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Home My WebLink AboutMeetings2887Packet_20260827154531516UTILITIES ADVISORY COMMISSION Regular Meeting Wednesday, September 02, 2026 Council Chambers & Hybrid 6:00 PM Utilities Advisory Commission meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference or in person. To maximize public safety while still maintaining transparency and public access, members of the public can choose to participate from home or attend in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Masks are strongly encouraged if attending in person. The meeting will be broadcast on Cable TV Channel 76, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/96691297246) Meeting ID: 966 9129 7246 Phone: 1(669)900-6833 PUBLIC COMMENTS General Public Comment for items not on the agenda will be accepted for up to three minutes or an amount of time determined by the Chair. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. All requests to speak will be taken until 5 minutes after the staff’s presentation. Written public comments can be submitted in advance to UAC@PaloAlto.gov and will be provided to the Council and available for inspection on the City’s website three days before the meeting. Please clearly indicate which agenda item you are referencing in your subject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to UAC@PaloAlto.gov at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks, posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do not create a facility, fire, or safety hazard; and (3) persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. TIME ESTIMATES Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Commission reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting to adapt to the participation of the public, or for any other reason intended to facilitate the meeting. 1 Regular Meeting September 02, 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. IN PERSON PUBLIC COMMENT 6:10PM - 6:15 PM Members of the public may speak to any item NOT on the agenda. 1-3 minutes depending on number of speakers. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. APPROVAL OF MINUTES 6:15PM - 6:20PM 1.Approval of the Minutes of the Utilities Advisory Commission Meeting Held on August 5, 2026 UTILITIES DIRECTOR REPORT 6:20PM - 6:30PM NEW BUSINESS 2.Special Presentation and Discussion on Partnering Norms for Staff and Commissioners Effectiveness. CEQA – Not a Project (DISCUSSION: 6:30PM – 7:00PM) 3.Discussion of Baker Tilly Reserves Advisory Report and Recommendation to the City Council of Proposed Policy Updates to the Utilities Reserve Management Policies (ACTION: 7:00PM – 8:30PM) Late Packet Report Added 4.Update on Electric System Long Duration Resiliency; CEQA Status – Not a Project (DISCUSSION: 8:30PM – 8:50PM) 5.City of Palo Alto Utilities Wildfire Mitigation Plan (WMP) 2026 Update: CEQA – Not a Project (ACTION: 8:50PM – 9:00PM) COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTS VIRTUAL PUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. 1-3 minutes depending on number of speakers. In-person comments will be heard at the beginning of the agenda and remote comments will be heard at the end of the agenda. ADJOURNMENT 2 Regular Meeting September 02, 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 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 3 Regular Meeting September 02, 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 Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1.Written public comments may be submitted by email to UAC@PaloAlto.gov. 2.Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom-based meeting. Please read the following instructions carefully. ◦You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. ◦You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. ◦When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. ◦When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 3.Spoken public comments using a smart phone will be accepted through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B-E above. 4.Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 966 9129 7246 Phone:1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing ada@PaloAlto.gov. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. 4 Regular Meeting September 02, 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 Utilities Advisory Commission Staff Report Report Type: APPROVAL OF MINUTES 6:20PM - 6:25PM Lead Department: Utilities Meeting Date: September 2, 2026 Report #:2608-6663 TITLE Approval of the Minutes of the Utilities Advisory Commission Meeting Held on August 5, 2026 RECOMMENDATION Staff recommends that the Utility Advisory Commission review and approve the August 5, 2026 minutes. Commissioner ______ moved to approve the draft minutes of the August 5, 2026 meeting as submitted/amended. Commissioner ____ seconded the motion. ATTACHMENTS Attachment A: August 5, 2026 Draft Minutes APPROVED BY: Alan Kurotori, Director Utilities Item #1 Packet Pg. 5 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 1 of 16 UTILITIES ADVISORY COMMISSION MINUTES OF AUGUST 5, 2026, REGULAR MEETING CALL TO ORDER Chair Mauter called the Utilities Advisory Commission (UAC) meeting to order at 6:00 p.m. Present: Chair Mauter, Vice Chair Phillips, Commissioners Croft, Metz, Tucher, and Gupta Absent: Commissioner Scharff AGENDA REVIEW AND REVISIONS Utilities Director Alan Kurotori said the updated 12-month calendar was left in front of the Commission, emailed to UAC members, and made available to the public in attendance and on the website. IN-PERSON PUBLIC COMMENT None. APPROVAL OF THE MINUTES ITEM 1: ACTION: Approval of the Minutes of the Utilities Advisory Commission Meeting Held on June 3, 2026 Commissioner Tucher asked about the status of the work plan drafted in redline in the minutes, which will be presented to Council as soon as August 10. Chair Mauter replied that the Director’s Report will indicate when the work plan goes to Council. MOTION: Vice Chair Phillips moved, seconded by Commissioner Metz, to approve the June 3, 2026 meeting minutes. MOTION PASSED: 5-0-1, Gupta abstain Item #1 Packet Pg. 6 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 2 of 16 UTILITIES DIRECTOR REPORT Utilities Director Alan Kurotori shared positive news about the passage of AB 34, sponsored by Senator Becker and Assemblymembers Patterson and Berman, and signed by the governor. Staff estimated that this legislation could have a $25M impact on the Utility between 2030 and 2045. Director Kurotori provided an update on the fiber-to-the-premises service. The fiber hut was completed earlier this year and will enable service for up to 850 customers in the area. Staff is currently working with about a dozen early adopters to refine the installation process, gather feedback on their experiences, and address any startup issues. Staff will present a full update to the UAC in October. Gas Main Replacement Program #25 has made significant progress. Crews have installed nearly 10,000 linear feet and approximately 220 gas services in our primary residential area. A $16.5M federal grant funded the project. This reinvestment in our infrastructure also helps reduce our greenhouse gas emissions, as leaks from our gas mains account for roughly 3 percent of the emissions generated by our gas utility. The contractor for the foothill wildfire mitigation project has installed a substantial amount of conduit and cable, with completion expected by the end of the calendar year. Due to the heat and increased fire risk, crews are not actively working unless the work is critical or there is a high business need. As a result, some crews are focusing their efforts outside the foothills and high-fire-threat areas. Director Kurotori provided an update on the Arastradero Creek rehabilitation and pipeline relocation project. A winter storm in 2023 exposed some of our utilities. Principal Engineer Aaron Perkins presented the proposed restoration activities to the Parks and Recreation Commission. The plan aims to relocate pipelines away from areas that are prone to erosion whenever possible. This project also involved gathering information and feedback from the community and regulatory agencies. Director Kurotori acknowledged the light agenda for today's meeting. Staff had a conversation with the chair and vice chair about moving items forward; however, this was not possible because some staff were out this month. Staff had about 60 potential projects, the majority battery-only, that they had been working on with the Northern California Power Agency and other agencies. Staff had expected to negotiate 3 or more power purchase agreements to present to the UAC tonight. Unfortunately, negotiations between the cities and the developers did not progress. Once staff receives further details on the next set of competitive projects for solar and storage options, they will present that information to the UAC, though it is not yet scheduled. Staff anticipates presenting the UAC work plan at the City Council meeting on October 5, as indicated in the 12-month rolling calendar. The calendar incorporates items from the Commission’s recently adopted work plan. Director Kurotori requested the Commission’s Item #1 Packet Pg. 7 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 3 of 16 feedback on how staff is managing the UAC’s schedule and the number of agenda items to ensure the UAC is not overwhelmed in any given month. Item #1 Packet Pg. 8 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 4 of 16 Commissioner Croft believed the Commission could ask staff about a meeting they attended, especially because the joint session's date was unknown and the information could be outdated by the time it was calendared. This body had shown a keen interest in water-related issues, and Commissioner Croft was curious about any information staff could provide to the UAC. Item #1 Packet Pg. 9 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 5 of 16 NEW BUSINESS ACTION: Calendar Year 2025 Reliability Metric Update and Annual System Reliability Goal Setting; CEQA Status; Not a Project, CEQA Guidelines Section 15378(b)(5) Utilities Chief Operating Officer Terry Crowley delivered a slide presentation. On March 2, 2026, staff presented electric system reliability metrics to the Council and proposed reliability goals. The Council agreed with staff’s recommended goals but wanted goals tied to Palo Alto’s past performance