
*NOT YET APPROVED*
120925 DM 6051788
SECTION 4. The Council finds that the adoption of this resolution does not constitute
a project under the California Environmental Quality Act, California Public Resources Code
section 21080, subdivision (b)(8).
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ _______________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ _______________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM )
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS PROGRAM YEAR 2012
Effective January 1, 2013
A. PARTICIPATION ELIGIBILITY REQUIREMENT:
The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) , Program
Year 2012, is open to participation by any Eligible Renewable Energy Resource, as defined in
Section D.45, with a total generation capacity of at least 100 kilowatts (kW)..
B. TERRITORIALITY REQUIREMENT:
In order to be eligible to participate in the CLEAN Program during Program Year 2012, an Eligible
Renewable Energy Resource must be located in and generating electricity from within the utility
service area of the City of Palo Alto.
C. PRICES FOR CERTIFIED RENEWABLE POWER:
The following purchase prices (“Program Prices”) shall apply to the electricity produced by an
Eligible Renewable Energy Resource participating in the Program starting in Program Year 2012,
except as provided in Sections D.5 D.3 and D.6.
Solar generation facilities:
Contract Term Price
10 years 12.360 ¢ / kWh
15 years 13.216 ¢ / kWh
20 years 14.003 ¢ / kWh
D. ADDITIONAL RULES AND REQUIREMENTS:
1. The owner of the Eligible Renewable Energy Resource shall enter into a Eligible Renewable
Energy Resource Power Purchase Agreement, Eligible Renewable Energy Resource (“PPA”)
with the City of Palo Alto.
2. The last Eligible Renewable Energy Resource that is eligible for participation in the CLEAN
Program during Program Year 2012 will be the Eligible Renewable Energy Resource that first
causes the total capacity of Eligible Renewable Energy Resources receiving payments under
the Program to exceed four (4) MW (the “Program Capacity”).
3. An application for participation in the CLEAN Program to sell output to the City (the
“Application”) may be submitted at any time. Applications will be considered in the order
received. during the month. Any number of PPAs may be awarded at the end of each
month. If the City can accept all Applications submitted without exceeding the Program
Capacity, then all Applications will be accepted at the applicable Program Price(s). If, in any
month, the City cannot accept all Applications submitted during that month without
exceeding the Program Capacity, then the PPAs will be awarded in the following order of
precedence:
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM )
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS PROGRAM YEAR 2012
Effective January 1, 2013
. The City will provide notification to all applicants that apply in the current month
that there is insufficient capacity to accept all Applications. All applicants that apply
for participation in the current month will be afforded two (2) weeks from the
notification date to submit bid prices at which electricity from its proposed resource
will be sold to the City. The bid price must be less than the price for the applicable
term described in Section C, or the City will reject or will be deemed to have
rejected the bid price.
. The City will award one or more PPAs based upon the proposed bid prices. The first
award will be made to the applicant offering the lowest bid price and any
subsequent award(s) will be made to the next higher prices, until the Program
Capacity has been attained.
. Nothing in this ‘bid price’ process will affect the status of applications accepted in
previous months.
8. In order for an Eligible Renewable Energy Resource to be eligible for participation in the
CLEAN Program during Program Year 2012, the City must receive an Application on or
before December 31, 2012 or, if that day does not fall on a regular business day of the City,
on the business day immediately preceding December 31, 2012.
9.4. For the purposes of Program Year 2012, an Eligible Renewable Energy Resource means an
electric generating facility that: (a) is defined and qualifies as an “eligible renewable energy
resource” under California Public Utilities Code Section 399.12(e) and California Public
Resources Code Section 25471, respectively, as amended; (b) uses a solar fuel source; and
(c) meets the territoriality requirement set forth in Section B.
10.5. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable Energy
Resource shall be required within six (6) months of the commercial operation date of the
electric generating facility; the facility’s owner shall provide written notice of the CEC’s
certification to the City within ten (10) business days. If the City takes delivery of the
facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity cannot be
considered in fulfillment of the City’s RPS requirements, the price that the City will pay for
the facility’s electricity (the “Pre-Certification Price”) will be set at 65% of the applicable
Contract Price. Upon the CEC’s certification of the facility, the City will pay the applicable
Contract Price for the facility’s electricity delivered on and after the date of the CEC’s
certification. The City will “true-up”, as appropriate, the difference between the Contract
Price and the Pre-Certification Price for any electricity received and paid for by the City,
effective as of the date of certification of the Resource.
