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HomeMy WebLinkAboutStaff Report 2512-57851.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on December 3, 2025 Item No. 1. Page 1 of 1 Utilities Advisory Commission Staff Report From: Alan Kurotori, Director Utilities Lead Department: Utilities Meeting Date: January 7, 2026 Report #: 2512-5785 TITLE Approval of the Minutes of the Utilities Advisory Commission Meeting Held on December 3, 2025 RECOMMENDATION Staff recommends that the Utilities Advisory Commission review and approve December 3, 2025 minutes. Commissioner ______ moved to approve the draft minutes of the December 3, 2025 meeting as submitted/amended. Commissioner ____ seconded the motion ATTACHMENTS Attachment A: December 3, 2025 Draft Minutes AUTHOR/TITLE: Alan Kurotori, Director of Utilities Staff: Rachael Romero, Administrative Associate II Utilities Advisory Commission Minutes Approved on: Page 1 of 12 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF DECEMBER 3, 2025 REGULAR MEETING CALL TO ORDER Vice Chair Mauter called the meeting of the Utilities Advisory Commission (UAC) to order at 6:04 p.m. Present: Vice Chair Mauter, Commissioners Croft, Metz, Phillips, and Tucher Absent: Chair Scharff, Commissioner Gupta AGENDA REVIEW AND REVISIONS Utilities Director Alan Kurotori highlighted the updates to the financial analysis on the informational item and noted this will be Assistant Director Karla Dailey's last meeting. ORAL COMMUNICATIONS Dave Warner gave a summary of the recent Water Supply Amendment (WSA) activities. Commissioners Gupta and Tucher had found significant problems with the WSA, including that BAWSCA cost estimates were understated; however, Hayward approved the WSA amendment. Mr. Warner opined that declining water demand was the future and was concerned about organizations projecting demands that will not occur. Mr. Warner referenced the alternative water supply projects San Diego had developed. Due to an inability to cover the costs of the projects because of a lack of demand, the San Diego County Water Authority and City of San Diego had agreed to increase rates by 30 percent in 2 years. Mr. Warner believed a similar outcome would occur with BAWSCA with worse financial consequences due to the SFPUC regional water system being a heavily debt-laden and fixed-cost system. The WSA amendment subsidized other agencies that develop alternative water supplies, which increases cost. Mr. Warner did not agree with the half-billion-dollar cost of the One Water study. Mr. Warner hoped the Commission and staff would be more vigilant and skeptical of BAWSCA. Avivit Katzir believed Urban Forest abused their power by clearing power lines in her property easement in October and November of 2025. The solution was to underground the utilities. Ms. Katzir read information from the City's website to understand the City's undergrounding plan. Ms. Katzir quoted material from the website, which stated the City's process and plan to underground approximately 100 homes per year. One percent of the electric revenue was to be spent on undergrounding each year. Ms. Katzir referenced the underground conversion plan map, which showed that no district was undergrounded in the years 2011 to 2019 and 2022 to 2025. Ms. Katzir asked where the money allocated to undergrounding went and if it had been repurposed. Ms. Katzir was told that, based on another Council decision, Utilities was focused on upgrading the grid and did not do undergrounding. Ms. Katzir wanted to know why the City was not moving forward with undergrounding utilities. Utilities Advisory Commission Minutes Approved on: Page 2 of 12 APPROVAL OF THE MINUTES ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on November 5, 2025 Vice Chair Mauter invited comments on the November 5, 2025, UAC draft meeting minutes. Commissioner Phillips moved, seconded by Commissioner Metz, to approve the draft minutes of the November 5, 2025, meeting as submitted. Motion approved 5-0. Chair Scharff and Commissioner Gupta absent. Utilities Director Alan Kurotori said that on December 1, Council approved the 2026 Gas Cost of Service study and rate changes, which went to the Finance Committee on November 18. In November, Council approved a resolution to defer utility late fee collection actions given the federal government shutdown. There were program design guidelines to the successor of the multi-family electric vehicle charger program and advanced HVAC pilot program. There will be an S/CAP community workshop on Saturday, December 13 to discuss the GHG emission reduction goal. No more than 3 UAC Commissioners may attend the workshop. Any commissioners absent