to address electrification concerns. Tonight, staff sought the UAC’s input on the proposed reliability goals before presenting them to the Council for adoption. COO Crowley displayed the primary reliability metrics for 2019 through 2025: SAIDI (System Average Interruption Duration Index), SAIFI (System Average Interruption Frequency Index), and CAIDI (Customer Average Interruption Duration Index). Major Event Days (MED) were defined as days when 10 percent or more of Palo Alto’s customers were affected by an outage. In 2023, the City implemented new software that improved accuracy, so numbers before 2023 may have been understated. Chair Mauter asked whether MED could be exogenous to the system, such as an earthquake or major weather event, rather than a major system outage caused by poor transformer maintenance, and whether there was a clearer version of MED. COO Crowley responded that there were 2 widely accepted industry definitions of an MED: The legacy version was 10 percent of customers affected in a 24-hour period. The newer, more statistically valid version is the 2.5-beta method, which takes the standard deviation of average daily outage minutes, multiplies it by 2.5, and then applies additional calculations to produce a range. A day that exceeds that range is an MED. Neither version considers the outage cause. Weather events, earthquakes, major equipment failures, or other factors could create an MED. Outages on certain circuits in Palo Alto create an MED. Staff will continue to triage large outages regardless of the cause. If it was the UAC’s recommendation, staff could include criteria tied to equipment failures, weather events, or multiple outages. COO Crowley presented regional and national reliability metrics for 2024 because 2025 data were not available when staff prepared the report. PG&E’s DeAnza District and Palo Alto had similar weather, climate, and population density. Benchmarking against PG&E helped assess the value the City of Palo Alto provides compared with the most likely provider if Palo Alto chose not to have an electric utility. Palo Alto also compared well with Alameda and Silicon Valley Power. Palo Alto ranked in the top quartile among all utilities nationwide. Staff’s proposed reliability goals were: Outperform PG&E’s DeAnza District on all reliability metrics, including and excluding MED. Remain within the top quartile nationally for SAIDI and SAIFI when MED is excluded. Set a target for average system reliability equal to or better than 4 nines (99.99 percent available), equivalent to a SAIDI of 52.6 or less. Set an operational target to lower CAIDI to below 190 to speed restoration times following an outage. The reason for excluding national MED was that California weather differs from other parts of the country, so comparing MED that includes storms was not a fair comparison. Item #1 Packet Pg. 10 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 6 of 16 Commissioner Gupta asked about staff’s recommended goal of lowering CAIDI below 190, rather than a 10 percent 3-year average. COO Crowley replied that the goal was to lower CAIDI but staff could consider using a 3-year average as an additional goal. Commissioner Metz wanted to confirm whether the 52.6 and 190 referred to minutes, as that clarification would be helpful throughout the presentation. COO Crowley confirmed that the SAIDI and CAIDI numbers were minutes. SAIFI is the number of outages per year. COO Crowley presented graphs of the proposed targets for average system availability and reliability, as well as for historical performance against SAIDI, ASAI, and CAIDI targets. COO Crowley believed that 4 nines, or 52.56 for SAIDI, was not out of reach relative to historical numbers. The CAIDI target of 190 was sometimes not met, so staff needed to continue driving those numbers downward to meet that goal. COO Crowley sought recommendations from the Commission on the 4 goals staff proposed. Those recommendations would then be taken to Council for final approval, after which staff would begin work on projects to meet those goals. Vice Chair Phillips emphasized the need for metrics that clearly show whether we are doing better or worse than in previous years, a sentiment he heard from several City Council members. No significant changes appeared over the period shown on the slide, prompting Vice Chair Phillips to ask whether this reflected no improvements or external factors. Given the City's $375M investment in grid modernization to improve reliability, Vice Chair Phillips asked how that would show up in the metrics. Vice Chair Phillips asked how these metrics would help staff improve, how many outages were unavoidable, whether there were many storms and we did well, or whether there were few storms and our performance was still poor. Vice Chair Phillips believed the system should be better equipped to handle major events and suggested that MED not be excluded. Vice Chair Phillips thought that industry-standard metrics did not adequately serve our needs, especially as we aim to justify the expense of grid modernization. Vice Chair Phillips wanted something creative to provide a clearer understanding, perhaps by setting different targets or using other metrics. Vice Chair Phillips was not satisfied with the proposed metrics. Commissioner Tucher agreed with Vice Chair Phillips that the SAIDI, SAIFI, and CAIDI metrics were unhelpful. COO Crowley loved SAIDI, SAIFI, and CAIDI, and he provided the following explanation. In 2023, the difference between including and excluding MED was substantial, 154.1 and 43.5, respectively, indicating storms and a lot of restoration work that caused many customer outage minutes. For normal operations, 43.5 was a good number. PG&E was in the 200s, the nationwide quartile was in the 80s, and the numbers for Alameda and Santa Clara were higher than Palo Alto’s. When MED is included, you assess storm response and decide how to reduce the number. A utility weighs the value of the service against the cost. One internal discussion is whether to rebuild the system to better manage winter storms and have staff available 24 Item #1 Packet Pg. 11 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 7 of 16 hours a day during storms or winter. The 2024 numbers were similar. In 2025, there were not many winter storms, so not many MED or outage minutes were excluded; however, when reviewing outage details, staff found that some large circuits serve more than 10 percent of the City’s customers. An equipment failure on that circuit automatically triggers an MED, so staff would have to consider whether we want to prepare for and manage this. Excluding MED allows separate analysis of large outages. Item #1 Packet Pg. 12 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 8 of 16 Chair Mauter thought it would be useful to have MED subsets to differentiate between weather events and equipment failures. We want fast response times during bad weather, so including everything is valuable. It will be easier to demonstrate the value of isolating sections of the grid, improving robustness, and investing in tree trimming if we pull those out. Benchmarking local agencies on recovery time is valuable because we experience the same weather events. Chair Mauter felt it was somewhat futile to set steady averages because the numbers have been volatile over the years, making it harder to track progress. Chair Mauter assumed the variance was weather-related. We can promote grid modernization as something that will improve reliability but then we get a bunch of bad storms. Chair Mauter supported the 4 nines target. Chair Mauter appreciated setting a metric of 190 minutes, which was valuable for customers considering investing in a backup battery, helping them decide the size of the backup battery and how long they were comfortable going without power. Item #1 Packet Pg. 13 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 9 of 16 margin. Palo Alto outperformed De Anza on all metrics including and excluding MED for SAIDI, SAIFI, and CAIDI, except for CAIDI excluding MED. Palo Alto is in the top quartile of SAIDI and SAIFI excluding MED. Palo Alto met the proposed 4-nines metric last year by a good margin, and we failed it only 1 year, so Commissioner Gupta did not know if that was the best metric to show improvement. Commissioner Gupta recommended identifying the 10 worst-performing circuits. Commissioner Gupta suggested looking at the percentage of outages we restored within 4 or 8 hours to evaluate our restoration efforts. We cannot promise customers they will not experience an outage during a severe storm but promising that they will have their power back within a couple of hours most of the time can be a helpful selling point in electrification. Commissioner Gupta will email staff if he has any further creative ideas. Item #1 Packet Pg. 14 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 10 of 16 quickly restore power to customers from another source during an outage. The industry has tried to reduce outage frequency as much as possible but a 5- or 10-second outage is not a reliability tool. Utilities are trying to sectionalize outages to fewer customers and then restore service quickly. Customers want fewer and shorter outages. Customers want information about the outage, the restoration process, and when the crew will arrive. The City uses the OMS system to communicate with customers. COO Crowley said it would take years of hard work to reach a higher goal of 4.5 nines, which corresponds to a SAIDI of about 26 minutes, but that goal was not unobtainable in most years. Item #1 Packet Pg. 15 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 11 of 16 Commissioner Croft mentioned that she has a heat pump water heater and, given the large tank, thought it would take a long outage before she ran out of hot water. Car charging was a major concern, so she suggested having a backup system to use during an outage. Commissioner Croft recalled a previous discussion about a municipal charging station. If customers could receive a notification on their phones and reserve a charging spot, it would reduce concerns for those considering electrification. Vice Chair Phillips asked what staff’s next step was on this item. COO Crowley replied that it was up to the Commission whether staff should return or that he could coalesce the commissioners’ comments and then return to Council to seek their input and final approval. The