11.6. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN
Program, then that Resource shall not be entitled to receive any rebate or other incentive
from the City’s Photovoltaic (PV) Partners Program, Power from Local Ultra-Clean
Generation Incentive (PLUG-In) Program, or other similar programs funded by the City’s
ratepayers. To the extent any rebate or incentive is paid to the owner of the Resource, that
rebate or incentive shall be disgorged and refunded to the City if the Eligible Renewable
Energy Resource continues to participate in the CLEAN Program. If a rebate or an incentive
has been paid to the Eligible Renewable Energy Resource, then that Resource shall be
PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM )
PROGRAM ELIGIBILITY RULES AND REQUIREMENTS PROGRAM YEAR 2012
Effective January 1, 2013
ineligible to participate in the CLEAN Program.
12.7. All electricity generated by the Eligible Renewable Energy Resource shall be delivered only
to the City. No portion of the electricity may be used to offset any load of the generating
facility (other than incidental loads associated with operating the generating facility).
13.8. A metering and administration fee of $34.73/month will be charged to each Eligible
Renewable Energy Resource that participates in the CLEAN Program during Program Year
2012. . See Utilities Rate Schedule E-15 (Electric Service Connection Fees).
Excerpted Draft Minutes of the October 3, 2012 UAC Meeting
ITEM 1: ACTION: UAC Recommendation that Council Adopt a Resolution Approving the
Continuation of the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program
Public Comment:
Craig Lewis, representing the CLEAN Coalition, stated that the Palo Alto CLEAN has had no
takers so far, but that the program could be tweaked to be successful. The CLEAN Coalition had
hoped when the program started that property owners rather than developers would develop
and own projects, eliminating the need for a lease payment. He said the price offered seems to
have been too low and developers and that property owners were not attracted by the rate of
return from a project in Palo Alto. He believed property owners would be more interested in
leasing their rooftops to a third party developer. He stated that the lease payment to building
owners translates to a 3 cent/kilowatt-hour (₵/kWh) increase in price so that a price of
17 ₵/kWh or higher would be required to get local solar projects. He recommended
implementing a Volumetric Price Adjustment (VPA) whereby non-participation in the program
over some period of time (e.g. a month) would result in an automatic increase in the price until
participants were attracted.
Resource Planner Jon Abendschein provided a summary of the written report. He stated that
the City has supported local solar photovoltaic (PV) system installations since 1999 and the PV
Partners program has resulted in the City being one of the top utilities nationwide for PV
system installations. Abendschein stated that, despite a large amount of interest, the CLEAN
program has not had any participants, primarily because the PV Partners is a more cost-
effective option for most facilities and the returns for CLEAN program are insufficient.
Abendschein explained the staff recommendation is to extend the program at the current 14
₵/kWh price, eliminate the 100 kW minimum size, and ramp up efforts to market the PV
Partners program. Since the program was evaluated last year, and the price was set at 14
₵/kWh, the City's projection of the avoided cost has fallen to 11.6 ₵/kWh so that additional cost
to ratepayers is $158,000 per year.
Abendschein explained that the alternatives to the recommendation were considered and
included increasing the price, lowering the price, or eliminating the program. Increasing the
price would increase the cost to ratepayers, while lowering the price would not result in any
participation. He also stated that staff had examined other types of renewable energy sources,
but did not find any other energy sources aside from solar that were viable in Palo Alto aside
from City-owned sources that could be developed without a CLEAN program.
Commissioner Melton said that originally the program had been priced at the City's avoided
cost, but now the price was 20% higher than the avoided cost. He asked what the City’s pricing
policy was, and at what price would the cost of the program be too high compared to the City’s
avoided cost. He did not want the program to entirely lose its relationship to avoided costs.
Director Valerie Fong stated that the City Council had been comfortable with a small premium
over avoided cost when the program was adopted, but had not provided specific policy
direction on the maximum acceptable premium.
Commissioner Eglash asked how many PV systems had been installed in Palo Alto since the
CLEAN program had been adopted. Abendschein stated that there had been from 25-50
systems installed in residences, but he did not have the exact numbers. Commissioner Eglash
said that many people were continuing to install solar even without Palo Alto CLEAN. He said
the goal was not to have a feed-in tariff (FIT) simply to have a FIT. It was to stimulate solar
development. He said the PV Partners program was economically more attractive and that
solar was being installed at a healthy rate even without Palo Alto CLEAN. That implied that Palo
Alto CLEAN was obsolete and unnecessary. He said the cost of solar was falling substantially,
and 3rd party developers were offering excellent prices. He was against raising the price, but he
was happy leaving the program operating as it was if it did not cost much to maintain it.
Commissioner Waldfogel asked what the equivalent cost of the PV Partners program was.
Abendschein said the avoided cost was the same, but if PV Partners were translated into a FIT
price it would be equivalent to 20-24 ¢/kWh. PV Partners was a State mandated program,
however. Commissioner Waldfogel asked whether the size of the PV Partners program was
also a State mandate. Abendschein said it was.
