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HomeMy WebLinkAboutStaff Report 2602-59682.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on February 4, 2026 Item No. 2 Page 1 of 1 9 3 8 2 Utilities Advisory Commission Staff Report From: Alan Kurotori, Director Utilities Lead Department: Utilities Meeting Date: March 4, 2026 Report #: 2602-5968 TITLE Approval of the Minutes of the Utilities Advisory Commission Meeting Held on February 4, 2026 RECOMMENDATION Staff recommends that the Utilities Advisory Commission review and approve the February 4, 2026 minutes. Commissioner ______ moved to approve the draft minutes of the February 4, 2026 meeting as submitted/amended. Commissioner ______ seconded the motion. ATTACHMENTS Attachment A: February 4, 2026 Draft Minutes AUTHOR/TITLE: Belle Farias, Administrative Associate III Utilities Advisory Commission Minutes Approved on: Page 1 of 18 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF FEBRUARY 4, 2026 REGULAR MEETING CALL TO ORDER Chair Scharff called the meeting of the Utilities Advisory Commission (UAC) to order at 6:03 p.m. Present: Chair Scharff, Vice Chair Mauter, Commissioners Croft, Gupta, Metz, Phillips (6:06 p.m.), and Tucher (6:49 p.m.) Absent: None AGENDA REVIEW AND REVISIONS None ORAL COMMUNICATIONS None APPROVAL OF THE MINUTES ITEM 1:Approval of the Minutes of the Utilities Advisory Commission Meeting Held on January 7, 2026 Chair Scharff invited comments on the January 7, 2026, UAC draft meeting Minutes. Commissioner Croft stated that she found the January 7, 2026, minutes somewhat difficult to follow for readers who were not present at the meeting. Commissioner Croft recommended several edits to improve context. It was suggested to revise references to “the money” to more clearly reflect that there were 2 separate funding sources. Commissioner Croft recommended replacing “the money” with “spending the full $20M” in one instance and with “not to spend the full budget without an initial look at the pilot results” in another instance to better reflect the prior discussion. Commissioner Croft also requested another sentence be revised to read "Commissioner Croft opined that for the people putting in large systems, communication will be needed about the fact that rates change over time and potential for high costs," and explained that the comment referred to customers installing large solar panel systems who might expect utility rates to remain constant over time. Utilities Advisory Commission Minutes Approved on: Page 2 of 18 ACTION: Commissioner Croft moved, seconded by Commissioner Gupta, to approve the draft minutes of the January 7, 2026, meeting as amended. Motion approved 6-0. Commissioner Tucher absent. UTILITIES DIRECTOR REPORT Director of Utilities Alan Kurotori reported on recent City Council actions. On January 5, the City Council selected Vice Mayor Vicki Veenker as Mayor and Councilmember Greer Stone as Vice Mayor. Mr. Kurotori reported that the Council held its annual goal-setting session on January 24, during which 4 primary priorities were identified: government efficiency, achieving near- term housing milestones, Cubberley acquisition and renovation funding, and enhancing business vibrancy. There were several utility-related actions undertaken in January, including approval of the updated 2026 Water, Gas, & Wastewater Utility Standards; adoption of applicable state and federal utility guidelines previously reviewed by the UAC; and approval of a professional services contract with Baron Contracting for gas leak survey services. Recruitment is underway for 2026 boards, commissions, and committees, with 10 seats currently open. The application deadline is February 18, and additional information is available on the City website. Interviews with the City Council are expected to occur in March. Commission appointments are anticipated to occur after the appointment process, with the earliest opportunity for Commission action likely in April. Mr. Kurotori reported on the Gas Main Replacement Project (GMR 25), which will replace approximately 5 miles of gas mains and services in the Duveneck/St. Francis, Leland Manor, Midtown, and Palo Verde neighborhoods. The project is part of ongoing efforts to enhance safety and reliability of the gas system and is funded by a $16.5M federal DOT grant. Construction is expected to begin later in the month and continue through summer 2027. Mr. Kurotori discussed that staff participated in legislative advocacy efforts at Capitol Day on January 26, organized by the Northern California Power Agency and the California Municipal Utilities Association. A group of staff met with several state legislators, including Assemblymember Joe Patterson, sponsor of AB 34, which would extend provisions related to large hydroelectric resources. Mr. Kurotori noted that the legislation would benefit Palo Alto and other agencies by helping avoid excess renewable procurement requirements and supporting affordable utility rates. There were also meetings with Assemblymember Berman and staff from Senator Becker’s office, who are co-sponsors of the bill. The legislation is advancing quickly, and staff is hopeful it will be signed by the Governor. Chair Scharff added that the bill passed the Assembly on the same day as the staff’s visit. Mr. Kurotori stated that staff consulted with the City Clerk’s Office regarding the format of UAC minutes and that the current practice may be migrating from summary minutes to action minutes, which typically include the agenda item, motion, vote, and outcome. Meeting recordings are available online to capture full discussion. Mr. Kurotori noted that summary minutes remain