Commission already expressed their opinions, so Chair Mauter recommended that staff coalesce these comments and return to Council to seek their input and final approval. Commissioner Tucher did not know whether the data showed we were getting better or worse, nor did he understand what was happening behind the numbers. Answers to the questions he raised in his public letter would give him more confidence that our outages are improving and help us reassure customers about electrification. Commissioner Tucher posed the following questions. Why is CAIDI so high at 245? Are a small number of big outages skewing the average, since SAIFI is low, or does excluding MED remove the easy cases and leave only the hard ones? What specifically is an MED (weather and equipment or other causes)? How many MED were there? What percentage of total outages were MED? Where are the hot spots? Where were the outages last year, and what were the causes and durations? Standard industry metrics do not answer those questions but Commissioner Tucher thought a metrics outage report ought to. What is an outage, and can an outage be as short as 30 seconds? Commissioner Tucher would welcome reevaluating whether solar and battery storage pencil out, especially for commercial. COO Crowley explained that Palo Alto’s CAIDI is typically high because outages are related to equipment failures or other issues that require a crew to repair, such as transformer or underground splice failures. It takes time to call out the initial troubleshooter, have them conduct an initial investigation, identify the issue, isolate it, and restore customers. In the meantime, we call in a crew of 3 to 5 people, and it takes time for them to arrive. We have more outages and more customers affected in an MED but restoration time is quicker because staff do not have travel time. Staff can calculate the outage minutes associated with MED. The Maybell and Colorado circuits were involved in the majority of outages from October 2023 to July 2026. Because they are large circuits, an outage affects more customers and generates more outage minutes. Fault indicators can find and isolate the outage. As we do grid modernization, staff is looking at adding sectionalizing devices, which is a fuse or interrupter to break up the circuit into smaller pieces, so fewer customers are affected by a disruption. COO Crowley said staff needed direction on these metrics or whether the UAC wanted to see additional metrics, such as how many customers we restore within 4 hours or other goals. As Item #1 Packet Pg. 16 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 12 of 16 next steps, staff will review those metrics, investigate outage details, and identify the lowest- cost solutions or projects to reduce those numbers and meet the goals. NO ACTION TAKEN FUTURE TOPICS FOR UPCOMING MEETINGS Item #1 Packet Pg. 17 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 13 of 16 commission, how we advocate and provide our advice, what our role is, and better ways to work together. Item #1 Packet Pg. 18 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 14 of 16 Commissioner Tucher submitted his suggestions for the work plan. The current draft contained inconsistencies, errors, and redundancies. The UAC work plan did not include financial reviews of each utility. Item #1 Packet Pg. 19 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 15 of 16 the work plan could be spread across the June and July meetings. Commissioner Croft thought a questionnaire should be sent in advance to help commissioners identify their top topics, as she found it helpful this year. Chair Mauter agreed with Commissioner Croft. Director Kurotori said work plans are fiscal and typically developed after commissioners are appointed. Chair Mauter stated that the UAC put significant time, thought, and effort into formulating the 12-month work plan in June, so the current UAC needed to follow through on it. Chair Mauter suggested the Commission discuss it with City Manager Shikada next month during Commission Norms. COMMISSIONER COMMENTS AND REPORTS FROM MEETINGS/EVENTS VIRTUAL PUBLIC COMMENT Item #1 Packet Pg. 20 Utilities Advisory Commission Summary Minutes – August 5, 2026 Page 16 of 16 1. Alex M. presented slides as the spokesperson for a group of 5 people. His company developed an easy-to-use platform that combined structures, live fuel moisture, terrain, and weather into a single, simple view of the wildland-urban interface, refreshed every 3 to 5 days, that firefighters can use on their iPad. Alex M. proposed a 90-day memorandum of agreement with the City of Palo Alto to allow firefighters, utilities, City planners, and community stakeholders to experience its operational value. Current fire models have technological limitations because they rely on input from a 1980 satellite launched by USGS that uses a 30-meter pixel grid. Alex M. built a platform on top of GIS. A slide showed 1-meter-per-pixel Sentinel-2 imagery from the European Space Agency, which can show vegetation health and growth over time; identify homes with the highest risk based on terrain, slope, live fuel moisture, and vegetation type; and show where flame lengths exceed 12 feet. This information helps agencies prioritize inspections, identify high-risk areas, and note areas with utility lines and other factors that could cause widespread urban conflagration. Gaussian Splats, a newer 3D rendering, was implemented to run a physics-based fire model in collaboration with some of the larger Bay Area technology companies. It can model how fire and embers may move under dry offshore winds interacting with the foothill terrain. Alex M. offered the possibility of applying for grant funding for the City of Palo Alto. 2. Peter Drekmeier with Yosemite Rivers Alliance raised his hand for Item 2, lowered it when he began to speak, and then heard staff say there were no speakers. He was very impressed with the staff presentation and believed the Commission asked good questions and made good points, resulting in a better product going to City Council. Yosemite Rivers Alliance had been trying to get a study session for a long time but they were not invited to participate in the water study session. Peter Drekmeier did not have much confidence in staff. At the Council meeting on the Urban Water Management Plan, he commented that staff was more aligned with BAWSCA than with Palo Alto. The City has endorsed the Bay Delta Plan but staff has been very oppositional. He has started to reach out to some Council Members to share his concerns. He asked Director Kurotori to reach out to him to ask what he wanted this study session to look like, how we could work together, and how we could make it the study session Council is expecting. BAWSCA and SFPUC did not want to engage in dialogue with Yosemite Rivers Alliance because it embarrassed them. Peter Drekmeier was happy to work with staff but they had to earn his trust. ADJOURNMENT Adjournment: The meeting was adjourned at 8:28 p.m. Item #1 Packet Pg. 21 On behalf of Utilities Director Alan Kurotori, please find below the staff responses to questions from Utilities Advisory Commission members. 1. Outage metrics – Objective: to strengthen the message to customers that CPAU electric service is reliable and build a more compelling case for electrification Specifically, can we come up with a more comprehensive, nuanced reporting of our local grid reliability? Can we report on outages and up-time so as to provide more insight into problems and priorities? Recommended approach: Define outage – Is an outage any interruption in service, regardless how short? Group outages by cause: weather, equipment failure, perhaps 1-2 other causes Outages by Duration, perhaps grouped by short/medium/long – grouped by cause Outages by Location: which neighborhoods, which substation or feeder – grouped by cause and by duration/severity. Are Residential or Commercial customers impacted? Major Event Days (MED) – How many MEDs? What were they? Can we list them? Which parts of our grid, or which customers did they impact? Can we provide simple sensitivity analysis for MEDs: What if, instead of 10% impact, we look at 5% or 20%? What if we define “impact” as 2hrs+ or 30min+ or “short vs long” interruptions? Note: To focus only on outages is, of course, negative. Up-time is positive. What about also reporting up-time overall, by substation or feeder, or by Residential/Commercial? Staff response: Below is additional information and data to answer the questions posed in the recent email. With the outages software we are currently using, there are limitations into how much dissecting of the data can be done. That said below provides a deeper dive into the outage trends and some of the circuits with the highest customer outage minutes. From the UAC’s recommendations, staff will look at ways we can break this data down for presentation to customers in a meaningful way. Additional Information & Data Define outage – Is an outage any interruption in service, regardless how short? Staff Responses to UAC Questions Utilities Director Report Packet Pg. 22 Outages or interruptions are defined as a loss of power on one or more phases. Interruptions are broken into the categories of momentary (less than 5-minutes) and sustained (greater than 5-minutes). Group outages by cause: weather, equipment failure, perhaps 1-2 other causes With the quarterly information report staff show the grouping of outages by the primary cause (tree, animal, equipment, etc.). Below is a snip from the most recent informational report showing the number of sustained outages within an outage type and percent of total outages. Creating this graph helps staff understand what types of outages occur more frequently, and which mitigation measures should be implemented. Palo Alto’s trend shows that a focus on the urban forest and tree trimming along with preventative equipment replacements could reduce the number of unplanned outages. Note that Equipment Damage (19%), Equipment Worn Out (8%), and Electrical Failure (23%) are all types of equipment failures (50% of sustained outages). Outages by Duration, perhaps grouped by short/medium/long – grouped by cause The first chart (left) below shows the number of outages by their average interruption duration (AIDI) in hours. This is basically the average time, rounded to the hour, it took to restore the customers impacted by the outage. The second chart (right) shows the total time from first reporting of the outage to last customer restored, rounded to the nearest hour, for each outage. From this data roughly 67% of customers impacted by an outages are restored within 4 hours, 57% within 3-hours. Utilities Director Report Packet Pg. 23 Outages by Location: which neighborhoods, which substation or feeder – grouped by cause and by duration/severity. Are Residential or Commercial customers impacted? I don’t have a visual of historical outages but can provide the table below of Circuits that have generated the most customer outage minutes since Oct 2023. What is seen is that historically Maybell and Colorado are large contributors to outage minutes which tend to increase SAIDI and CAIDI. Sectionalizing devices (fuses, reclosers, interrupters) will lower these outage minutes. Utilities Director Report Packet Pg. 24 Below is a list of the MED, based upon 10% of customers, for CY2024 and CY2025. This list also includes the causes for each MED. Notable is the UAC recommendation to further separate these by larger external influences rather any outage cause that reaches the 10% threshold. We have some limitations in the outage records we keep. For example, we do not track outages by customer type. A separation of outage data by residential vs commercial customers isn’t readily available. Staff does review outages by circuit and protective device (fuse, recloser, interrupter) to identify repeat outages or outage cause trends. Utilities Director Report Packet Pg. 25 Major Event Days (MED) – How many MEDs? What were they? Can we list them? Which parts of our grid or which customers did they impact? Can we provid Packe simple sensitiviet Pg. 24ty analysis for MEDs: What if, instead of 10% impact, we look at 5% or 20%? What if we define “impact” as 2hrs+ or 30min+ or “short vs long” interruptions? Item No. 2 Page 1 of 3 9 7 7 9 Utilities Advisory Commission Staff Report From: Ed Shikada, City Manager Lead Department: City Manager’s Office Meeting Date: September 2, 2026 Report #: 2607-6585 TITLE Special Presentation and Discussion on Partnering Norms for Staff and Commissioners Effectiveness. CEQA – Not a Project RECOMMENDATION Discuss partnering norms for staff and Commissioners effectiveness. BACKGROUND Citywide, the Boards, Commissions, and Committees (BCC) Handbook1 provides comprehensive guidance for the operation of the City’s BCCs. City departments that provide staff to BCCs periodically discuss opportunities to enhance effectiveness in providing support to the work and BCCs, and one recently identified area for exploration is establishment of norms for interactions between BCCs and staff. This report and Commission discussion are intended to support ongoing alignment between Commissioners and staff to advance the work of the City. In addition to addressing issues of importance to the Palo Alto community, the City’s Boards and Commissions provide an important role in staff development as well as the development of community volunteers and leaders. As such it is important that all participants receive an environment that is welcoming and conducive to professional and personal development while also effectively and efficiently conducting the work entrusted to each body. On an ongoing basis, staff work with individual commissioners on concerns with staff interactions as they arise. This report and discussion represent an effort to proactively address issues before they become concerns, for the benefit of all. The UAC is the fourth commission to hold this discussion over the past year. 1 City Boards, Commissions, and Committees Handbook; https://www.paloalto.gov/files/assets/public/v/4/cityclerk/board-and-commission-handbook.pdf Item #2 Packet Pg. 26 Item No. 2 Page 2 of 3 9 7 7 9 ANALYSIS Recognizing the broad range of topic areas and procedures involved with the City’s advisory bodies, staff is not recommending that each Commission adopt of a uniform set of norms. At the same time, in order to provide a starting point for each discussion, staff has developed an initial set of topic areas for discussion provided in Attachment A. The attachment is simply provided as a starting point, with the expectation that Commissioners may have differing views on the topic areas as well as additional topic areas to discuss. The points provided may also serve as a reference if/when issues arise in the future. Depending on the Commission’s interest level, next steps could vary. This could simply be a one-time discussion, not requiring any follow-up. Otherwise, it could be included as a topic for further discussion at a future Commission meeting such as an annual work-planning session. Other follow-up may also be appropriate. In any case, staff appreciate the opportunity to discuss this important issue with the Commission. When reviewing these and normalizing activity for a commission, it is helpful to review foundational direction on roles as well as acknowledge some inherent tensions that can arise in fulfilling the roles of commissioners and staff. The UAC is established by the City of Palo Alto Municipal Code Chapter 2.23. with the Purposes and Duties outlined in PAMC 2.23.050 (a) The purpose of the utilities advisory commission shall be to advise the city council on present and prospective long-range planning and policy and major program and project matters relating to the electric utility, gas utility, water utility, wastewater collection utility, fiber optics utility and recycled water matters, excluding daily operations. UAC recommendations are typically advanced to the City Council Finance Committee (or potentially the Policy & Services Committee), which then makes recommendations to the full City Council for approval or direction on policy and program decisions impacting the Utility Department. Inherent in the design of this governmental decision-making structure are principles such as transparency, opportunities for community engagement, and checks and balances. This can lead to tensions such as: - Individual topics of interest versus priorities for the Commission as a whole - Ability to address issues of the day versus public noticing (Brown Act) requirements - Engaging on emerging issues versus accountability for completing a workplan - Governance versus management - Resource allocation to progress reporting versus making progress - Time management These tensions are systemic and balancing competing interests requires prioritizing collaborative governance. This item is intended to support discussion of commission norms that Item #2 Packet Pg. 27 Item No. 2 Page 3 of 3 9 7 7 9 balance competing priorities and maintain the alignment necessary to advance the services established by the City Council as priorities for the Palo Alto community. FISCAL/RESOURCE IMPACT ATTACHMENTS AUTHOR/TITLE: Item #2 Packet Pg. 28 Item #2 Packet Pg. 29 1 0 5 1 8 Utilities Advisory Commission Staff Report Report Type: NEW BUSINESS Lead Department: Utilities Meeting Date: September 2, 2026 Report #:2608-6668 TITLE Discussion of Baker Tilly Reserves Advisory Report and Recommendation to the City Council of Proposed Policy Updates to the Utilities Reserve Management Policies This will be a late packet report published on Thursday, August 27, 2026. Item #3 Packet Pg. 30 Item No. 4 Page 1 of 4 Utilities Advisory Commission Staff Report From: Alan Kurotori, Director Utilities Lead Department: Utilities Meeting Date: September 2, 2026 Report #: 2604-6312 TITLE Update on Electric System Long Duration Resiliency; CEQA Status – Not a Project RECOMMENDATION Recommend staff continue monitoring estimate costs for local utility scale battery storage and provide an update to the UAC with the next Integrated Resource Plan and recommend staff review and propose reasonable hazard mitigations with recommended capital improvement projects. EXECUTIVE SUMMARY On March 2, 2026, the City Council accepted a report on the cost of local energy resources and improved reliability and resiliency. The report found that local microgrids were not cost effective at this time but recommended continued engagement with the Utility Advisory Commission (UAC), Climate Action and Sustainability Committee (CASC), and the City Council regarding micro-grids and long-term resiliency. On an ongoing basis, utility staff are reviewing the market and publicly available information regarding the cost of local microgrids and battery energy storage systems (BESS). Because current costs indicate that microgrids do not present cost savings for customers, staff plans to continue to review pricing until market analysis suggests better value. Another assessment will be included with the next update of the City’s Integrated Resource Plan, which staff will begin updating in 2027 and planned to file in early 2028. Simultaneously, staff are beginning a review of the Electric Department’s preparedness to respond to large-scale events requiring a significant and sustained effort to restore electric service. In the event of a large-scale natural disaster (earthquake, flooding, windstorm, wildfire, heat storm, etc.), local micro-grids could help isolated pockets of electric customers remain in power, but City staff would immediately need to begin the repair and restoration process for all other customers. The larger effort of restoring utility service citywide requires forethought, planning, and some capital investment. The Palo Alto Annex of the Santa Clara County Multi- Jurisdictional Hazard Mitigation Plan (MJHMP) identifies areas of the City’s electric system that Item #4 Packet Pg. 31 Item No. 4 Page 2 of 4 could be strengthened to lessen the impact of major events. Over the next several months, staff will review utility projects identified in the MJHMP and existing Grid-Modernization (Grid- Mod) projects consider impacts of major weather events over the expected life of the assets. This review will help to improve long-term resiliency under adverse conditions as well as support one of Grid-Mod’s primary goals of improving overall system reliability. BACKGROUND ANALYSIS 1 identified a cost for utility scale battery storage of $482/kWh, and NLR’s 2025 update2 saw a lowering of those costs to $334/kWh. The 2023 update also forecasted battery storage pricing ranging between $255/kWh and $403/kWh in 2030, with the 2025 update estimating storage costs at $147/kWh and $339/kWh by 2035. Both the 2023 and 2025 forecasts of future battery storage costs anticipate reductions in costs, but the expected reductions may fall within a wide range. 