HomeMy WebLinkAbout2026-02-04 Utilities Advisory Commission Agenda PacketUTILITIES ADVISORY COMMISSION
Regular Meeting
Wednesday, February 04, 2026
Council Chambers & Hybrid
6:00 PM
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maintaining transparency and public access, members of the public can choose to participate
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PUBLIC COMMENTS
Public comments will be accepted both in person and via Zoom for up to three minutes or an
amount of time determined by the Chair. All requests to speak will be taken until 5 minutes
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TIME ESTIMATES
Listed times are estimates only and are subject to change at any time, including while the
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1 Regular Meeting February 04, 2026
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas
CALL TO ORDER 6:00PM – 6:05PM
AGENDA CHANGES, ADDITIONS AND DELETIONS 6:05PM – 6:10PM
The Chair or Board majority may modify the agenda order to improve meeting management.
PUBLIC COMMENT 6:10PM – 6:25PM
Members of the public may speak to any item NOT on the agenda.
APPROVAL OF MINUTES 6:25PM – 6:35PM
1.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on January 7,
2026
UTILITIES DIRECTOR REPORT 6:35PM – 6:50PM
NEW BUSINESS
2.Background and Discussion on Data Centers in Palo Alto (DISCUSSION 6:50PM –
7:50PM) Staff: Kathryn Fortenberry, Management Fellow
3.Discussion of the Residential Electric and Water Utility Customer Satisfaction Survey
Results (DISCUSSION 7:50PM – 8:30PM) Staff: Catherine Elvert, Utilities Communications
Manager
COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTS
ADJOURNMENT
OTHER INFORMATION
The materials below are provided for informational purposes, not for action or discussion during this meeting’s agenda. Written
public comments may be submitted in advance and will be provided to the Board and available for public inspection on the
City’s website three days before the meeting.
A.12 Month Rolling Calendar
B.Public Comments
2 Regular Meeting February 04, 2026
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas
PUBLIC COMMENT INSTRUCTIONS
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teleconference, or by phone.
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3 Regular Meeting February 04, 2026
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas
Item No. 1. Page 1 of 1
Utilities Advisory Commission
Staff Report
From: Alan Kurotori, Director Utilities
Lead Department: Utilities
Meeting Date: February 4, 2026
Report #: 2601-5848
TITLE
Approval of the Minutes of the Utilities Advisory Commission Meeting Held on January 7, 2026
RECOMMENDATION
Staff recommends that the Utilities Advisory Commission review and approve January 7, 2026
minutes.
Commissioner ______ moved to approve the draft minutes of the January 7, 2026 meeting as
submitted/amended.
Commissioner ____ seconded the motion
ATTACHMENTS
Attachment A: January 7, 2026 Draft Minutes
AUTHOR/TITLE:
Alan Kurotori, Director of Utilities
Staff: Rachael Romero, Program Assistant I
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UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF JANUARY 7, 2026 REGULAR
CALL TO ORDER
Chair Scharff called the meeting of the Utilities Advisory Commission (UAC) to order at 6:05
p.m.
Present: Chair Scharff, Vice Chair Mauter, Commissioners Croft, Gupta, Metz, Phillips, and
Tucher
Absent: None
AGENDA REVIEW AND REVISIONS
None
ORAL COMMUNICATIONS
None
APPROVAL OF THE MINUTES
ITEM 1: ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on
December 3, 2025
Chair Scharff invited comments on the December 3, 2025, UAC draft meeting Minutes.
Commissioner Phillips commented the statement declaring the budget subcommittee would be
himself and Commissioner Tucher was incorrect and wanted it removed. It was clarified to be
Commissioners Croft, Phillips, and Tucher and would be corrected.
Commissioner Tucher suggested consideration of using an auto transcript service for the
minutes in order to save time and effort. Alan Kurotori, Director of Utilities, stated Staff would
go back to the Clerk's office for feedback on alternatives or options and bring it back to the next
meeting.
ACTION: Commissioner Phillips moved to approve the draft minutes of the December 3, 2025,
meeting with the requested change.
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Commissioner Tucher seconded the motion.
The motion carried 6-1 with Chair Scharff, Vice Chair Mauter, Commissioners Croft, Metz,
Phillips, and Tucher voting yes. Commissioner Gupta abstained.
UNFINISHED BUSINESS
None
UTILITIES DIRECTOR REPORT
Director Kurotori, Director of Utilities, delivered the Director's Report. Approval of the
attestation of the veracity of the power disclosure report and power content label,
reaffirmation of the carbon neutral plan, and the Renewable Energy Credit Exchange Program,
and resolution and execution of professional services with NCPA were brought to Council. The
gas COSA update went to Council with the effective date of February 1st, 2026. Information is
being prepared moving forward with potential rate increases in 2027. A phased rollout of the
TOU rates is being offered currently to a small subset of customers with the goal of bringing it
out wider for the summer following testing in the first and second quarter of this year. The
utility bill printing service has changed resulting in changes to the appearance of the bills. An
annual mailer was sent to all customers on gas safety as part of the public safety program on
natural gas. Terry Crowley has been appointed to the full role of chief operating officer. Lisa
Bilir has been promoted to assistant director of the Utilities Resources Management. A slide
was presented with an overview of upcoming items.
Commissioner Tucher wanted clarification on the time of use update. Director Kurotori stated
the small phased rollout would be done in the first and second quarter followed by a rollout in
the summer to larger customers. It will be about a dozen customers per month. The initial
phase was an outreach to potential customers. Commissioner Croft wanted to know why it
would only be a dozen per month. Director Kurotori replied the smaller amounts is to make
sure the processes are correct and described the process. Commissioner Croft suggested doing
a comparison of time of use versus regular rates for each customer to incentivize people to use
it. Director Kurotori indicated behavioral changes was expected. Commissioner Croft expressed
interest in being a pilot customer.
Commissioner Tucher was frustrated that the time of use project seems to be moving slowly.
NEW BUSINESS
ITEM 2: Fiscal Year 2026 Mid-Year Fiber Expansion Update (DISCUSSION 6:50 PM – 7:35
PM) Staff: Alexandra Harris
Alexandra Harris, Telecommunications Program Manager, provided a slide presentation
including an agenda, a background, dark fiber vs fiber internet services and infrastructure, dark
fiber service, fiber internet service, dark fiber status, fiber internet status, pricing strategy and
next steps of fiber internet, and phase 1 strategy of fiber internet.