in use at present and acknowledged challenges associated with preparing Utilities Advisory Commission Minutes Approved on: Page 3 of 18 them. Commissioner Phillips questioned what was meant by "migrating," and Mr. Kurotori responded that implementation would be guided by the Clerk’s Office. Commissioner Phillips asked whether action minutes would capture staff commitments made during discussions that were not formally voted on. Mr. Kurotori stated that such items might be included if part of an approved action but that the level of detail would be confirmed with the Clerk’s Office. Chair Scharff expressed concern that action minutes may not adequately capture discussion items that do not require a vote, which could limit City Council’s ability to understand Commission input. Councilmember Lauing indicated that action minutes can be customized to document significant discussions even without formal votes. Chair Scharff emphasized that summary minutes provide a useful overview of Commission deliberations and expressed concern that relying solely on action minutes and recordings would make information less accessible. Commissioner Croft similarly noted difficulty compiling past discussion topics from existing materials and expressed concern that action minutes could further reduce accessibility. Commissioner Phillips suggested that if action minutes are adopted, the Commission may need to vote on more items to ensure its guidance is documented, and Chair Scharff agreed. Commissioners discussed alternatives, including providing transcripts alongside action minutes. Commissioner Mauter suggested that transcripts would allow readers to search and summarize content as needed. Chair Scharff noted that automated transcription services may already be available, and Commissioner Gupta added that AI tools could potentially assist with summarizing recordings efficiently. Mr. Kurotori acknowledged the feedback and stated that staff would follow up with the Clerk’s Office and IT to evaluate available options. Utilities Advisory Commission Minutes Approved on: Page 4 of 18 resolve underlying issues and that a comprehensive cross-departmental evaluation is needed to identify effective solutions. NEW BUSINESS ITEM 2:Background and Discussion on Data Centers in Palo Alto (DISCUSSION 6:50 p.m. – 7:50 p.m.) Staff: Kathryn Fortenberry, Management Fellow Utilities Advisory Commission Minutes Approved on: Page 5 of 18 practices for integration, including clear interconnection expectations, development of Conditional Use Permit requirements, and cost responsibility for grid expansion, while noting that data centers may also provide grid benefits as large flexible loads. Ms. Fortenberry concluded by requesting Commission input on whether attracting new data centers should be a priority, exploration of Conditional Use Permit policies, and community considerations for projects of varying scale. Utilities Advisory Commission Minutes Approved on: Page 6 of 18 increasing costs to existing customers or causing community disruption, with concerns noted regarding noise and water use. Palo Alto’s advantages as a municipal utility with coordinated water and electric oversight and available capacity were highlighted, along with regional competition for such projects. Additional analysis was requested on grid feasibility, potential sites, recruitment strategy, and protective measures such as strict cost responsibility, upfront funding, minimum usage commitments, long-term agreements, and exit provisions. Commissioner Gupta also noted uncertainty in long-term demand projections due to rapid technological change, with the observation that future energy needs may differ from current forecasts. Utilities Advisory Commission Minutes Approved on: Page 7 of 18 water and energy use, noting that many data centers seek to minimize potable water consumption and often use recirculating systems that reduce discharge. Mr. Kurotori stated that recycled water is preferred by data centers where available and that Palo Alto’s wastewater treatment system can supply recycled water in certain locations. Commissioner Croft expressed a preference for smaller data center projects rather than large facilities, indicating that multiple smaller installations would be more compatible with existing customer classes. Commissioner Croft stated that any such data centers should use non-potable water and raised concerns about potential impacts including noise, chemical contamination, light pollution, and broader industrialization, suggesting that appropriate regulations would be important. Utilities Advisory Commission Minutes Approved on: Page 8 of 18 Chair Scharff agreed with concerns about public perception of data centers and suggested that improved public communication would be beneficial. Chair Scharff expressed general support for pursuing data center opportunities, particularly if they could help stabilize or reduce residential electric rates and support electrification goals, and indicated support for 25 megawatt data centers, while noting that larger projects should provide substantial financial contributions to the City. Chair Scharff noted that the presentation included significant potential revenue figures and stated that additional funds could be beneficial given the City’s budget deficit. Chair Scharff asked about potential effects on energy markets if Diablo Canyon were extended and whether current prices already reflect that uncertainty. Dr. Perkins responded that legislative studies on cost and reliability are underway and that any action could take several years, noting that current procurement decisions would lock in prices regardless of future