1 NLR Cost Projections for Utility-Scale Battery Storage 2023 Update https://docs.nlr.gov/docs/fy23osti/85332.pdf 2 NLR Cost Projections for Utility-Scale Battery Storage 2025 Update https://docs.nlr.gov/docs/fy25osti/93281.pdf Item #4 Packet Pg. 32 Item No. 4 Page 3 of 4 reliable electric service rather than analysis based solely on providing the lowest cost service regardless of reliability. Staff are working with the NLR model, adjusting the assumptions to provide relevance for Palo Alto’s residential and commercial customers. As staff become more familiarized with the model’s valuation of reliability, those valuations will be brought to the UAC in the FY28-32 Electric Capital Improvement Program. 5 For the City’s Electric Department, the Annex specifically names earthquake, heavy precipitation/atmospheric rivers, extreme heat/cold, high wind, wildfire, and sea level rise as hazards. It also lists mitigation measures that could make the electric system more resilient. Some of those mitigation measures have been completed, such as undergrounding overhead electric lines in the Foothills, while others are still being studied, such as mitigation measures addressing sea-level rise. The Annex presents a good starting point to identify additional mitigation measures and to estimate costs in preparation of potential funding through rate revenue and/or federal grant dollars. 5 Santa Clara County Multijurisdictional Hazard Mitigation Plan 2023 Update: City of Palo Alto Annex - https://www.paloalto.gov/files/assets/public/v/1/oes/plans/final_vol-ii-santa-clara-mjhmp_city-of-palo-alto- annex-1.pdf Item #4 Packet Pg. 33 Item No. 4 Page 4 of 4 model. Should additional projects show a cost benefit, staff will bring the projects showing the largest benefit to cost ratio back to the UAC for further review and discussion. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS AUTHOR/TITLE: Item #4 Packet Pg. 34 Utilities Advisory Commission Staff Report From: Alan Kurotori, Director Utilities Lead Department: Utilities Meeting Date: September 2, 2026 Report #:2608-6666 TITLE City of Palo Alto Utilities Wildfire Mitigation Plan (WMP) 2026 Update: CEQA – Not a Project RECOMMENDATION Staff recommend that the Utilities Advisory Commission (UAC) review the City of Palo Alto Utilities (CPAU) 2026 Wildfire Mitigation Plan (Plan), receive public comments, and recommend that CPAU submit the Plan to the California Wildfire Safety Advisory Board (WSAB) in accordance with Public Utilities Code Section 8387.1 EXECUTIVE SUMMARY This report presents the City of Palo Alto Utilities (CPAU) 2026 Wildfire Mitigation Plan Update for the Utilities Advisory Commission's review, receipt of comments, and recommendation for approval to submit to the WSAB. The Plan documents CPAU's continued efforts to reduce the risk of utility-caused wildfires through undergrounding electric infrastructure, vegetation management, routine inspections, weather monitoring, system hardening, emergency preparedness, customer education, and Public Safety Power Shutoff (PSPS) planning. The Plan specifically highlights progress on the multi-phase, multi-million-dollar Foothill Fire Mitigation Project by undergrounding electric infrastructure and decommissioning high-voltage overhead facilities along with other completed mitigation measures and planned future initiatives. BACKGROUND Public Utilities Code Section 8387 requires publicly owned electric utilities to prepare and maintain a Wildfire Mitigation Plan describing how electrical lines and equipment will be 1 Public Utilities Code 8387 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=8387&lawCode=PUC Item #5 Packet Pg. 35 constructed, maintained, and operated in a manner that minimizes the risk of utility-caused wildfires. 3 Under the current schedule, CPAU is required to submit its Wildfire Mitigation Plan by October 2, 2026. CPAU is currently assigned to a two-year Wildfire Mitigation Plan reporting cycle, with a future update due in October 2028, because it continues to own overhead electric facilities within the High Fire Threat District (HFTD) designated by the California Public Utilities Commission (CPUC).4 Upon completion of the Foothill Fire Mitigation Project and removal of the remaining overhead facilities within the HFTD, CPAU staff plan to work with WSAB to determine whether the City qualifies for a four-year reporting interval under a future reporting schedule. ANALYSIS The Plan includes updates on the following wildfire mitigation activities: Planned completion of the Foothill Fire Mitigation Project in late 2026, including undergrounding electric and fiber infrastructure and decommissioning City-owned overhead wires and utility poles. As of August 2026, all overhead high-voltage lines have been de- energized and customers are now being served via underground lines. Ongoing vegetation management activities within the Foothills Area including vegetation management around newly installed underground and pad-mounted equipment. Inspection and preventative maintenance of electric infrastructure in the high fire threat area to improve reliability and lower the incidence of power outages. Weather monitoring and situational awareness using localized weather stations, AlertCalifornia wildfire camera monitoring, regional fire weather forecasts, and Electricity Information Sharing and Analysis Center (E-ISAC) notifications. 3 Senate Bill No. 254 - https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB254 4 Office of Energy Infrastructure Safety, Wildfire Advisory Board 2026-2029 Wildfire Mitigation Plan Schedule for Publicly Owned Utilities and Electrical Cooperatives (Dec. 2025), https://energysafety.ca.gov/wp- content/uploads/2025/12//2026-2029-schedule-for-pou-and-co-op-wmp-submissions.pdf Item #5 Packet Pg. 36 Public Safety Power Shutoff (PSPS) education, planning, and emergency communications. Coordination with the City's Office of Emergency Services, Fire Department, Public Works Department, and Urban Forestry Division to support wildfire preparedness and emergency response. The Plan also updates Appendix A to summarize completed wildfire mitigation accomplishments, goals, and future initiatives. FISCAL/RESOURCE IMPACT There is no immediate fiscal impact associated with the Plan. The Plan documents existing and planned wildfire mitigation activities that are funded through the City's approved Capital Improvement Program and annual operating budgets, as appropriate. Approval of the Plan does not authorize additional funding but provides the planning framework supporting CPAU's utility wildfire mitigation program. STAKEHOLDER ENGAGEMENT Consistent with Public Utilities Code Section 8387, the Wildfire Mitigation Plan is presented at a publicly noticed Utilities Advisory Commission meeting to provide an opportunity for public review and comment prior to filing with the California Wildfire Safety Advisory Board. The 2026 Plan will be posted on the City of Palo Alto Utilities website.7 ENVIRONMENTAL REVIEW The Plan is not a project under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378 because it is an administrative planning activity that does not authorize or result in a physical change to the environment. Any future capital projects identified in the Plan will undergo separate environmental review, as applicable. ATTACHMENTS Attachment A: CPAU Wildfire Mitigation Plan Update 2026 APPROVED BY: Alan Kurotori, Director Utilities Staff: Terry Crowley, Chief Operations Officer 7 City of Palo Alto Utilities Website for all versions of the WMP @ https://www.paloalto.gov/Departments/Utilities/Utilities-Services- Safety/Safety/Utilities-Wildfire-Mitigation Item #5 Packet Pg. 37 WILDFIRE MITIGATION PLAN 2026 UPDATE September 2, 2026 Item #5 Packet Pg. 38 TABLE OF CONTENTS I. UTILITY OVERVIEW AND CONTEXT ................................................................................................... 1 A. Context table ............................................................................................................................... 1 B. Statutory cross-reference table ................................................................................................... 2 C. Process for Wildfire Mitigation Plan adoption ............................................................................. 2 D. Plan location on the website ........................................................................................................ 2 II. PLAN PURPOSE AND OBJECTIVES ..................................................................................................... 3 A. Purpose ........................................................................................................................................ 3 B. Scope............................................................................................................................................ 3 C. Plan objectives ............................................................................................................................. 3 III. ROLES AND RESPONSIBILITIES ......................................................................................................... 5 A. City of Palo Alto organizational structure ................................................................................... 5 B. Coordination with other departments ......................................................................................... 6 C. Deenergization-related communication ...................................................................................... 6 IV. ELECTRIC-LINE IGNITED WILDFIRE RISK DRIVERS .............................................................................. 7 A. Primary risk drivers and specific mitigation efforts ..................................................................... 7 C. Other electric equipment-specific mitigation strategies ............................................................. 8 D. Enterprise-wide Safety Risks ........................................................................................................ 9 E. Current and prior activities ........................................................................................................ 10 V. MONITORING THE PLAN ................................................................................................................ 