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Public Comment:
Andy Poggio opined the dark fiber revenue could be better applied to building up the electrical
infrastructure than rolling out FTTP.
Hamilton Hitchings indicated tens of millions of dollars would be lost in a failed foray into fiber.
Herb Borock suggested making a recommendation to Council to expand the dark fiber for the
purpose of being used as a fiber to the premises backbone.
Commissioner Gupta stated a substantial portion of the fiber funds are being used to enhance
the fiber backbone. Enhancing the fiber backbone will happen regardless of FTTP being offered.
Offering FTTP is a great way to offer residents an affordable option. The annualized profit off
dark fiber would be a very small dent in electrification. The San Bruno's network is a different
example and is the reason TV services are not being offered as part of the fiber internet plans.
Commissioner Croft asked what has been defined as the KPIs. Ms. Harris replied the take rate is
important to determining the success of the FTTP project. Some of the KPIs are customer
satisfaction, delivery times, and rates. These will be formalized as part of the learning summary
from the pilot. Dave Yuan, Utilities Strategic Business Manager, commented the goals of the
pilot are technical feasibility, operational efficiency, customer satisfaction, and testing
promotional pricing. For phase 1, the take rate will be vital. Scalability, number of passes per
premise, and bringing construction costs down will be looked at. Growth opportunities will be
pursued.
Commissioner Croft wanted to know about the dark fiber network. Mr. Yuan explained the dark
fiber is a ring around the City in the commercial areas. It is congested in certain areas and not
always available. If it is available, fiber to the premise could be offered in certain places. If not,
new backbone or additional capacity would be required. The new backbone will be phased.
Commissioner Phillips inquired if the decline in dark fiber is cyclical. Mr. Yuan responded it is
cyclical. There are vacancies in the research area but also new developments in the same area
which are being approached to let them know dark fiber will be available in the area. It is based
on the commercial business economy. Vice Chair Mauter asked if there was growth of new
customers that are requests beyond capacity. Mr. Yuan stated there are constant discussions
being held with strategic partners. New fiber connections are added when new facilities are
built out. The smaller businesses usually want private service providers. Commissioner Phillip
expressed skepticism and needed to see a convincing business plan.
Commissioner Metz advised having just 1 gig in residential service. Stronger marketing and
sales effort is important. Mr. Yuan agreed.
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Commissioner Tucher expressed confusion about keeping up with big private enterprises
regarding pricing. Commissioner Gupta responded the FCC data showed about a 45 percent
number of residences passed. That is still in research. The pricing is going to be competitive.
People do not like AT&T or Comcast and are looking for other options. Residents are positive
about this option.
Vice Chair Mauter found the presentation unclear on the feedback being requested and asked
about the technical risk and capability of delivering fiber. A suggestion was proposed to think
about a potential second pilot evaluating factors other than the service area to serve broader
goals of the community. Mr. Yuan responded feedback being requested included strategy, KPIs,
opinions on decoupling from grid mod, and looking for new Greenfield MDUs. Vice Chair
Mauter questioned if a 35-year payback period is a smart investment. Darren Numoto, Director
of Information Technology, stated Staff is confident in the technical feasibility of the service.
Commissioner Phillips shared the concern of the technical feasibility. Director Numoto stated
fiber is a long-term asset. Commissioner Gupta stated the fiber connection between the home
and the backbone would last decades.
Chair Scharff asked if it is really a 35-year payback. Director Numoto responded a 40 percent
take rate would be more like 15 years. Vice Chair Mauter stated that is where the Commission
would like to see a business plan that assured the plan has been adequately assessed.
Commissioner Phillips queried if every rate change needed to be approved by City Council. Mr.
Yuan replied there is flexibility to offer promotions up to X dollars without going to City Council.
Commissioner Tucher inquired if there has been a financial model presented. Mr. Yuan
responded there have been two financial models presented, one in 2021-2022 and the other in
2025 and those would be reshared. Commissioner Tucher asked about the new pilot
neighborhood. Mr. Yuan replied every location has not yet been identified but the new teacher
housing and another affordable housing area are included. Director Kurotori commented the
role of the UAC goes back to the work plan. Information will be brought back from the
outcomes from the pilot. Commissioner Tucher stated the most important updates are the
decoupling to some degree with UAC and a redefinition of geo targeting. The commissioner
urged Staff to make a KPI of the take rate.
Chair Scharff asked how the Commission was to know if this should end after the pilot and
discussed skepticism of the plan. Mr. Yuan responded the original Council motion was to build a
phase 1. Staff will come back to the UAC, Finance, and Council three to four months after the
pilot with more data. In the meantime, opportunities to build are being sought. Chair Scharff
desired Staff to come back to the UAC quickly with information about what the plan is on the
pilot to give the opportunity to go to Council before they move forward. The chair wanted to
know how much would be spent on the pilot and on phase 1. Director Kurotori commented
when this went forward to Council, it included the phase 1 area which included the pilot. The
pilot was Staff driven in terms of looking at grid mod to fine synergies and potential cost savings
associated with both. That was not found. The work plan is to provide UAC and Council with
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status updates as they relate to metrics for success during pilot and phase 1. The intent is to
bring take rate back to the UAC. The pilot will be brought back in the next several months with
information to be brought forward to the UAC and Council to give updates on the progress.
Commissioner Croft thought there had been agreement that there would be a pilot after which
there would be opportunity to see the data and decide if it would be worth the money.
Commissioner Croft and Chair Scharff recalled the decision being made not to spend the
money. Commissioner Croft recommended going back to figuring out how much it will cost to
do a pilot in a neighborhood. Commissioner Gupta disagreed and thought Staff was doing the
right thing. Commissioner Tucher inquired as to the difference in phase 1 and the pilot.
Commissioner Gupta responded the pilot area was a technical pilot Staff created to make sure
it could technically be done and whether it could be coupled with grid mod. It was not intended
to be a litmus test on whether or not to move forward with fiber or not.
Chair Scharff asked how much money Staff planned to spend before going back to Council. Mr.