Vice Chair Foster asked who paid for the PV Partners program. Director Fong stated the City
did. Vice Chair Foster asked whether it was better to have people participating in PA CLEAN or
PV Partners, since PV Partners was more expensive. Director Fong stated that PA CLEAN
participation would not relieve the City of its SB1 obligation, which the PV Partners program
fulfilled. Abendschein added that even if customers chose to participate in Palo Alto CLEAN,
the PV Partners capacity would still be available. Vice Chair Foster asked how much the
Brannon Solar project factored into the avoided cost calculation. Abendschein said it was a
small part of the calculation. Vice Chair Foster asked whether the staff recommended program
would allow people to fund solar on each other’s roofs if they chose to. Abendschein said the
funding source was not important as long as they sold the energy to the City.
Vice Mayor Scharff asked what it would cost to continue the program. Abendschein said the
staff time involved in maintaining the program without marketing it was minimal, but that the
staff proposal had involved some staff time for marketing which would be absorbed by existing
staff. Utility Marketing Services Manager Joyce Kinnear said that Key Account Representatives,
who market the City’s programs, including energy efficiency, would spend time on marketing
Palo Alto CLEAN, which would replace some of the time they spent marketing other programs
like energy efficiency.
Commissioner Foster stated that the program is an innovative program. The City should be
doing it and would like to see an increase in the price to get more participation. He was not
sensing much support for that proposal, so he would support the staff recommendation. He
would be opposed to eliminating the program.
Chair Cook thanked the CLEAN Coalition for support, but would not want to move much further
away from the avoided cost. He would support the staff recommendation, but would want to
review it again at some point in time, rather than have the program continue indefinitely.
Commissioner Melton remarked that the goal is to increase the amount of renewable power
generated within city limits, so he supported continuing the program despite the small increase
in price.
ACTION:
Vice Chair Foster made a motion to support staff's recommendation. Melton seconded the
motion.
Commissioner Eglash offered a friendly amendment to review the program in one year. Vice
Chair Foster and Commissioner Melton accepted the amendment.
Commissioner Waldfogel asked if the failure of the program could be attributed to a marketing
shortcoming. Abendschein said it was a matter of expanding the marketing to the specific
customers who the program would work for. Commissioner Waldfogel stated that he believed
that anyone who was eligible for the program had already heard about the program and had
determined it was not worthwhile. He was uncomfortable continuing to spend money to
market the program.
Vice Chair Foster said that some level of marketing should exist as not all have heard of the
program and it is being expanded to more customers.
The motion passed by a vote of 5-1 with Commissioner Waldfogel voting no.
ATTACHMENT D
EXCERPTED FINAL MINUTES OF THE OCTOBER 3, 2012
UTILITIES ADVISORY COMMISSION MEETING
ITEM 1: ACTION: UAC Recommendation that Council Adopt a Resolution Approving the
Continuation of the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program
Public Comment:
Craig Lewis, representing the CLEAN Coalition, stated that the Palo Alto CLEAN has had no
takers so far, but that the program could be tweaked to be successful. The CLEAN Coalition had
hoped when the program started that property owners rather than developers would develop
and own projects, eliminating the need for a lease payment. He said the price offered seems to
have been too low and developers and that property owners were not attracted by the rate of
return from a project in Palo Alto. He believed property owners would be more interested in
leasing their rooftops to a third party developer. He stated that the lease payment to building
owners translates to a 3 cent/kilowatt-hour (₵/kWh) increase in price so that a price of
17 ₵/kWh or higher would be required to get local solar projects. He recommended
implementing a Volumetric Price Adjustment (VPA) whereby non-participation in the program
over some period of time (e.g. a month) would result in an automatic increase in the price until
participants were attracted.
Resource Planner Jon Abendschein provided a summary of the written report. He stated that
the City has supported local solar photovoltaic (PV) system installations since 1999 and the PV
Partners program has resulted in the City being one of the top utilities nationwide for PV
system installations. Abendschein stated that, despite a large amount of interest, the CLEAN
program has not had any participants, primarily because the PV Partners is a more cost-
effective option for most facilities and the returns for CLEAN program are insufficient.
Abendschein explained the staff recommendation is to extend the program at the current 14
₵/kWh price, eliminate the 100 kW minimum size, and ramp up efforts to market the PV
Partners program. Since the program was evaluated last year, and the price was set at 14
₵/kWh, the City's projection of the avoided cost has fallen to 11.6 ₵/kWh so that additional cost
to ratepayers is $158,000 per year.
Abendschein explained that the alternatives to the recommendation were considered and
included increasing the price, lowering the price, or eliminating the program. Increasing the
price would increase the cost to ratepayers, while lowering the price would not result in any
participation. He also stated that staff had examined other types of renewable energy sources,
but did not find any other energy sources aside from solar that were viable in Palo Alto aside
from City-owned sources that could be developed without a CLEAN program.