10 A. Measuring Plan and inspection performance ............................................................................ 10 B. Performance and outcome metrics ........................................................................................... 11 C. Applying previous Plan metrics to this Plan ............................................................................... 11 TABLE OF FIGURES Figure 1: Map of CPAU Electric Service Area - CPUC HFTD Tier 2-Elevated Fire Risk “Foothills Area” Figure 2: Organizational Structure of Roles & Responsibilities Supporting the Plan Figure 3: Vegetation Buffer Diagram Figure 4: High Level Map of the Foothill Fire Mitigation Project APPENDICES Appendix A: Summary of Key Wildfire Mitigation Activities Appendix B: PSPS Policy and Process for Public Safety Power Shutoff Appendix C: Utilities Wildfire Mitigation Utilities Response and Communications Procedure for Public Safety Power Shutoff (PSPS) Appendix D: Plan Revision Log of Key Changes Item #5 Packet Pg. 39 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 1 I. UTILITY OVERVIEW AND CONTEXT A. Context table 1 CPUC ArcGIS map https://www.arcgis.com/home/webmap/viewer.html 2 CAL FIRE’s Santa Clara Unit 2024 Strategic Fire Plan https://osfm.fire.ca.gov/what-we-do/community-wildfire- preparedness-and-mitigation/pre-fire-planning City of Palo Alto Utilities High Fire 2 - 40% 1 by a PG&E PSPS. PSPS? to initiate its own PSPS? forecast and field conditions. Refer to the PSPS Policy Appendix B by information about wind regional wind conditions.2 Item #5 Packet Pg. 40 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 2 B. Statutory cross-reference table C. Process for Wildfire Mitigation Plan adoption Palo Alto is unique among Public Owned Utilities (POUs) because it has a Utilities Advisory Commission (UAC), an advisory Commission to the City Council. This commission is comprised of Council-appointed residents who meet monthly to provide advice to City Council and staﬀ on utilities-related matters, including the City’s Wildﬁre Mitigation Plan (Plan). A Brown Act body, the UAC publishes agendas in advance of each public meeting and provides opportunities for public comment at each meeting. Each year, Palo Alto staﬀ presents the Plan at a UAC meeting where staﬀ accept any public comments and receive feedback from Commissioners.3 Minutes and videos of past meetings are available on the City’s website. D. Plan location on the website Palo Alto’s Plan is the ﬁrst substantive item found on the Utilities Department safety webpage. Navigating to this page from the Department’s main page takes only two clicks and is intuitive. Users click on “Utilities Services and Safety,” then “Wildﬁre Mitigation.” 4 Because the City also has a Fire Department and an Oﬃce of Emergency Services that respond to ﬁres and other emergencies, this report brieﬂy notes how this wildﬁre Plan diﬀers from other City emergency response plans. 3 PUC 8783(b)(3) requires a POU to “present its wildﬁre mitigation plan in an appropriately noticed public meeting…[and] accept comments on its wildﬁre mitigation plan from the public….” While not the governing board of the utility, the UAC review satisﬁes the legal requirement of presenting the Plan at a noticed public meeting where comments from the public are accepted. http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=8387&lawCode=PUC 4 Utilities Department safety webpage, www.paloalto.gov/safeutility Code section Requirement Page Item #5 Packet Pg. 41 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 3 II. PLAN PURPOSE AND OBJECTIVES A. Purpose This Plan is written in compliance with Public Utilities Code section 8387 5 and describes how the City of Palo Alto Utilities Department (CPAU) maintains and operates its electrical lines and equipment in a manner that minimizes the risk of wildﬁre posed by those lines and equipment. B. Scope The scope of this Plan is limited to providing information about mitigating the risk of wildﬁres from electric lines and equipment. It distinguishes between mitigating risks of possible electric line-ignited wildﬁres versus wildﬁres or wildﬁre suppression generally. The latter topics are in the scope and under the purview of trained ﬁre experts, such as the City’s Fire Department, and not within the expertise of utility engineers and technicians. The former is within the scope of CPAU responsibilities and is the subject of the state code section mandating this Plan; therefore, it is the sole focus of this Plan. Additionally, this Plan applies to the only area in the City of Palo Alto identified as a high fire threat area per the California Public Utilities Commission (CPUC) High Fire Threat District (HFTD) map. Currently, the high fire threat area in Palo Alto includes all areas with the City limits west of Highway 280, referred to as the Foothills Area, see Figure 1 below. This area is about eight square miles, is sparsely populated, and consists primarily of open space. Lastly and per the California Wildfire Safety Advisory Board (WSAB) request of all POUs, this updated Plan deliberately omits general information the Board already understands in favor of specific information about the City’s territory, infrastructure, and mitigation projects. For example, the Board already knows that CPAU, and other POUs, meet all applicable CPUC General Order 95 (GO95) standards so it is not reiterated here. C. Plan objectives The Plan’s primary objective is to guide CPAU staff in minimizing the probability that the City’s electric distribution system may be an original or contributing source for wildfire ignition. The City strives to ensure that its infrastructure is safe and resilient by taking proactive actions to maintain its equipment, refine the existing Public Safety Power Shutoff (PSPS) protocols as needed, and underground the electric lines in the high fire threat area. A secondary objective is to improve the resiliency of the City’s electric distribution system and to measure the efficacy of the wildfire mitigation strategies. 5 Public Utilities Code section 8387 http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=8387&lawCode=PUC Item #5 Packet Pg. 42 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 4 Figure 1: Map of CPAU Electric Service Area - CPUC HFTD Tier 2-Elevated Fire Risk “Foothills Area” Item #5 Packet Pg. 43 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 5 III. ROLES AND RESPONSIBILITIES A. City of Palo Alto organizational structure Figure 2 highlights staff and governing bodies with direct or indirect roles and responsibilities related to the Plan. Figure 2: Organizational Structure of Roles & Responsibilities Supporting the Plan Item #5 Packet Pg. 44 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 6 In Palo Alto, the City Council is the governing body of all City functions including the City’s utilities. As noted above, the UAC is a Brown Act body that provides advice on utilities- related matters. CPAU operates and maintains all the utilities in the City, including electric, water, gas, fiber, and wastewater. CPAU also employs communications staff to engage with the community and a Compliance Manager who, among other duties, ensures reports such as this Plan are completed timely and appropriately. CPAU’s electric and fiber staff noted above all play a key role in mitigating wildfire risk from electric lines and equipment. Specifically, CPAU engineering staff produce safe and resilient designs, and oversee wildfire mitigation projects such as undergrounding electric and fiber lines.6 B. Coordination with other departments CPAU’s Electric Engineering and Operations Divisions work closely with other divisions within the Utilities Department. Utilities collaborates with the Public Works Department (PWD) and its Urban Forestry and Environmental Compliance Division, the Fire Department, and the Office of Emergency Services (OES). Together, these departments and divisions proactively prepare for wildfires, act to mitigate climate and fire-related risks, maintain utilities infrastructure, develop plans for deenergization events, provide vegetation management, and lead Palo Alto’s robust climate action efforts. As these divisions, departments, and teams are under the umbrella of one City, there is a strong history of working together closely. C. Deenergization-related communication CPAU’s Communications staff inform the community about deenergization events. CPAU staff maintain and update as necessary a “Utilities Wildfire Mitigation Response and Communications Procedure for Public Safety Power Shutoff” (PSPS), see Appendix C. This procedure details the City's outreach to customers about Public Safety Power Shutoffs (PSPS). CPAU proactively communicates with potentially impacted customers when first alerted to weather conditions that may require a PSPS, provides updates while monitoring conditions, and if a PSPS is activated, communicates with customers during and after an event. The City uses a variety of communication channels for public information outreach. Customers can be reached directly through the Outage Management System (OMS) using text notification. Information on PSPS in general and specific events as they occur is provided on the City's website (paloalto.gov/PSPS) and recordings on City hotlines such as the Electric Operations Dispatch phone line at the Utilities Control Center and Utilities Customer Service Call Center. 