Yuan replied $20 million was originally authorized for phase 1 and another $26 million for the
fiber backbone with some contribution from the electric fund. About $5 million is projected
from the $20 million. Director Kurotori added the pilot information would come back in about
three to four months once the hut is completed. Chair Scharff wanted to ensure it is agendized
as "what is the UAC's recommendation to Council" when it is brought back in nine months.
Commissioner Gupta disagreed stated that would be setting it up for failure. Commissioner
Phillips asked when there would be a business plan based on actual data to justify a no -go
decision. Mr. Yuan responded it would be around the same nine months when the pilot data is
brought back. Ed Lauing, Council Member, added Staff is executing the plan Council put in
place. Data is required to make the go or no-go decision. Budgeting difficulties play a part in
determining the amount spent for data. Vice Chair Mauter thought the KPIs in the work plan
are right and wanted report on those. One other KPI worth addressing is a question of service
areas which there is strong suspicion that AT&T will not serve.
ACTION: No Action
ITEM 3: Fiscal Year 2026 Mid-Year Electric Grid Modernization Update (DISCUSSION 7:35 PM –
8:35 PM) Staff: Terry Crowley
Terry Crowley, Chief Operating Officer, provided a slide presentation including grid
modernization background, key grid modernization projects, sub-transmission system, convert
4kV systems, substation reconstruction, Colorado 115 and 60kV improvements, 12kV
distribution improvements, forecasted costs and timeline, and key considerations.
Vice Chair Mauter inquired how the 8.5 to 19.5kW peak is estimated. Mr. Crowley answered it
is estimated by the use of EV chargers, space and water heating, and ancillary loads normal in a
house. There will be some impact on peak demand. Utilities depend on diversification. The time
of use pricing has the potential to send a price signal and change behaviors.
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Commissioner Tucher asked if there is data on how the average peak load is distributed. Mr.
Crowley replied this presentation does not go into that level of detail. The design processes will
look into the costs of multifamily connections versus single -family housing connections.
Commissioner Tucher queried how the fact that the projects total up to around $420 million
not including the things mentioned should be interpreted. Mr. Crowley responded it is likely the
full construction and electrification of the City could go over $500 million. Commissioner Tucher
wanted to conclude this agenda item with a sense of how the overall cost of grid mod is
discussed. Director Kurotori added more discrete costs are being looked at. Some of the
systems require replacement anyway. The importance of this presentation is looking at
substations and ensuring reliability.
Commissioner Gupta asked if the numbers on the key grid modernization projects slide are
viewed as what is necessary for maintaining the electric infrastructure as well as goals for
electrification. Mr. Crowley answered this would replace the aging equipment as well as
increase capacity. Commissioner Gupta asked about the assumptions that go into the presumed
loads from EV. Mr. Crowley stated customers prefer to have a 60-amp IV charger. Customers
are being asked to share the 60-amp plug capacity across multiple vehicles.
Vice Chair Mauter asked if there are investments that should be incentivized at the customer
level or other incentives for installing smart panels. Mr. Crowley confirmed there are incentives
for that. Moving slowly at the beginning of the process can help manage the total bulk design of
the system. Vice Chair Mauter opined there are financial reasons to incentivize smart panels
and technologies in that realm.
Commissioner Tucher wanted explanation of sub-transmission. Mr. Crowley clarified the sub-
transmission is the 60kV loop that runs through the City servicing the individual substations.
Transmission services are received at 115 at Colorado Substation. That is stepped down to 60kV
through a bus structure and four sub-transmission outlets of Colorado that run through the City
and serves all the substations. Grid mod is an evolving process. There is a need for speed due to
climate to try and move through this quickly and figure out how to support electrification. Now
that piece has been identified, it is more of a priority because of the number of customers
potentially affected and the need for this work to complete some of the upgrades to increase
capacity and reliability at the Colorado Substation. Every customer could potentially be affected
but there is redundancy in the 60kV loop so the mitigation measures for those overloads may
have to affect some customers but not all. There are identified overloads in facilities under
certain reliability contingencies the require mitigation. This is additional cost to the grid mod
that was not in the initial study.
Commissioner Tucher asked about the substations mentioned on the convert 4kV systems slide.
Mr. Crowley responded they are the Hopkins and East Meadow Substations. There is a pocket
for East Meadow that does not connect over to Hopkins. That is where a potential reliability
issue is seen. If these substations are rebuilt to 12 kV, they could support the adjacent 12 kV
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substations. Commissioner Tucher asked which substation supports University Avenue
downtown. Mr. Crowley replied Colorado provides a lot of that support.
Commissioner Croft asked for a description of a feeder tie. Mr. Crowley explained feeder ties
are wires and conductors between two substations. Increasing the capacity of those will give
the substation the ability to reach further, serve more load, and help with reliability in
unplanned outages as well as maintenance.
Commissioner Tucher queried how plug sharing would work. Mr. Crowley responded through
the permitting process, homes that are planning to install multiple chargers can be identified.
At that point, conversations can be held with the homeowners about using plus sharing
technology or limiting their EV charging to a 60-amp breaker. One assurance is the requirement
to install a 60-amp breaker and all plug sharing is behind that. Smart meter data can be used to
identify customers that have a larger peak demand and higher loading on transformers. Utilities
does not review a single EV charger. The City knows through planning. Commissioner Tucher
asked about pricing incentives. Mr. Crowley commented the utility likes to provide options.
Customers can have two EV chargers but grid mod will not fund that. Those things are being
looked at to see how they work. Feedback from this policy decision is being sought from the
UAC. Chair Scharff asked how plug sharing would work. Mr. Crowley stated it could work by
switching cars out or having multiple chargers that communicate and share a 60-amp plug.
Director Kurotori added for commercial, managed charging is able to share a lot of different
ports.
Vice Chair Mauter asked if Mr. Crowley would advise that the UAC look at including peak
demand charges. Mr. Crowley thought looking at new rate structures, new ways to incentivize
different behaviors, or more fairly cost recovery options are on the table. Smart meters bring
the ability to implement those plans. Director Kurotori stated having a baseline of what will be
provided is helpful in creating what the utility is committing to and what customers can expect.
Commissioner Phillips opined it would be appropriate to think about demand charges if there is
disparity in the level of residential. Vice Chair Mauter said it does not make sense to have
different approaches to cost of service studies across the utilities. Commissioner Metz spoke
about downsides to demand charges.