Commissioner Melton said that originally the program had been priced at the City's avoided
cost, but now the price was 20% higher than the avoided cost. He asked what the City’s pricing
policy was, and at what price would the cost of the program be too high compared to the City’s
avoided cost. He did not want the program to entirely lose its relationship to avoided costs.
Director Valerie Fong stated that the City Council had been comfortable with a small premium
over avoided cost when the program was adopted, but had not provided specific policy
direction on the maximum acceptable premium.
Commissioner Eglash asked how many PV systems had been installed in Palo Alto since the
CLEAN program had been adopted. Abendschein stated that there had been from 25-50
systems installed in residences, but he did not have the exact numbers. Commissioner Eglash
said that many people were continuing to install solar even without Palo Alto CLEAN. He said
the goal was not to have a feed-in tariff (FIT) simply to have a FIT. It was to stimulate solar
development. He said the PV Partners program was economically more attractive and that
solar was being installed at a healthy rate even without Palo Alto CLEAN. That implied that Palo
Alto CLEAN was obsolete and unnecessary. He said the cost of solar was falling substantially,
and 3rd party developers were offering excellent prices. He was against raising the price, but he
was happy leaving the program operating as it was if it did not cost much to maintain it.
Commissioner Waldfogel asked what the equivalent cost of the PV Partners program was.
Abendschein said the avoided cost was the same, but if PV Partners were translated into a FIT
price it would be equivalent to 20-24 ¢/kWh. PV Partners was a State mandated program,
however. Commissioner Waldfogel asked whether the size of the PV Partners program was
also a State mandate. Abendschein said it was.
Vice Chair Foster asked who paid for the PV Partners program. Director Fong stated the City
did. Vice Chair Foster asked whether it was better to have people participating in PA CLEAN or
PV Partners, since PV Partners was more expensive. Director Fong stated that PA CLEAN
participation would not relieve the City of its SB1 obligation, which the PV Partners program
fulfilled. Abendschein added that even if customers chose to participate in Palo Alto CLEAN,
the PV Partners capacity would still be available. Vice Chair Foster asked how much the
Brannon Solar project factored into the avoided cost calculation. Abendschein said it was a
small part of the calculation. Vice Chair Foster asked whether the staff recommended program
would allow people to fund solar on each other’s roofs if they chose to. Abendschein said the
funding source was not important as long as they sold the energy to the City.
Vice Mayor Scharff asked what it would cost to continue the program. Abendschein said the
staff time involved in maintaining the program without marketing it was minimal, but that the
staff proposal had involved some staff time for marketing which would be absorbed by existing
staff. Utility Marketing Services Manager Joyce Kinnear said that Key Account Representatives,
who market the City’s programs, including energy efficiency, would spend time on marketing
Palo Alto CLEAN, which would replace some of the time they spent marketing other programs
like energy efficiency.
Commissioner Foster stated that the program is an innovative program. The City should be
doing it and would like to see an increase in the price to get more participation. He was not
sensing much support for that proposal, so he would support the staff recommendation. He
would be opposed to eliminating the program.
Chair Cook thanked the CLEAN Coalition for support, but would not want to move much further
away from the avoided cost. He would support the staff recommendation, but would want to
review it again at some point in time, rather than have the program continue indefinitely.
Commissioner Melton remarked that the goal is to increase the amount of renewable power
generated within city limits, so he supported continuing the program despite the small increase
in price.
ACTION:
Vice Chair Foster made a motion to support staff's recommendation. Melton seconded the
motion.
Commissioner Eglash offered a friendly amendment to review the program in one year. Vice
Chair Foster and Commissioner Melton accepted the amendment.
Commissioner Waldfogel asked if the failure of the program could be attributed to a marketing
shortcoming. Abendschein said it was a matter of expanding the marketing to the specific
customers who the program would work for. Commissioner Waldfogel stated that he believed
that anyone who was eligible for the program had already heard about the program and had
determined it was not worthwhile. He was uncomfortable continuing to spend money to
market the program.
Vice Chair Foster said that some level of marketing should exist as not all have heard of the
program and it is being expanded to more customers.
The motion passed by a vote of 5-1 with Commissioner Waldfogel voting no.
FINANCE COMMITTEE
DRAFT EXCERPT
Page 1 of 15
Special Meeting
November 14, 2012
Utilities Advisory Commission Recommendation that Council
Adopt a Resolution Approving the Continuation of the Palo Alto
Clean Local Energy Accessible Now (CLEAN) Program.