6 To keep the public informed of CPAU’s capital improvement projects (CIPs), CPAU places CIP-related information on its website, paloalto.gov/UtilityProjects. This information includes primary staﬀ contact information for the projects. Item #5 Packet Pg. 45 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 7 IV. ELECTRIC-LINE IGNITED WILDFIRE RISK DRIVERS WITH PREVENTION AND MITIGATION EFFORTS A. Primary risk drivers and specific mitigation efforts Palo Alto recognizes that the WSAB is most interested in specific risks unique to each POU and its service territory, rather than general risks carried by all electric utilities. As such, and because Palo Alto is in the process of undergrounding the lines in its single high fire threat area, this Plan notes only the risk associated with electric equipment in the Foothills area. The more general risks (outside the Foothills area) Palo Alto regularly mitigates, but does not specifically address in this Plan, include: • Electric distribution system operating, management, and construction practices • Weather including high winds • Extended drought With regard to weather monitoring, Palo Alto installed a weather station in the Foothills area and a second weather station at the Utility Control Center to view localized weather data. CPAU staff also monitor regional conditions, such as red flag warnings (RFW), and communicate with first-responder departments on any actions needed due to weather conditions. B. Primary risk drivers and specific mitigation efforts: Vegetation type, density, and management practices. Wildfire risks from electric lines and equipment include vegetation intruding into power lines, falling onto lines, or roots damaging undergrounded equipment. Mitigation efforts include ongoing physical inspections, ensuring the proper type of vegetation is placed at the correct distance from equipment, and adherence to the City’s Line Clearing Program and Tree Technical Manual for proper care of trees. Palo Alto’s dedicated Urban Forestry Division, part of the Public Works Department and staffed by trained, experienced urban foresters, also oversees and coordinates the work of external contractors. Palo Alto utilizes a variety of vegetation treatment methods to reduce the risk of wildfire, including tree or branch removal, trimming, mowing, and brush cutting. To help staff track and manage flammable new growth, Palo Alto may utilize geographic information system (GIS) and growth modeling. Currently, this work is performed manually with physical inspections. In addition, for the Foothills area, Urban Forestry uses an enhanced vegetation management buffer as shown in Figure 3. Item #5 Packet Pg. 46 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 8 Figure 3: Vegetation Buffer Diagram C. Other electric equipment-specific mitigation strategies The overhead distribution line serving the Foothills area has been undergrounded, eliminating the need for the previous practice of disabling automatic reclosing on protective devices to reduce wildfire ignition risk. The underground system is protected by vacuum fault interrupters and substation circuit breakers that automatically isolate faults. Following a fault, service restoration is performed only after the affected equipment has been evaluated and any necessary repairs have been completed to ensure safe restoration. Undergrounding significantly reduces wildfire ignition risk while improving overall system reliability and resilience. • Utilizing specific fuses. CPAU utilizes non-expulsion fuses in the high fire threat area. Specifically, CPAU utilizes Eaton’s Cooper PowerE series ELFE fuse, a full range, current-limiting dropout fuse with a self-contained design that eliminates noise and expulsive showers. If these fuses explode, any hot metal is contained within the fuse holder, preventing contact with vegetation. • Deenergizing, then reenergizing when prudent. CPAU considers deenergizing electric lines as a last resort, realizing that while the lack of power could be an inconvenience for some customers, it could cause significant health and safety concerns for others. However, CPAU will utilize this option when necessary to minimize the risk of an electric-line ignited wildfire in the high fire threat area. Factors CPAU considers when determining whether to deenergize include: Item #5 Packet Pg. 47 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 9 o The possible safety impacts to CPAU customers o Any fire activity in the vicinity o Any evacuation orders and other information from emergency personnel o Information from local fire agencies, vegetation staff, and CPAU electric system operators o Local and regional weather conditions including wind, humidity, precipitation and any red flag warnings o The state of vegetation in the area (i.e. very dry) • Restoring power after a wildfire or deenergization event. Lines will only be reenergized when (1) the risk has passed, (2) the lines are inspected, and (3) any required repairs are complete. CPAU utilizes its Public Safety Power Shutoff (PSPS) policy and procedure, see Appendix B, when determining whether to deenergize lines because of a wildfire risk. The written protocol also includes customer notification procedures and reenergization information. In addition to customer notification from the Utilities Department, PSPS communication is also coordinated with Palo Alto’s OES. The decision to institute a PSPS also includes working with CPAU’s water utility staff to determine if the City should pump water up to the reservoirs located in the Foothills area in advance of shutting off power, to ensure there is sufficient water and water pressure for any firefighting activities. • Coordination with PG&E. As a transmission-dependent utility, CPAU seeks collaboration with PG&E regarding their potential deenergization events that may impact the City’s service territory. • Studying device coordination strategies. Staff have engaged in protective device coordination studies to ensure that any fault is isolated quickly and any impact limited. Based on these studies, CPAU changed the fuse type and size, as noted above, on Foothills area distribution lines and changed settings on protective devices identified above. D. Enterprise-Wide Safety Risks Palo Alto’s protocol for identifying and addressing enterprise-wide safety risks is a collaborative effort with various City departments. Together the goal is to prevent, protect from, mitigate, respond to, and recover from a broad range of potential hazards and threats. The City’s OES leads that coordination with the goal of developing, maintaining, and sustaining a citywide, comprehensive, all hazard, risk-based emergency management program that engages the whole community. This community driven hazard and risk process leads to a range of plans, programs, projects, and other preparations to reduce risks from the hazards of highest concern. The City maintains and updates the following assessment and plans that provide information regarding the risks in Palo Alto and the necessary actions to take. Item #5 Packet Pg. 48 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 10 - Threat and Hazard Identification and Risk Assessment 7 - The result of the THIRA process is an organized evaluation of vulnerability and implementation measures based on the necessary capabilities to deal with the natural and non- natural hazards and threats of most concern. - Santa Clara County Multi-jurisdictional Hazard Mitigation Plan 8 - Identifies and prioritizes potential and existing hazards across jurisdictional borders, including hazards that may be further amplified by climate change, and provides mitigation objectives with prioritized actions. - Community Wildfire Protection Plan/Foothills Fire Management Plan 9 - Addresses a broad range of integrated activities and planning documents to address and mitigate the impacts of fire hazards in the Palo Alto Foothills Area. E. Current and prior activities CPAU’s earlier Plans note mitigation tasks the City has already completed, such as preparing a Foothills Fire Mitigation Plan and acting as “territory lead” for the CPUC’s fire threat map. Additionally, prior Plans note ongoing efforts, which continue. These include regular vegetation management, inspection and maintenance of the electric distribution system, and electric infrastructure designs that consider fire safety. Appendix A shows the status of CPAU’s mitigation-related activities. V. MONITORING THE PLAN A. Measuring Plan and inspection performance In preparing annual Plans, CPAU takes the opportunity to evaluate the current Plan for any deficiencies, or if any best practices have changed. In doing so, CPAU considers what, if anything, related to wildfires occurred in the high fire threat area. Any events related to wildfires or City electric infrastructure in the Foothills area could inform future Plans and help understand the effectiveness of the current Plan. With regard to inspections, CPAU examines its electric infrastructure in the high fire threat area more frequently than in other areas of the service territory. Staff strive to ensure that all inspections are completed by June, before the historic start of fire season, or earlier, 7 The current 2017 Threat and Hazard Identiﬁcation and Risk Assessment can be found at https://www.cityofpaloalto.org/files/assets/public/v/1/oes/plans/unrestricted_palo_alto_thira_report_final_april- 2017.pdfhttps://www.cityofpaloalto.org/files/assets/public/v/1/oes/plans/unrestricted_palo_alto_thira_report_fi nal_april-2017.pdf 8 The current 2023 Santa Clara County Multi-jurisdictional Hazard Mitigation Plan, along with the local Palo Alto Annex, can be found at https://www.paloalto.gov/Departments/Emergency-Services/Plans-and-Information/Local- Hazard-Mitigation-Plan 9 The City has updated the pre-existing Community Wildfire Protection Plan (CWPP) dated 2017 and the Foothills Fire Management Plan (FFMP) dated 2016. The 2025 update replaces both pre-exiting plans and now serves as the current version of the CWPP/FFMP at https://www.paloalto.gov/files/assets/public/v/1/oes/plans/city-of-palo- alto-cwpp-ffmp-update-final-2025.pdf Item #5 Packet Pg. 49 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 11 depending on drought conditions. Inspections are completed manually. Staff analyze the results of the inspections for trends of any failures or maintenance needs, which can inform future design changes. Staff also monitors the performance of equipment during windy and severe weather conditions as described in the metrics below. B. Performance and outcome metrics CPAU audits the effectiveness of the Plan’s mitigation and prevention efforts by using two broad metrics: performance and outcomes. Information specific to each are below: i. Performance metrics a. Vegetation management. This metric includes the amount of vegetation cleared or number of trees trimmed in the high fire threat area. b. Infrastructure maintenance in high fire threat area. This metric includes the amount of equipment and number of lines inspected and repaired (if needed) in the high fire threat area. c. Project status. This metric involves monitoring the progress of any projects related to mitigating wildfires from electric equipment or lines in the high fire threat area and ensuring that projects progress on the proper timeline. ii. Outcome metrics a. Electric-line ignited wildﬁre. This metric includes any ﬁre started by CPAU’s electric equipment in the high ﬁre