Chair Scharff commented that grid mod will not matter if customers do not adopt and it should
be paced moving forward. Mr. Crowley stated that is Staff's recommendation. It provides the
Staff the ability to focus on other larger projects that have a bigger impact to the customer.
Commissioner Tucher asked for a definition of customer adoption. Mr. Crowley stated
customer adoption is more at the individual property. Commissioner Tucher inquired if the
decisions of the commercial base have any affect. Mr. Crowley replied the focus on grid mod is
looking at electrifying the residential sector. The commercial sector pays for upgrades as they
come. The substations being focused on are older substations that serve a lot of the residential
neighborhoods.
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Commissioner Phillips wanted to know if the numbers in the timeline slide includes the amount
that is deferred. Mr. Crowley responded those numbers are Staff recommendation which
include the deferred amount and spending rates over the years.
Commissioner Gupta asked if this would be presented to S/CAP at the meeting on the following
Friday. Mr. Crowley stated it was intended to be presented in February. Director Kurotori added
the intent is to bring it to the UAC and then to S/CAP following feedback from UAC.
Commissioner Gupta thought there should be more alignment on this question because S/CAP
will potentially be approving the work plan and asked what Staff recommendation would be of
the work plan coming up on Friday. Director Kurotori stated those reports look at different
phasings of low, medium, and high adoption scenarios. This is the recommendation of
increasing the infrastructure from the Colorado receiving station down to the customers. These
distribution improvements and upgrades can be ramped based on the customer uptake moving
forward with S/CAP.
Commissioner Gupta asked if rate impacts will be discussed. Mr. Crowley replied that was not
the intent of the discussion. The discussion is about what Staff is proposing for the CIP plan
moving forward through the budgeting process subject to additional feedback and approvals
from different bodies. The rate impacts will come in later as the plan for the CIP becomes more
formalized. Lower spending will have a lower impact to rates. Commissioner Gupta asked if this
is beyond the forecast received in November for electric rates. Mr. Crowley stated the forecast
in November did not account for this lower spending rate. Director Kurotori added a lot of the
capital projects are being bonded so that is spread over a longer period of time. If the
customers and community electrify faster, there will be revenues to cover the costs.
Vice Chair Mauter inquired models are being built to estimate where load growth is going to
happen next. Mr. Crowley stated studies that come out of S/CAP are closely watched looking
the ramp rates for appliance replacements. Flexibility has to be maintained to ramp up the rate
of construction. Director Kurotori EV projections are being tracked and that is integrated into
the long-term plans and budgets. Chair Scharff asked if adoption of EV is increasing in Palo Alto.
Director Kurotori confirmed EV is increasing in Palo Alto. Looking forward to future years, there
will be a softening of those projections because there will be other options.
Vice Chair Mauter asked if the concentration of EV adoption and heating and cooling
electrification would matter at the infrastructure level. Mr. Crowley confirmed that to be true.
Tracking the permitting process would be helpful. That skill set will have to be build into the
process.
Commissioner Croft queried if sizes of transformers can be standardized and preordered to
beat the long order lead time and asked how transformers serve the home and how it was
decided what equipment to put in and where. Mr. Crowley explained Staff is proposing looking
at standardizing transformers. They have a number of standardized 50kV, pole -mounted
transformers in the yard to build out these systems . The right number is something being
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learned and emerging technology would help to change. Some of the risk of using the wrong
transformer is mitigated by slowing down.
Commissioner Croft opined that for the people putting in large systems, communication will be
needed about the high cost. Mr. Crowley indicated that is done at the time of system upgrades.
Vice Chair Mauter asked where the 19.5 number came from on the considerations slide. Mr.
Crowley explained it is the sum of EV charger, heat pump, and ancillary loads. Vice Chair
Mauter asked if there is any AMI data used to come up with this number. Mr. Crowley replied it
is additive. The AMI data is another piece of the tool needed to do quality control. Vice Chair
Mauter thought there could be a way to set less numerically based on what is seen in practice
to arrive at a number based on community needs. Mr. Crowley responded the intent is to get
the concept out and see if there is appetite to further develop that.
Public Comment:
Herb Borok commented it is unclear with the long timeline that this would have the proposed
effect and that Staff will probably end up doing what they want to do regardless of what
recommendation UAC makes or Council approves.
David Coale thought limiting to a 9kW or 50-amp breaker would be sufficient and it is
appropriate to charge the customer for an extra transformer above that. The utility should push
to do streamlining of EV charging permitting. Slow down of the grid mod will help realize the
needs.
Chair Scharff supported slowing down to match demand. Lower electric rates is an incentive to
electrify. The question of large demand paying for upgrades is hard to answer based on the
information provided. Mr. Crowley stated with the development and permitting process, it is
common to see large demands come in. That is where the question of what should be
supported comes in. Commissioner Tucher had questions about upgrade costs. Mr. Crowley
stated it is in the realm of $10,000 to $20,000. They would try to look at proportionality.
Commissioner Tucher opined it would be better to find a way to incorporate demand capacity
peak load into each individual's monthly base cost. Commissioner Phillips commented a
structured conversation at a separate time is needed with more information provided.
Commissioner Metz agreed with setting a line in the sand and requiring the customer to pay
beyond that number. It is important to understand the load growth based on meter data.
Commissioner Croft supported bullet one and two. She would like to look at AMI data and
benchmark against other places where people are electrifying.
Commissioner Gupta encouraged all creative ideas on reducing rates. More data is needed. It is
crucial to align with S/CAP. He asked if the planned investments enable vehicle to the grid. Mr.
Crowley responded that is an emerging technology. It is not yet commercially viable so hard to
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incorporate into a current design. That is one advantage to slowing down. Vehicle to grid would
heavily depend on an incentivizing rate structure. Vice Chair Mauter stated S/CAP can do a lot
of pushing technology but the market pull has to be there if Palo Alto is going to play the role of
leader in implementing technologies.