Jon Abendschein, Resource Planner, said since they adopted the
Palo Alto Clean Local Energy Accessible Now Program (PA CLEAN)
back in March they had a lot of interest but found that the 14
cent per Kilowatt hour (kWh) price was not high enough to
provide a return on investment for a third party developer, while
still providing the developer with an attractive lease rate. There
were three potential types of participants in the program: a third
party developer, a utility customer, and a landlord, who installed
the system on their own. With the third party developer, they
leased the rooftop, they owned and developed the system, and
then they sold the power to the City. They needed to be able to
meet their target return while providing an attractive lease to the
building owner. The utility customer built their system on their
own but when they looked into Staff’s program, they compared it
to Photovoltaic (PV) Partners Program; the PV Partners Program
offered a shorter return because they used the energy on site.
Landlords were the last potential participants. They had very few
landlords that approached them but they were the most likely to
participate in the program because they could get a return at 14
cents per kWh. Staff recommended to Council that they keep the
program at 14 cents per kWh and to continue outreach to people
that would benefit from the price of 14 cents per kWh. He said
there was more information about the status of the renewable
energy market. When they first looked into this program, they
were calculating the City’s avoided costs. That meant the cost of
buying renewable energy outside of Palo Alto and the
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transmission cost to bring it to Palo Alto. To keep the price at 14
cents per kWh they needed to increase adder because renewables
were a lot lower and they were calculating the avoided costs at
11 cents per kWh. He referred to the Brannon Solar Project to
use as a comparison.
James Keene, City Manager asked to have the explanation of
what the change meant.
Mr. Abendschein said to maintain the 14 cents per kWh price that
meant an increase in utilities cost of $160,000 per year, or a 0.1
percent increase. They included other potential program
alternatives in the Staff report, which included prices as well.
John Melton, Utilities Advisory Commissioner (UAC) said the UAC
was disappointed with the results and contemplated shutting the
program down. Staff convinced them that an additional year of
testing the program out might field more potential for marketing
and more users, like landlords and building owners.
Bruce Hodge said he supported the PA CLEAN Program; it
encouraged growth in solar and he thought it was cheaper. He
thought an advantage was that it improved the system reliability
and it conserved critical line distribution across the State; he
thought it was great to generate power locally. He thought the
14 cents per kWh crippled the program and he suggested
increasing the program to 16 cents because he wanted solar
power to succeed. He thought the failure of solar power in Palo
Alto was that solar power prices were too low to begin with. He
thought the 16 cents was not that much more to ask.
Sahm White said when the rate was proposed last year, he
thought it was marginal and the cost to lease space was higher
than anticipated. The cost increase proposed by Staff was not
entirely insignificant, so he thought it was actually good to go
with 2 cents more. He also thought this program brought a lot of
investment in the City of Palo Alto. By buying energy from other
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places, it was going to take money away from Palo Alto. The
benefit of having the program within the community was that it
generated revenue and investment in Palo Alto.
Council Member Price wanted to know what other types of
outreach was going to be done that would improve outreach
already done. Secondarily, she wanted to know if there were any
incentives that promoted this project.
Mr. Abendschein suggested spending more time looking at
facilities within the City, identifying owners, especially ones that
have multiple properties or larger lots. Another method to
promote the program was to possibly sit down with the building
division and discuss whether there were ways to create multiple
installations, economy of scale, that kind of thing.
Council Member Price suggested looking at Palo Alto Unified
School District (PAUSD) because they had a lot of property.
Mr. Abendschein said they talked to them over this past year;
there were challenges and opportunities there.
Council Member Price said there were sustainable schools groups,
green schools movement, and others.
Council Member Burt assumed landlords that did not occupy their
own property were the primary target group, along with
considering the City’s current program of Net Metering. He
suggested Staff look at the PV Partners Program because the
dilemma was between the landlord and a tenant. The tenant paid
the electric bill, not the landlords, which did not allow for much of
an incentive for the landlord. The Net Metering/PV Partners
Programs reduced the tenants’ rate. A big breakdown in the
adoptions of solar was when the tenant was separate from the
landlord. PA CLEAN allowed the landlord to sell the power, which
opened up a new client base. Since the power was priced so low,
and they had PA CLEAN, it did not seem likely that people were
choosing PA CLEAN because the PV Partners Program had a
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better incentive. The Staff report clarified the comparison
between PA CLEAN and remote renewables. If a person were
considering cost for the best local renewables, they were
probably going to choose the program that was the most cost
effective. A problem was that when Palo Alto first adopted the PV
Partners, a decade ago, Palo Alto was ahead on the renewables
with the State. He mentioned the Million Solar Roofs Program,
under Senate Bill one (SB 1), and State legislation controlling
how solar electric rebates were being paid in California because it
had certain mandates on all utilities and a person could look at
what caused the increase. He said Staff looked at whether the
expansion of PV Partners was in the number of megawatts or the
rates. He wanted to know what the definition of expansion was.