from this meeting may attend. The City received the gold-level designation from Charging Smart. Vice Mayor Veenker participated in COP30 and represented the City of Palo Alto and Bay Area Air Quality Management District. The Fiber to the Premises contractor, MP Nexlevel, began work on the first phase of construction in the pilot area. The work will be done by early January. Mr. Kurotori expected the hydroelectric resources will produce more than the longer-term average for the rest of 2026 and 2027. As of November 1, the regional system for the SFPUC, the Hetch Hetchy system, was at about 160 percent of median. Vice Chair Mauter asked if any Commissioners were planning to attend the workshop. Commissioner Croft will attend the workshop from 9 a.m. to 11 a.m. Commissioner Metz will not be able to attend the workshop. Karla Dailey thanked the City for the career and lots of opportunities. Ms. Dailey acknowledged the employees that worked for the organization and highlighted Resource Management, which Ms. Dailey led for 4 years. Commissioner Phillips thanked Ms. Dailey for the service. Commissioner Croft wished Ms. Dailey the best. Vice Chair Mauter appreciated Ms. Dailey's mentorship. Mr. Kurotori expressed pleasure of having served with Ms. Dailey, who was well respected, and thanked Ms. Dailey for the service to the community. Utilities Advisory Commission Minutes Approved on: Page 3 of 12 A slide provided a list of action and activity items the Commission wanted to discuss. The UAC discussion on Policy and Procedure will occur at this meeting. Microplastics and forever chemicals will be addressed in the workplan on source water quality; wastewater was not in the UAC workplan. The preliminary results of the Gas Utility Transition study were presented to the UAC in September and October of 2025 and were expected to return in early 2026. The time-of-use (TOU) rate implementation update will be included with Electric Rates in 2026. Utilities will complete an internal reserves evaluation and will bring recommendations in the first quarter of 2026. Work was ongoing regarding the affordability and federal impacts on rates, which may be part of a potential discussion on the subcommittee. The initial estimates will be included in the FY27 Rate proposals. Mr. Kurotori wanted to follow up with Commissioner Metz' comment from the last meeting regarding the Reliability and Resiliency Strategic Plan standard versus emergency operations. NEW BUSINESS ITEM 2: Recommendation that the City Council Accept the “Evaluation of Local Energy Resources to Lower Costs and Improve Reliability and Resiliency” Report to Complete Reliability and Resiliency Strategic Plan Strategies Four and Five, and that the City Council Direct Staff to Pursue Various Activities Related to Flexible Energy Resource and Efficient Electrification to Improve Reliability and Resiliency; CEQA Status - Not a Project Utilities Advisory Commission Minutes Approved on: Page 4 of 12 flexible energy technologies and efficient electrification in reducing electric supply costs, deferring distribution system investment, and enhancing short-term reliability and long-term resiliency. A slide showed the study timeline. The study evaluated the potential benefits and costs of various technologies. All technologies had benefits, which made barrier reduction, promotion, and low-cost technical assistance worthwhile. No technologies had benefits that outweighed the cost. Large-scale local commercial solar and storage broke even and could be cost effective on a case-by-case basis. Time-of- use rates were not evaluated but the potential impact was estimated. Utilities Advisory Commission Minutes Approved on: Page 5 of 12 incorporate the optional alternative, that would need to be included in a motion. The working group noted the suggestions made by Commissioners Croft and Metz about long-term resiliency and expressed support for a continued focus on permit and other forms of streamlining. The CASC had questions about batteries at substations and were optimistic about the trends with commercial cost benefits. The CASC believed residents valued long-term resiliency and expressed an interest in having more discussions around resiliency in 2026. Mr. Abendschein cited the fiscal impact section of the staff report and said the optional alternative 2b would require a half-time hourly position. Staff would have to return via the budget process to determine the financial impact. Utilities Advisory Commission Minutes Approved on: Page 6 of 12 future of energy was in local energy resources, microgrids, battery storage, etc. Commissioner Tucher wanted to consider a program that would target commercial