Commissioner Croft questioned how the second transmission line coming in would complicate
grid mod. Mr. Crowley answered the current plan is that the second Ames line would come into
the existing Palo Alto Switching Center. It does not change anything as far as the connection or
use for Colorado. The numbers presented do not change based on the current approved
transmission line that will provide the second source and source of reliability to the existing
Palo Alto Switching Center. If there was a second receiving station, there would be additional
cost that would have to be analyzed, funded, and prioritized. That is not included in the current
proposed CIP. Commissioner Croft asked if that is part of what has been approved. Director
Kurotori stated it is part of the CAISO approval.
ACTION: No Action
FUTURE TOPICS FOR UPCOMING MEETINGS
Director Kurotori commented that the 12-month rolling calendar highlights that updates to the
pilots will be given in the July timeframe and the items going to City Council. The election of
chair and vice chair will be added to the April timeframe. Past the July timeframe, other items
and future work plan will be added.
Commissioner Phillips was looking for a discussion of the reserves policy. Kiely Nose, Assistant
City Manager, explained based on the Finance Committee, UAC, and ultimately Council's
referral to Staff to study reserves, the use of reserves, and level of reserves in the utilities, it
was put on the State Auditor's work plan. That assessment is underway and will move through
that process with Staff. Staff is working through an initial review of the report with the city
auditor. It will take a few months. The audits will go to the Policy and Services Committee.
Because this has an impact on the utility, the UAC will receive that report and any outcomes
from it. The report will provide information and then there will be next steps. That is where the
UAC decision making comes into play. UAC will be made aware of the assessment.
Councilmember Lauing stated that would be required before budgeting. Ms. Nose was not sure
that would be available in time for budgeting. They are trying to have a high level
understanding of being over, under, or at the mark to help inform rate setting. Commissioner
Phillips asked if the audit would address the policy question of how many reserves should be
had. Ms. Nose confirmed that would be addressed. The auditor will review the number of types
of reserves in the context of best practices for utilities and make recommendations or
benchmarking identifications. It is incumbent on Staff to move through the policymaking
process on what Council wants to approve. Commissioner Phillips asked if Staff would come to
UAC with recommendations. Ms. Nose replied that would not be part of the process but they
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can bring that assessment to the UAC. Staff has a desire to bring it to a Council body as soon as
possible.
Commissioner Croft wanted to see an update on the time of use rate pilot and the Reliability
and Resiliency Strategic Plan Cost Effectiveness and Cost Benefit Analysis added to the calendar.
Director Kurotori stated if the Resiliency Strategic Plan Cost Effectiveness and Cost Benefit
Analysis was determined to be on an annual basis it will be added to the calendar. Feedback will
be provided on the action taken by Council.
Chair Scharff stated a line needed to be drawn on the pilot stuff.
Commissioner Metz asked if the gas rate and financial forecast would include a strategy for the
gas utility. Director Kurotori replied there is a gas transition study. There are no plans to shut
down the gas utility but there are studies underway. Updates will be provided. The status
update on the gas transition study is May 6.
Commissioner Metz wanted to know if the impact of data center on rates will be addressed
next month. Director Kurotori said the competitive nature of it will be brought back.
Commissioner Tucher inquired what the meaning of competitive aspects of data centers is.
Director Kurotori stated it asks if it makes sense in terms of growth, impacts on the rates, what
type of infrastructure will be needed, what the needs look like, where they will potentially
grow, etc. Commissioner Tucher requested for that presentation to include specific information
or data coming back from commercial customers such as what kind of data centers the
customers want. Director Kurotori explained Staff would not be able to share specifics about
customer load. They can talk about capacity and the growth and ability to serve those types of
data centers. There are different definitions of data centers that will need to be defined.
Information on size and types will be provided. Commissioner Tucher hoped to learn where the
200 megawatts comes from, why it stays flat for the next five years, and what is behind the red
component in the load projections called data centers.
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
Commissioner Gupta reported having a meeting along with Commissioners Metz and Tucher on
resilience with the director and Ken Dueker form OES. The upcoming grid mod efforts will
directly improve emergency readiness. Staff is looking at creating documentation for residents
regarding utility preparedness and ensuring electricity resilience will be integrated in future
major capital projects in the City. Strategic gaps and the need for broader public dialogue about
long-term outage scenarios were flagged. After the meeting, they followed up on getting the
utilities director added to the Emergency Services Council and hoped to see progress on that.
Director Kurotori added that these briefings are intentional on providing information to the
commissioners they have. The most important factor for this Commission is working as a body.
The briefings provided from other departments is to help have the conversation.
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Commissioner Croft attended the S/CAP workshop. There was about 30 people in attendance.
The primary discussion was around incentives for residential electrification.
Commissioner Tucher asked if there is a way to get minutes out in the first week as opposed to
the fourth and when presentations should be expected. Director Kurotori stated Staff likes to
incorporate those with the packet whenever possible. Some of the changes in the fiber one
came later and required changes and adjustments. The presentations should be expected prior
to the meetings when possible. Commissioner Tucher asked if public letters are included in the
e-packet. Unknown speaker confirmed public letters are included in the e -packet. The link that
is provided is just the agenda. Public comment letters are now being provided in the HTML
agenda only. Commissioner Tucher observed it would be better if everything was included in
the e-packet link. It was pointed out that the quarterly report was not what it said it was. It was
not a financial report or summary. There was no summary of utilities. There was no summary of
revenue or CapEx year to date. It should be better or omitted.
ADJOURNMENT
Chair Scharff moved to adjourn.
Meeting adjourned at 9:44 p.m.
Respectfully Submitted
City of Palo Alto Utilities
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Utilities Advisory Commission
Staff Report
From: Alan Kurotori, Director Utilities
Lead Department: Utilities
Meeting Date: February 4, 2026
Report #: 2512-5600
TITLE
Background and Discussion on Data Centers in Palo Alto
RECOMMENDATION
Staff recommends that the Utilities Advisory Commission (UAC) discuss general guiding
principles for the integration of new data centers and give input on community preferences on
the possibility of relatively large new data centers being built in City of Palo Alto Utilities’
(CPAU) service territory.
EXECUTIVE SUMMARY
Artificial Intelligence (AI) computing requirements are driving a generational increase in
electricity demand nationwide. News articles highlight new “hyperscalers” of 100 MW to 500
MW or greater throughout the nation on an almost daily basis. While the City of Palo Alto
Utilities (CPAU) is aware of increased interest in local data center development as a municipal
electric utility with an average electric load of about 110 MW1, existing infrastructure imposes
natural size limitations at least in the short to medium term. Limited commercial and industrial
sites as well as community preferences may naturally steer CPAU to focus on a smaller scale of
data centers (< 25 MW) over the long term as well.