changes and that major utilities are actively competing for supply. Chair Scharff also asked about the City’s approach to attracting data centers and whether project timelines could align with potential market changes. Mr. Kurotori responded that Palo Alto does receive inquiries about building data centers, noting that there are development timelines with property acquisition, financing, and construction. Mr. Kurotori added that the City expects large customers to fund required infrastructure improvements upfront and is positioned to accommodate potential projects due to planned transmission upgrades that will increase reliability and capacity, while emphasizing that Palo Alto remains competitive relative to other markets with constrained capacity. Utilities Advisory Commission Minutes Approved on: Page 9 of 18 Chair Mauter noted the value of reliable, high-quality electric service for local businesses and requested that potential queue management policies be considered as part of future planning. Utilities Advisory Commission Minutes Approved on: Page 10 of 18 additional energy could be obtained at lower cost without thorough analysis. Mr. Kurotori explained that detailed evaluations are highly site-specific and typically conducted once a prospective customer and location are identified. Infrastructure requirements and timelines can be estimated but broader analysis depends on customer needs and outreach. Mr. Kurotori emphasized the importance of direct engagement to negotiate agreements that protect the community based on prior experience serving large loads. Utilities Advisory Commission Minutes Approved on: Page 11 of 18 Chair Scharff stated that the UAC’s overall message was to mitigate risks while exploring data center opportunities and asked about next steps, including whether staff would pursue outreach, develop a plan, or bring recommendations to the City Council. Mr. Kurotori responded that staff will continue evaluating expectations and community concerns, including noise and aesthetics, and may coordinate with other departments on potential permitting approaches to provide clarity for prospective projects. Mr. Kurotori noted that outreach occurs through existing customer relationships and that interest may increase as awareness of available capacity and new transmission improvements spreads, while acknowledging local constraints such as limited land availability and high costs, and advantages including existing infrastructure and connectivity resources. ITEM 3: Discussion of the Residential Electric and Water Utility Customer Satisfaction Survey Results (DISCUSSION 7:50 p.m. – 8:30 p.m.) Staff: Catherine Elvert, Utilities Communications Manager Utilities Advisory Commission Minutes Approved on: Page 12 of 18 responsibility. Ms. Elvert explained that organizational characteristics refer to key structural, operational, and cultural attributes that describe how a utility functions and manages risk. Comparative results were presented showing CPAU's performance in 2025 relative to 2023, statewide municipal utilities, IOUs, and national benchmarks, noting that CPAU scored significantly higher on most measures across all comparison groups. Ms. Elvert also stated that the survey results are statistically reliable, with margins of error of approximately plus or minus 4.8 percent at a 95 percent confidence level, and noted that additional demographic details and comparative data are available in supplemental materials. Utilities Advisory Commission Minutes Approved on: Page 13 of 18 complex billing issues requiring multiple contacts. About 75 percent reported satisfaction with recent service experiences, below municipal averages. Email is the preferred communication method, though many still rely on bill inserts, which are now available to e-bill customers. Customers identified leak detection alerts and no-cost conservation guidance as the most useful efficiency tools and expressed familiarity with conservation programs, while low-income customers showed a preference for upfront rebates for water-efficient fixtures. Utilities Advisory Commission Minutes Approved on: Page 14 of 18 that the City also conducts broader residential surveys and uses multiple sources to gauge community perspectives, noting that while survey responses tend to reflect certain demographics, the results are considered statistically significant and informative when evaluated alongside other data. Utilities Advisory Commission Minutes Approved on: Page 15 of 18 account customers, noting that the business survey was conducted in 2024 and will be repeated in 2026, with results expected to be presented to the Commission in early 2027. Utilities Advisory Commission Minutes Approved on: Page 16 of 18 centers will return to the Commission for further discussion and potential votes. Councilmember Lauing explained that not all matters require action at the initial meeting and that updates often serve to inform the Commission and guide future decision-making. Utilities Advisory Commission Minutes Approved on: Page 17 of 18 Commission’s discussions directly and can convey them to the full Council, and expressed confidence that the Council is receiving the Commission’s input. Utilities Advisory Commission Minutes Approved on: Page 18 of 18 staff presentations and noted that the rate process includes preliminary projections and subcommittee review, emphasizing that the timeline and procedure follow an established annual process. Mr. Kurotori confirmed that the UAC does vote, particularly on rate matters, and provides formal input as part of its primary responsibilities. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS ADJOURNMENT