Joyce Kinnear, Manager Utilities Marketing Services clarified that
the changes in SB 1 around PV rebate program revolved around
structure and it had the impact of lowering rebates over time.
They had a high rebate and they wanted to standardize the
rebates process due to that. They did this to make the process
easier for residents and businesses to understand the rebate
process.
Council Member Burt understood that the stepping down
happened in tiers and the cost of solar went down at an even
faster rate than what was anticipated.
Ms. Kinnear said yes. In the last couple of years, the cost
dropped dramatically.
Council Member Burt said even if the rates were a little higher on
PA CLEAN, people had a better return on the PV Partners
Program. He wanted to know, with SB 1, whether it prohibited a
wholesale program to meet the requirement.
Ms. Kinnear said it was set up to pay rebates and to have net
metering. She said there were certain restrictions. For example,
there were certain types of buildings that were not included.
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Council Member Burt asked if the key was that it had to be net
metered.
Ms. Kinnear said yes.
Council Member suggested holding the conversation because he
wanted to compare it to the Net Metering Program, which was
prescribed by the State. He referred to the Staff report and
asked for clarification on Palo Alto’s cost of utilities at the 14
cents because if Palo sold out at the 14 cents and it was going to
cost 158,000 per year, which was equivalent to a .1 percent
increase in the electric utilities cost, which equaled one one-
thousandth of Palo Alto’s cost of utilities at the 14 cents.
Mr. Abendschein confirmed that was the cost above what power
would otherwise cost.
Council Member Burt confirmed that the additional cost was one
one thousandth of people’s utility bill.
Mr. Abendschein answered yes.
Council Member Burt wanted to clarify that if people were to
double the subsidy it would be two thousandths of the utility bill.
Staff indicated that $1.3 million was spent on the PV Partners per
year to produce 6.6 megawatts, whereas the other program
spent $ 320,000 per year, to produce 4.0 megawatts; this was
five times the subsidy for PV Partners Program, in comparison
with the PA CLEAN per megawatt produced.
Ms. Ratchye, Assistant Utilities Director said Council Member Burt
was only calculating a bit above the avoided cost, not the entire
cost.
Council Member Burt asked if that was the total budget.
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Val Fong, Utilities Director agreed that there was a difference in
program costs and that the PV Partners was more expensive.
Council Member Burt wanted to clarify whether Palo Alto spent
the money and if that was what was being used for the incentive
to adopt the program.
Ms. Fong said the power produced was kept and bypassed the
utilities system.
Mr. Abendschein said there was a revenue loss that was on-going
for 20-25 years, which was on top of the $1.1 million.
Council Member Burt said the City of Palo Alto benefits as a
general fund and pays for many services based off profits, but
with PV Partners, the profit was subtracted off because the
revenue was subtracted off.
Ms. Fong said yes.
Council Member Burt confirmed that the money from the PV
Partners Program went to a capital subsidy, not a revenue
subsidy.
Mr. Abendschein answered yes.
Council Member Burt clarified that the subsidy for the PV Partners
Program far exceeded the subsidy, per megawatt produced, for
PA CLEAN, not considering any State mandates that influenced
the programs. Palo Alto was participating in a more expensive
program because of the State mandate which did not produce a
program that was cost effective, while still producing qualitative
benefits. He noted that the Staff report said there was minimal
to no uptake projected for 2013 and 2014. The program was
doing good nine months ago, but now was encountering some
problems; this caused a lot of bad publicity for the program. The
cost of solarof solar for the utility scale had dropped quite a bit,
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in comparison with local solar. He remarked that there was a lot
of community interest, and he did not want to let go of that. His
question to Staff was, for the next year, how they were going to
keep the program alive and successful, at a low risk, and how the
program was going to sustain itself, possibly through Palo Alto
Green and the Cap and Trade Revenue.
Mr. Keene said Staff’s plan was to bring Palo Alto Green to the
UAC in December and then bring the report to Council.
Vice Mayor Scharff confirmed that there was not any way to
transfer funds from the PV Partners Program to Palo Alto CLEAN.
Mr. Abendschein said that was correct.
Vice Mayor Scharff said the PV Partners Program was a State
mandated program, and yet the money from this program was
not transferrable. He mentioned the UAC’s recommendation of
giving Staff another year and said there was not much of a loss
on Staff time. He said there was a possibility of a small increase
but the Committee and Staff discussed raising the price next
year. He thought Staff needed to look at what they wanted to
achieve as a City. He did not think having the extra four
megawatts made a difference. He said the question was whether
Council should raise the price now, end the program, let the
program go, or continue looking at the program as is. The UAC
was supportive of Staff’s suggestion to continue the program for
another year. He suggested looking at redoing Palo Alto Green to
allow for funding and to allow people to see its value. He thought
that after some time people would see enough of a return to
make a long term commitment. He did not think they should
raise the price now because he saw the price of solar falling.