The purpose of this report is to:
1. Provide an overview of the in-City data center impacts on electricity rates and
infrastructure in Palo Alto to-date;
2. Provide context on the size of data centers that is best-suited for the City of Palo Alto’s
existing electric distribution system;
1 While the average CPAU load is about 100 MW, the CPAU recent peak power was 178 MW in 2023.
https://www.paloalto.gov/files/assets/public/v/5/utilities/utilities-at-a-glance-fy-2023_final.pdf
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3. Provide best practices for managing financial risk from data centers and offering
customer protections;
4. Solicit feedback from the UAC on community preferences and considerations when it
comes to attracting and integrating data centers.
CPAU has integrated a few 5-10 MW data centers recently. Carefully structured contracts have
thus far helped to stabilize or lower systemwide rates by spreading fixed costs over a greater
volume and helping to fund needed infrastructure replacements. Additional 5-25 MW data
centers could lower electric rates if locations are coordinated and risks are contractually
managed. For data centers with loads above 25 or so MW, the land required for a dedicated
customer substation and distribution system impacts will be much larger. CPAU is seeking
feedback on guiding principles when attracting smaller data centers and when considering
larger projects to align with the community’s preferences.
DISCUSSION
Overview Of Data Center Load, Rate, and Environmental Impacts To-Date
Located in the heart of Silicon Valley and with a municipal dark fiber loop,3 Palo Alto has had
data centers for decades. Over the last three to five years, neighboring electric utilities have
seen requests for larger data centers, including clusters up to 2 GW in San Jose,4 which is
roughly 200 times the size of the largest data centers in Palo Alto. Companies and developers
continue to make relatively large data center inquiries throughout the Bay Area and the state as
they investigate the Bay Area and shop around between utilities and cities, and states. CPAU
has successfully integrated a few 5-10 MW data centers in the last few years, but anticipates
requests for larger data center interconnections.
1. Load impacts to-date
Palo Alto’s electric load peaked in 1998 around 1,170 GWh, declined roughly 30% to a
low of 822 GWh in 2021 and has been growing steadily to roughly 945 GWh in 2025.
Staff forecasts that load will rise steadily through 2045 largely due to data center load
growth, but also as building and transportation electrification accelerate. Data centers
represent roughly 15% of CPAU‘s electric load today.
Data center customers may provide system benefits particularly when loads are
relatively steady, do not trigger large capital capacity expansion, and persist for several
years or decades. Currently CPAU’s largest data centers are running at a high load
3 City of Palo Alto Utilities Commercial Fiber Information.
https://www.paloalto.gov/files/assets/public/v/1/utilities/business/25042-commercial-fiber.pdf
4 “Data centers for AI could nearly triple San Jose's energy use. Who foots the bill?” NBC Bay Area.
https://www.nbcbayarea.com/news/local/data-centers-for-ai-san-jose/3994182/
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factor7, driven in part by the commercial demand rates which incentivize steadier loads
throughout the year.
2. Electricity rate impacts to-date
Due to careful coordination on distribution system upgrades, existing CPAU rules and
regulations, contract structures, and effective commercial demand charges, CPAU’s data
center customers currently have relatively steady usage, lowering (or lowering the rate
of increase) rates for all customers. To ensure that data center projects continue to
benefit all customers, some principles for long-term risk mitigation from new large data
centers include up-front funding from developers, rate structures that return that
investment over time to ensure durability of electricity demand, and clear
communication of where there is existing available system capacity. These are discussed
more in the following section.
3. Environmental impacts to-date
CPAU has maintained a commitment to a 100% carbon-neutral electricity supply since
2013, meaning Palo Alto is probably one of the greenest places to site a data center in
the United States. Palo Alto’s carbon-neutral electricity has been tracked at hourly
resolution since 2020, and CPAU is committed to only carbon-free electricity long-term
contracts in its electricity portfolio going forward.
The same data center load may greatly differ in its climate implications depending on its
location. From an environmental perspective, siting data centers in Palo Alto can be
preferable to siting them in less-decarbonized utilities.
Available Capacity on the Distribution System for Data Centers
Based on the current distribution system, the most practical size for additional data center load
is in the range of approximately 5–25 MW. The most straightforward inquiries fall within 2–5
MW or 5–10 MW in particular locations. Loads beyond 10 MW are feasible in specific
circumstances with contributions of customer funding and structural rate protections.
One location with some available capacity for data centers or other new loads is in the
commercial areas of Stanford Research Park. CPAU is working with several companies
interested in smaller integrating data centers in the 5-10 MW range within existing office space
to communicate existing potential sites. For data centers beyond about 25 MW, the land
7 Load factor in electrical engineering is a ratio measuring the utilization of a system, defined as the average load
divided by peak load. Essentially, it quantifies how fully a resource (like an electrical system's capacity) is being
used relative to its maximum potential. Definition: The ratio of the average load over a period to the peak load
during that same period. Example: A high load factor means consistent energy use, reducing costs. Formula: Load
Factor = Average Load / Peak Load (for a given time). https://electrical-engineering-portal.com/demand-factor-
diversity-factor-utilization-factor-load-factor
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required for new substations, and distribution system impacts will be much larger. CPAU is
seeking input from the UAC on guiding principles when considering these projects and how
they align with the community’s vision for the future and ensuring projects are beneficial to
existing ratepayers.
Best Practices for Ensuring Data Centers Benefit All Customers
9 There are risks that larger or speculative loads that accelerate major upgrades
without secured cost recovery can increase exposure and lead to higher rates if the loads do
not come online.
9 Wiser, R., O’Shaughnessy, E., Barbose, G., Cappers, P., & Gorman, W. (2025). Factors influencing recent trends in
retail electricity prices in the United States. The Electricity Journal, 38(4), 107516.
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Feedback Solicited From the UAC:
Staff is seeking input from the UAC and the community on general guiding principles for
attracting and integrating data centers in order to respect community preferences regarding
land required for new electric infrastructure, sustainability, and electricity rates.