prospects. Commissioner Tucher asked what happened to the airport and Wastewater Treatment Plant projects. Utilities Advisory Commission Minutes Approved on: Page 7 of 12 Commissioner Metz believed the cost-benefit analysis approach to long-term resilience, as suggested on page 6 of the presentation, was not the correct approach. Commissioner Metz opined CPAU should invest in electrical emergency preparedness and resilience even if the cost benefit was not positive because it was the right thing to do. Commissioner Metz thought that investments made by residents had community value because the community required people to be able to stay home during an emergency. Commissioner Metz felt it was important to explicitly consider the risk of major emergencies when conducting analysis and planning for CPAU reliability and resilience. These technologies will not have a positive cost benefit if the risks were not considered because the grid was already optimized to operate without problems or risk of failure. Commissioner Metz suggested using a scenario-based approach and coordinate with the Palo Alto Office of Emergency Services, which used a methodology called Assets At Risk. Commissioner Metz wanted the results of such an analysis to be communicated to Council and residents in a detailed and transparent manner. Commissioner Metz said the report was not detailed enough to determine whether the calculations were correct. Commissioner Metz wanted the City to build and maintain competencies in reliability and resiliency, including emergency preparedness. ACTION: Commissioner Croft moved, seconded by Commissioner Phillips, to approve the staff recommendation plus the edits to item 2c: Update the cost benefit analysis annually for electricity prices and update the cost benefit analysis for other flexible energy technology inputs within 2 years ITEM 3: Approval of Utilities Advisory Commission Fiscal Year (FY) 2027 Budget Subcommittee to Serve a Term from December 3, 2025 through June 3, 2026 Utilities Advisory Commission Minutes Approved on: Page 8 of 12 Public Comment: None. Vice Chair Mauter explained there needed to be a rotating membership so there was no de facto standing committee. Commissioners Phillips, Croft, and Gupta served on the budget subcommittee over the last year. Vice Chair Mauter clarified the scope of that subcommittee was primarily around the rate and did not include a broader review of the utility reserves or rate assistance programs. Commissioner Phillips confirmed the scope of the prior subcommittee was as Vice Chair Mauter described and also looked at financing for Fiber to the Home. Vice Chair Mauter determined, in conjunction with Utility staff, that the proposed scope was different than past committees and was passable. The subcommittee will have no decision-making ability; the responsibility will be to come back to the UAC and report on findings. There was a Utility-wide review regarding the reserves policies. Vice Chair Mauter asked if that will come to the subcommittee first for review before going to the UAC as a whole. Commissioner Croft said the prior finance committee offered pre-engagement for staff before topics were addressed to the full UAC and asked if that would be the case again. Commissioner Metz asked for clarification on what the topics were. Mr. Kurotori explained that staff would be able to have discussions with the subcommittee about anything relating to the subcommittee's topic. Staff's recommendation was the official topic, which included the 3 commissioner-proposed topics. There will be an evaluation of the reserves across the entire Utilities with the intent to bring those results back to the UAC. Vice Chair Mauter clarified that the staff recommendation was to not address the Utility reserves, which was item 2, but rather items 1 and 3 in reference only to the electric utility. Commissioner Tucher asked if the subcommittee could change course mid-year to address something other than electric should an issue regarding a different utility come up. Commissioner Croft was concerned about the large rate increases 5 years into the future and noted the increases were not only due to electric. Commissioner Croft wanted to identify areas to lower costs, which could be beyond the electric utility and went beyond the rate assistance program. Commissioner Croft recommended broadening the topic to include affordability of all utilities. Commissioner Metz agreed to broadening the topic and suggested removing all wording from the staff recommendation after the word "forecast" and adding "for cost reduction opportunities." The entire UAC will look at the budget. Commissioner Metz stated