Ms. Fong agreed and said it was at 7.7 cents.
Vice Mayor Scharff suggested not raising the projected price now
and reviewing the program in a year’s time. He thought the Cap
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and Trade needed to be discussed and said he would support
Staff’s recommendation.
Chair Shepherd said there were no guarantees and was
encouraged by the local energy gain. She wanted clarification on
whether Staff had a small range of prices, as opposed to one
fixed price.
Ms. Fong said having a bid was an option.
Mr. Abendschein said it was tough because Palo Alto was a small
market.
Chair Shepherd suggested exploring the market to get the right
price.
Ms. Fong agreed.
Chair Shepherd said Staff could barter for a price now, and then
in a year, they still might not have the right price.
Mr. Abendschein said Staff looked at the Los Angeles Department
of Water and Power (LADWP) as an example because they were
going to launch a 100 megawatt program. They did a small 10
megawatt pilot and had a commitment to buying up 30 cents per
kWh. He said the commitment was needed; otherwise Staff was
not going to get serious proposals.
Chair Shepherd said if Staff threw out the 16 cents, they might
not get a chance to look at things that came in at 30 cents.
Mr. Keene said Staff could state the words “up to an amount,” as
the Staff report does not have to have an exact amount.
Ms. Fong suggested capping the price amount.
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Council Member Burt said it was not necessary to have a non-
capped open-ended bid. He said Staff could have a range, say
between 14 and 16 cents so Staff was authorized to have some
flexibility, without coming back to Council.
Ms. Fong said having flexibility took a fair amount of Staff time.
Chair Shepherd said Council expected that. Staff was going to
get the information and the experience during this startup phase;
she said it was important to grasp the experience and to gather
information.
Ms. Fong said Mr. Abendschein had some standardized models
and if they moved away from that, it was going to take a fair
amount of Staff time.
Mr. Abendschein said it was possible to do some adjusting.
Ms. Fong agreed but said it was still going to take a fair amount
of time.
Mr. Abendschein said if Staff had the cap to work with, it was
doable.
Mr. Keene asked who was most likely to bid on the Staff’s
proposal, was it the third party developer? He asked if the
responder or the bidder went out to secure potential locations or
leases in advance, or was this proposal more speculative.
Mr. Abendschein said it was required to have a site and show site
control.
Mr. Keene asked if that was the way things worked in Los
Angeles.
Chair Shepherd asked if Staff would go back to Council, or, this
could be something Staff was free to engage in.
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Mr. Keene said it depended on the price level.
Council Member Burt suggested hearing from a representative of
the CLEAN Coalition in the audience.
Mr. White said Los Angeles had a pilot bid program, with similar
scenarios to the Palo Alto CLEAN Program. If Palo Alto went the
route they were headed now, they would be duplicating the
process. The distributions were already thought out. Going
ahead with this proposal meant redoing what other people
already did.
Chair Shepherd asked if Staff took what happened in Los Angeles
into consideration when writing this report.
Ms. Fong said Mr. Abendschein looked at all the FIT-type
programs that they were aware of.
Chair Shepherd asked if Staff still arrived at the proposed 14
cents price.
Mr. Abendschein said last year there was a lot of interest coming
in from third party developers. Then the third party developers
came back and said it was not actually going to work and they
explained why. It was good information for installation cost and
how price was structured. He said Staff looked at non-developer
organizations, and Palo Alto’s numbers agreed with those.
LADWP’s rates did validate the numbers Staff put out. There
were some differences between Los Angeles and Palo Alto, like
more sun and different lease rates compared to buildings in Palo
Alto. He felt Staff had a good sense of what the price of solar
was, if purchased by a third party developer or a landlord.
Ms. Ratchye said the going price was 18.8 cents for third party
developers Palo Alto.
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Mr. Abendschein agreed that if a person wanted third party
developers, they needed to be priced around 18 cents per kWh.
Chair Shepherd asked if Staff knew the price took hold at 16 or
18 cents per kWh, why did Staff recommend 14 cents.
Mr. Abendschein said he knew 14 cents worked, and cited the
example of the City of Marin. He said the City of Marin was
priced it at 13.7 cents per kWh and the trick was getting the
project structured right. This required education and outreach.
He said the project may take a few years, and in doing so, the
cost of solar may come down too.
Chair Shepherd asked if Staff stayed at 14 cents was Palo Alto
going to end up with a project next year.
Mr. Abendschein projected the education and outreach may take
longer.
Chair Shepherd said she supported a higher rate. She wanted to
explore having the project more open ended and for a larger
project to get the 16 cents; it was going to have a learning curve.