1. For integrating data centers on the larger side of what is currently feasible within
CPAU’s existing electric system, what concerns does the UAC feel should be addressed
proactively with the community?
2. How much does the UAC feel the City of Palo Alto should be prioritizing recruiting right-
sized data center customers?
3. Large data centers in the 50 MW or greater range have the opportunity to lower or
stabilize electricity rates for customers in Palo Alto, but depending on site location could
require extension of distribution overhead and underground infrastructure and other
investments.
a. What should staff consider when having those discussions about relatively large
(50 MW) data centers?
b. Would a relatively large data center or data centers align with community values
if they did lower or stabilize rates for all customers and provide an increase in
electric revenue?
At this time, there is no financial impact associated with these recommendations. Staff is
working to streamline processes and contracts for data centers which appear to be good fits for
our distribution system and community.
Staff anticipate continued engagement with the Utilities Advisory Commission, coordination
with additional City departments as needed, economic development study impacts, and
outreach to affected stakeholders and interested members of the community.
The UAC’s discussion of this item will not cause a direct or indirect physical change in the
environment, and is therefore not a project subject to review under the California
Environmental Quality Act (Public Resources Code sec. 21065).
:
Alan Kurotori, Director of Utilities
Staff: Kathryn Fortenberry, Management Fellow
Staff: Lena Perkins, PhD, Utilities Acting Deputy Director, Resource Management
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Utilities Advisory Commission
Staff Report
From: Alan Kurotori, Director Utilities
Lead Department: Utilities
Meeting Date: February 4, 2026
Report #: 2512-5642
TITLE
Discussion of the Residential Electric and Water Utility Customer Satisfaction Survey Results
RECOMMENDATION
This item is for discussion, and no action is requested. Staff will present the results of the City of
Palo Alto Utilities (CPAU) 2025 Residential Electric and Water Utility Customer Satisfaction
Surveys.
EXECUTIVE SUMMARY
CPAU conducts annual utilities customer satisfaction surveys to gauge perspectives on critical
utilities issues. This report summarizes the latest results of the residential electric and water
utility customer surveys performed October 14 through November 25, 2025.
The surveys were conducted with the primary purpose of assessing customer awareness and
satisfaction related to the following areas: service reliability, utility rates and affordability,
customer service, communication, infrastructure management, customer programs,
sustainability practices, and overall engagement with CPAU's services. The outcome of this
research will enable CPAU to clearly understand customer expectations, act on near-term
opportunities for improvement, and create a strategic roadmap to increase customer
satisfaction. Proposed action items are included in the attached presentation.
PROJECT DESCRIPTION
The surveys were conducted in collaboration with California Municipal Utilities Association
(CMUA) members and administered by GreatBlue Research, Inc. CPAU participated with other
CMUA members in a statewide survey of municipal utility and investor-owned utility (IOU)
customers. Subsequently CPAU engaged with GreatBlue Research, Inc. to implement a follow-
up “oversample” survey of Palo Alto residents for expanded understanding of local utility
customer insights and benchmark comparisons to other municipal utilities and IOUs. This is the
second residential survey conducted for CPAU by GreatBlue Research, Inc. following an initial
survey of residential customers in 2023.
ANALYSIS
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Considering the demographics of customers who responded to the survey, CPAU may try to
enhance future survey methodologies to improve representation of the Palo Alto community.
Overall Performance Context
Water Service: CPAU's average positive rating across organizational characteristics was
80.0% (+1.1 percentage points compared to 2023), compared to 63.3% for the statewide
municipal utility customer aggregate. CPAU scored higher on every single characteristic,
with the largest gaps in “environmental responsibility” (+23.2 percentage points),
"promoting efficient use and conservation" (+22.4 percentage points) and “monitoring
water quality” (21.0 percentage points).
Electric Service: CPAU's average positive rating was 74.4% (+3.5 percentage points
compared to 2023), compared to 62.0% for statewide municipal utilities and 62.6% for
IOUs. CPAU led other statewide municipal utilities on all 11 characteristics, with the
highest scores in reliability (+19.5 percentage points), outage restoration (+18.3
percentage points), and commitment to renewables (+23.7 percentage points).
Key Strengths Highlighted in Deeper Analysis
Alignment of Performance and Priorities: In both surveys, CPAU shows strong
alignment between what customers rate as most important (e.g., water quality and
monitoring, reliable supply, value for cost) and where CPAU earns its highest scores.
This alignment is tighter than the municipal utility averages, contributing to high Net
Positive Scores (86.1% among water customers; 82.1% among electric customers). Net
Positive Score (NP+S) = (advocates + loyal + satisfied).
Value and Affordability Perception: Despite rate pressures felt industry-wide, CPAU
customers rate value and reasonableness higher than benchmarks. For example, 68.0%
rate water value "good/very good"; and 71.8% find electric rates reasonable, which is
7.4 percentage points higher than other electric municipal utilities in California.
Environmental and Conservation Leadership: High ratings for conservation promotion
and renewable commitment stand out as differentiators versus other municipal utilities.
Areas of Opportunity
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While CPAU remains a top performer, a few areas showed slight declines compared to 2023
that align with broader industry trends.
Customer Service Resolution: First contact resolution dipped modestly among both
water customers (-13.9 percentage points) and electric customers (-3.8 percentage
points). Billing inquiries and lack of prior resolution were common drivers of repeat
contacts. These are common pain points for many municipal utilities dealing with rate
complexity. Also, customers are increasingly expecting to find more information on their
utility’s website and turning to customer service when they cannot find this information.
Preparedness Perceptions: Lower confidence in drought, natural disaster, and
emergency preparedness. These are notably below municipal utility averages in some
cases and may reflect statewide anxiety around climate risks rather than CPAU-specific
issues.
Digital Tools and Communication: Satisfaction with self-service digital options lagged
behind municipal utility averages in the electric survey (-9.8 percentage points),
suggesting room to enhance online portals for account management, mobile
application, or other self-service activities.
Action Items
Strengthen customer service first-contact resolution through billing issue workflows,
identifying common failure points such as unclear bill language, difficulty navigating
online account tools, or delayed processing. Integrate proactive digital tools, such as
estimated bill explanations or usage trend visualizations, to help customers self-
diagnose matters before contacting support, reducing call volume and complexity.