subcommittees were valuable to look at issues more deeply than could be done in a meeting and opined a few commissioners doing a deep dive on the budget would be valuable. Mr. Kurotori wanted the scope of the subcommittee to stay narrow and was concerned the proposed changes made the topic too broad. Utilities Advisory Commission Minutes Approved on: Page 9 of 12 Mayor Lauing reiterated the review of the FY27 Financial Plan and the 5-Year Forecast will happen for all utilities and be brought to the UAC. Mayor Lauing clarified that the members on the subcommittee could not talk to the other UAC members to ask for input on the topics outside of UAC meetings. Mayor Lauing believed addressing budget issues across all utilities would have a large impact on staff workload. ACTION: Commissioner Metz moved, seconded by Commissioner Croft, to have Commissioner Phillips and Commissioner Tucher serve on a budget subcommittee from December 3, 2025, through June 3, 2026, with a defined scope of reviewing the FY27 Financial Plan and 5-Year Forecast regarding affordability for the electric and water utilities. Utilities Advisory Commission Minutes Approved on: Page 10 of 12 Chair Schaff and Commissioner Gupta absent. ITEM 4: Utilities Advisory Commission Discussion on Policy and Procedure Assistant City Manager Kiely Nose showed a slide regarding the purpose of the UAC for reference. The UAC wanted to discuss how the Commission could effectively communicate advice to Council. Another slide showed a visual of the workflow. City Council and Council Committees were governing bodies. The UAC was an advisory body to Council. The work of the UAC was shaped by regulatory and legislative principles, the municipal code, Commission workplans, and Council priorities. The UAC could communicate advice by making recommendations via staff reports, Commission letters, having representation at Council meetings, or holding joint sessions. The UAC asked when the Commission should send representation to Council. Staff suggested the Commission ask what the standard practice for representation was. Staff recommended representation for complex or high-impact items. Staff proposed the UAC consider how to identify which member represented the UAC. The UAC asked when there should be a joint study session. Staff suggested the UAC consider what topics would be of interest to explore in a joint session and what the desired outcome would be from a joint session. Vice Chair Mauter asked what role the Council Member appointed to the UAC played and if there were other mechanisms by which Council could ask for UAC input more directly. Ms. Nose said Council could make a referral at any time to the UAC or the UAC could recommend that Council refer a topic to the UAC, like with Gas COSA, for example. Mayor Lauing said the UAC had a Council liaison because it was an important Commission. If the UAC wanted a representative to go to a Committee or Council, that would be deemed a request to Council. Study sessions used a lot of resources. Council was not trying to limit or cut off communication from the UAC. Public Comment: None. Commissioner Phillips noted that Council spent much more time on PTC items than UAC items and therefore did not believe it was worthwhile to appoint a UAC member to attend every Council meeting. Commissioner Phillips noted that any representative would represent the UAC's position on an item, not a personal opinion. Vice Chair Mauter asked if Mayor Lauing could advise on when someone from the UAC should come before Council on a specific issue. Commissioner Metz wondered if the Commission should generate a list of topics that would fit the situations in which a representative would be needed in advance. Commissioner Metz noted it would take the UAC time to reach a conclusion on representation, to schedule, and to coordinate with Council or a Committee. Mayor Lauing said the PTC was on-call. Mayor Lauing would not advise on when someone from the UAC should come to Council. Any time a representative wanted audience with Council, it would go to the Utilities Advisory Commission Minutes Approved on: Page 11 of 12 liaison first, who would then discuss with the Mayor. Mayor Lauing explained it may be more appropriate for the UAC to go more frequently to the Finance Committee than to Council. Utilities Advisory Commission Minutes Approved on: Page 12 of 12 liaison, then go to the Mayor. Mayor Lauing opined it would be better to speak at Council on behalf of the UAC versus as a private citizen, although private citizen comments were allowed. ACTION: Discussion Item, no action required. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS ADJOURNMENT