Council Member Burt reached out to some developers and came
up with 16.5 cents as an attractive incentive, with the probability
of some uptake. He said citing the Marin Solar Project as a model
was optimistic. Many people in Palo Alto put the panels on their
roof because they want to be green, not because they consider
price. If Staff wanted moderate success they needed to have a
foundation and a way to transition, so they can build success,
rather than have failure.
Vice Mayor Scharff inquired how big a one megawatt project was.
Mr. Abendschein said it was a large project for Palo Alto.
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Vice Mayor Scharff asked about when Staff gave the number of
158,000 per year, whether it was based on a four megawatt
uptake because if Council authorized 16 cents for one megawatt
of usage, it created incentive for early adopters at a higher rate.
Mr. Melton said the UAC was presented with 17 cents per kWh.
Based on the response that Staff received, there seemed to be an
expressed interest; Staff arrived at 16.5 cents. The UAC was
hung up because they bought solar power at 11.5 in the open
market. The UAC thought 16 or 17 cents was about right but
chose not to recommend that.
Council Member Burt thought looking at the lowest cost rate to
buy renewables was good and said the PV Partners Program was
comparable, in terms of the objective. He recommended a
variable rate structure because having interplay between a
regulated market and a market dynamic was good. He said the
State tried to anticipate the market by saying solar was going
down, but the State cannot predict the market.
Mr. Hodge said one key feature with a FIT was Staff started with
a higher price than the initial year of implementation, then it was
characterized by the gradually decreasing curves as they got up-
keep in adoption; every year there was a gradual adjustment.
Chair Shepherd wanted to know what the downside would be to
giving Staff this type of flexibility.
Ms. Fong was not sure there were any downsides; she suggested
Council set a ceiling price they were willing to accept to protect
the customers.
Chair Shepherd asked Staff to come back to give the ceiling price
and to give Council the smallest, large project Staff wanted.
Ms. Fong asked if the Committee would give Staff a
recommendation.
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Chair Shepherd said they were not as knowledgeable as Staff.
Council Member Burt said what was placed as a ceiling price could
go to Council. Then, if Staff disagreed with the number set
tonight, they could recommend changing that number when they
present it to Council, just so Staff could move forward.
Vice Mayor Scharff supported going forward.
Chair Shepherd agreed but said she did not want to rush into
anything.
Ms. Ratchye suggested Council come up with an option
mechanism, which was a maximum price and volume to be set.
Vice Mayor Scharff referred back to Council Member Burt’s
comment and said this program was viewed as unsuccessful. He
wanted to ask what it would take to get one project.
Ms. Fong said if Council really wanted to make sure Staff gets a
project, she recommended 18 cents and a limit on the volume.
Council Member Burt said he did not feel good going over 17
cents.
Vice Mayor Scharff said he felt good about 16.5 cents and 2
megawatts.
Council Member Price asked if that was enough of a delta, should
it be higher than 16.5 cents.
Mr. Abendschein said there were multiple data points and 16.5
cents looked like it might work, while providing an attractive
lease to the property owners.
Council Member Price asked if 16.5 cents was sufficient.
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MOTION: Vice Mayor Scharff moved, seconded Council Member
Burt to recommend the City Council adopt the resolution
approving the continuation of the Palo Alto CLEAN program at a
price of 16.5 cents per kilowatt-hour for 2 megawatts, with a
review of the program by the Finance Committee in one year or
when the 2 megawatts are achieved.
Council Member Burt said he was for Staff using their discretion
on a tiered pricing range, to make the proposal work, along with
a price and volume cap. He thought this was especially good
because if Staff thought they were not going to get uptake, they
could adjust.
Vice Mayor Scharff agreed.
Council Member Price said giving Staff a little discretion should be
done more often.
Chair Shepherd asked if there was a reason Staff was not going
up to four megawatts.
Vice Mayor Scharff said one reason was that it costs more money.
He was concerned about making sure there was at least one
successful project, and then looking at other options.
Chair Shepherd asked Staff to check-in with the Finance
Committee on the outcome.
Ms. Fong said she was okay with having a price and not having as
much discretion. She said Staff would come back to Council after
they had the two megawatts in place.
Council Member Burt said the difference between government
agencies was they were apprehensive about risk-taking, but if the
policy makers were clear about the range of the risk, it was
allowed for Staff. The City of Palo Alto was taking the risk and
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City Council was authorizing Staff to do so. There was not be a
problem because Council limited the risk.
Ms. Fong said, based on the response, they might get a higher
price and they would then think through other mechanisms that
required more discretion.
Vice Mayor Scharff said that he agreed with Council Member Burt
and said that Staff should not feel so concerned about having
discretion.
MOTION PASSED: 4-0