Enhance education about utility rates and affordability through robust outreach
campaigns, utilizing a variety of different media, to better communicate the value of
publicly owned utilities.
Expand communication about infrastructure improvements, highlighting regular
updates on water and energy infrastructure projects to showcase reliability
improvements and conservation benefits. Clearly articulate how these investments align
with CPAU’s mission, customer priorities, and affordability.
Develop income-specific messaging pathways for electric appliance replacement
programs that reflect the motivations, financial constraints, and support needs of each
group. Offer simplified “guided installation pathways,” including contractor
recommendations and step-by-step support for high-income customers who prioritize
convenience and trusted installation partners. Enhance outreach during key
replacement moments, such as emergency replacements, with clearer, faster messaging
on available rebates and financing options.
Amplify outreach campaigns to inform water customers about efficient usage and
rebate opportunities. Align rebate tiers and cost-share structures with demonstrated
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willingness-to-pay segments, ensuring that lower-cost options remain accessible to
customers with limited budgets.
Expected Outcomes
CPAU plans to implement the identified action items and address key takeaway results to
improve customer satisfaction, trust, awareness, and engagement. Survey results indicate that
an improved understanding of rates and the value of what goes into those investments,
including program benefits, will lead to increased satisfaction and trust. Dedicated efforts to
raise awareness among different customer groups about programs and resources will lead to
higher participation in energy and water efficiency initiatives, as well as accelerate adoption of
electrification programs and conservation practices. Expanding educational outreach and
awareness around rates, infrastructure investments, and affordability initiatives will build
greater trust in CPAU among customers. Customer relationships will be strengthened,
solidifying CPAU’s reputation as a reliable utility provider focused on community needs.
This report serves as a foundational document for the Utilities Advisory Commission to consider
strategic actions based on customer feedback and insights gained from results of these
residential surveys conducted in 2025.
FISCAL/RESOURCE IMPACT
CPAU compensated GreatBlue Research, Inc. in the amount of $22,000 for the statewide
residential electric and water customer surveys and oversampling survey of Palo Alto residents.
STAKEHOLDER ENGAGEMENT
GreatBlue Research, Inc. utilized digital data collection to field responses from a statistically
significant, random sampling of residents. Staff provided public outreach to the Palo Alto
community to ensure the legitimacy of the surveys and encourage greater participation.
ENVIRONMENTAL REVIEW
This does not meet the definition of a project, pursuant to Section 21065 of the California
Environmental Quality Act, thus no environmental review is required.
AUTHOR/TITLE:
Alan Kurotori, Director of Utilities
Staff: Catherine Elvert, Utilities Communications Manager
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Date: February 4, 2026
12-MONTH ROLLING CALENDAR
FORECAST
Utilities Advisory Commission City Council
CCM – City Council Meeting
FCM – Finance Committee Meeting PS – Policy and Services February 2026 February 4, 2026
• Data Center Competitiveness
• Discussion of Residential Customer Satisfaction
Survey Results
• Purchase Order with ABB Inc. for Substation
Breakers
• Water System Leak Detection Survey
• Informational Report on Residential Customer
Satisfaction Survey Results
• Utilities Reserves Advisory Report (PS)
• Informational Report on Calendar Year 2024
Annual Update for the Cap-and-Trade Program
• UAC FY 2026 Work Plan
March 2026 March 4, 2026
• Potable Water Quality Update – Regional
Sampling of Microplastics Informational Report
• Wastewater Rates and Financial Forecast
• Water Rates and Financial Forecast
• Wastewater Rates and Financial Forecast (FCM)
• Water Rates and Financial Forecast (FCM)
• Flynn Resources 2 Yr Extension Contract
Amendment
• Updates to Utilitiesy Rules and Regulations
• Adoption of a Resolution Approving an Edison
Electric Institute Master Power Purchase and Sales
Agreement
April 2026 April 1, 2026
• Urban Water Management Plan
• FY 2026 – Q2 Report, Informational
• Gas Rates and Financial Forecast
• Electric Rates and Financial Forecast
• Water Supply and Demand Assessment
• Election of UAC Chair and Vice Chair
• Gas Rates and Financial Forecast (FCM)
• Electric Rates and Financial Forecast (FCM)
May 2026 May 6, 2026
• FY 2027 Utilities Operating and CIP Budget
• Status Update on the Gas Transition Study
• GoGreen Business Financing
• FY 2027 Utilities Operating and CIP Budget (FCM)
• Urban Water Management Plan
• Commercial Efficiency and Electrification Program
• Commercial Customer Characterization Tool
• Commercial Electrification Technical Assistance
June 2026 June 3, 2026
• Q3 Informational Report
• UAC Work Plan
• FY 2027 Utility Rates and 5-year Forecasts
• FY 2027 Utilities Operating and CIP Budget
July 2026 July 1, 2026
• FTTP Pilot Report Out
• Grid Mod Project Update
August 2026 August 5, 2026 • FTTP Pilot Report Out (FCM & CCM)
• GoGreen Business Energy Financing Program
• Grid Mod Bond Financing (FCM & CCM)
September 2026 September 2, 2026 • Substations’ Electric Equipment and Structures
Painting Contract
October 2026 October 7, 2026
• FY 2026 – Q4 Report, Discussion
November 2026 November 4, 2026
• FY 2028 Preliminary Rates
December 2026 December 2, 2026 • FY 2028 Preliminary Rates (FCM)
January 2027 January 6, 2027
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Council Recap on Utilities Items – January 2026
Approved By Council:
• Gas Leak Survey Services Contract Number C26195486
• City of Palo Alto’s Updated 2026 Water, Gas, and Wastewater Utility Standards
• Adopt the 2026 State and Federal State Legislative Guidelines and 2026 Utility Policy Guidelines
Recurring Items Items to Be Scheduled
• Educational Update on any Type of New Technology or Terminology
• Projects with a Resiliency Component
• Quarterly Reports (Q1-3 Info Rpts)(Q4 Discussion Summary of the year)
o Financial Report
o Utilities Programs Update
▪ Informational EV Charger Installation Updates
▪ Informational Bucket 1 REC Sales Updates
▪ Informational Fiber Updates
• Rates and Financial Forecast
• Utilities Budget
• Utilities Quarterly Informational Report – Council
• Reserve Assessment
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