threat area that traveled greater than one linear meter from the ignition point. In at least the past 20 years, there have been zero such ﬁres. b. Downed lines in the high ﬁre threat area. For purposes of this Plan, a wires-down event includes any instance where an electric line in the high ﬁre threat area of the service territory falls to the ground or onto a foreign object. CPAU will not normalize this metric by excluding unusual events, such as severe storms. Instead, staﬀ will supplement this metric with a qualitative description of any such unusual events. C. Applying previous Plan metrics to this Plan CPAU’s initial Plan speciﬁed two metrics for evaluating performance, each discussed below, and noting how they have informed this revised Plan: i. Outages to the overhead lines in the high ﬁre threat area In the initial 2020 Plan, staﬀ described how CPAU would evaluate an outage in the high ﬁre threat area. The 2020 Plan also noted a related project in rebuilding the overhead lines, the status of which is presented in Appendix A. CPAU’s evaluation of any outages in the high ﬁre threat area described in 2020 remains: Determine if CPAU’s activities (a) could have prevented any outages, (b) were adequate to prevent an outage, (c) could be improved, and (d) could not have prevented an outage. Both the Item #5 Packet Pg. 50 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 12 evaluation and metric remain for this Plan because they properly inform CPAU eﬀorts in preventing outages. Since January 1, 2020, CPAU has had twelve (13) outages in the Foothills area. None were a result of a PSPS event or weather-related. ii. Fire ignitions An important metric, CPAU stated in the 2020 Plan that staﬀ would provide the number of ﬁres occurring in the high ﬁre threat area that were less than ten (10) acres in size, speciﬁcally describing any ﬁres larger than ten (10) acres. Since January 1, 2020, CPAU has had zero wildﬁres in the high ﬁre threat area over ten (10) acres with no calls to 911 to report of a wildfire of any size. If CPAU experiences any wildﬁres in this area, whether ignited by electric infrastructure or not, CPAU will work with the Fire Department, Oﬃce of Emergency Services, and any related local government agency to review the cause, how or if CPAU equipment related to the cause or was impacted and collaborate on any after- action activities. iii. Wires down This metric includes instances of any electric lines or conductors that fall to the ground or come into contact with a foreign object in the high ﬁre threat area. For each wires-down event, CPAU will utilize an evaluation system similar to CPAU’s outage evaluation: reviewing the cause, what actions may have prevented the event, and if there are areas for improvement. Item #5 Packet Pg. 51 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 1 Appendix A: Summary of Key Wildfire Mitigation Activities The City’s key mitigation activity is undergrounding overhead electric lines in the Foothills area. This multi-phase Foothill Fire Mitigation Project includes substructure construction, including the installation of boxes and pad-mounted equipment, cable pulling and line energization, and decommissioning of overhead city-owned poles and equipment. This project is expected to be complete at the end of calendar year 2026. Figure 4: High Level Map of the Foothill Fire Mitigation Project Item #5 Packet Pg. 52 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 2 Summary of Key Wildfire Mitigation Activities Grid Design, Operations and Maintenance • Foothill Fire Mitigation Project - undergrounding work out of 7,500 feet, including substructure and cable installation. 1,800 feet remain for both substructure and cable installation. • Foothill Fire Mitigation Project - undergrounding work out of 22,000 feet, including substructure and cable installation. 10,000 feet remain for both substructure and cable installation. • Foothill Fire Mitigation Project - undergrounding work, with all substructure installation finished. 4,200 feet remain for cable installation. • Fiber Optic Extension - To strengthen communication capabilities in the high fire threat area, the installation of underground conduit is progressing in phases, in coordination with ongoing electric substructure work, phase by phase. The City has installed 28,000 feet out of 45,000 feet new fiber optic cables for Phases 1, 2, 3, and 4. 2025 Goals (Prior Year Objectives): • Complete the Foothill Fire Mitigation Project - undergrounding of approximately 49,200 feet of electric overhead distribution lines and fiber optic cable. • Energize the remaining Foothills Fire Mitigation Project Phases 3-5 • Decommission city-owned overhead poles, along with electric and fiber lines and equipment across Phases 1-5. 2025 Accomplishments (Prior Year Overview): • Foothill Fire Mitigation Project - Construction Phase 3 (of 5 phases): Completed 7,5 undergrounding work out of 7,500 feet, including substructure and cable installation. • Foothill Fire Mitigation Project - undergrounding work out of 22,000 feet, including substructure and cable installation. 10,000 feet remain for both substructure and cable installation. • Foothill Fire Mitigation Project - Construction Phase 5 (of 5 phases): Completed 4,200 feet of undergrounding work, including substructure and cable installation. • Fiber Optic Extension - To strengthen communication capabilities in the high fire threat area, the installation of underground conduit is progressing in phases, in coordination with ongoing electric substructure work, phase by phase. The City has installed 35,000 feet out of 45,000 feet new fiber optic cables for Phases 1, 2, 3, and 4. Item #5 Packet Pg. 53 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 3 • COMPLETE Substructure Work: 49,200’ feet Completed out of 49,200' • COMPLETE Cable Installation: 49,200' Wire pulled out of 49,200' • COMPLETE Energized: 49,200' out of 49,200' of cable (as of August 5, 2026) • Fiber Installation: 35,000’ out of 45,000’ • Project completion target: December 2026 2026 Goals (Current Year Objectives): • Complete the removal of the remaining de-energized high voltage overhead conductors and associated equipment. • Complete the decommissioning of city-owned overhead poles, along with electric and fiber lines and equipment across Phases 1-5. 2026-2028 Planned Initiatives (Future Strategies): • When electric infrastructure replacements are necessary, incorporate fiberglass materials for poles and crossarms remaining in the high fire threat area to enhance resiliency. • The City’s multi-year Grid Modernization initiative is focused on strengthening the electric distribution system to support 100% electrification. This effort will improve grid resiliency and reliability through the replacement of poles, transformers, aerial wires, select cabinets, and underground infrastructure. It also includes upgrades to two substations, with completion targeted by 2032, aligning with both near- and long- term energy goals. • Evaluate opportunities to incorporate the updated 2025 CAL FIRE- Fire Hazard Severity Zone (FHSZ) designations into infrastructure planning, emergency outreach protocols, and long-term mitigation efforts within the Local Responsibility Area (LRA). Any potential projects or enhancements, including those affecting newly designated Moderate risk zones, will be reviewed and prioritized based on the ability to mitigate known risks in a cost-effective manner. • Continue undergrounding the remaining overhead service laterals in the Foothills area to reduce the and Inspections • Electric General Order 165 Inspections in the high fire threat area: o Completed 100% of annual inspections o Up to date with all intrusive pole inspections • Vegetation Management in the high fire threat area: o Completed 100% of vegetation inspections 332 trees trimmed Item #5 Packet Pg. 54 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 4 •Continue to complete all required annual electric infrastructure inspections. •Complete a vegetation contact with electrical infrastructure. •PWD staff is actively working to update the Draft Tree Landscape Technical Manual (TLTM) and also plan to establish a tree and landscape line clearing policy, similar to the current utility line clearing policy. 2025 Accomplishments (Prior Year Overview): •Electric General Order 165 Inspections in the high fire threat area: o Completed 100% of annual inspections o Up to date with all intrusive pole inspections •Vegetation Management in the high fire threat area: o Completed 100% of vegetation inspections o Completed vegetation maintenance by trimming 7 trees and clearing 20 brush units. •The City's draft Tree and Landscape Technical Manual (TLTM) was posted online for public comment from December 2, 2024, through March 3, 2025. 2026 Goals (Current Year Objectives): •Continue to complete all required annual electric infrastructure inspections. •Complete annual vegetation maintenance, inspection and clearances from electrical lines to avoid vegetation contact with electrical infrastructure. •Develop vegetation management plan for underground and pad-mounted equipment. 2026-2028 Planned Initiatives (Future Strategies): •The City has previously evaluated the use of drones for vegetation management and electric infrastructure inspections. While privacy concerns, public feedback, and local regulations have posed challenges to implementation, the City remains interested in exploring this technology for potential future use. •PWD staff will incorporate the Public Tree Management Plan into the next update of the Urban Forest Master Plan. Rather than developing it as a standalone document, its objectives and recommendations will be addressed as part of the Urban Forest Master Plan update. •Following completion of the Foothills Undergrounding Project, transition wildfire mitigation efforts from overhead electric distribution facilities to underground utility infrastructure, including associated above Item #5 Packet Pg. 55 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 5 Situational Awareness and Forecasting • Monitored weather conditions daily during Red Flag Warning (RFW) periods to assess wildfire risks and maintain situational awareness. Prepared staff for potential PSPS events by briefing them on response protocols and collaborating with the communications team for effective coordination. • The City partnered with Stanford and Town of Woodside to install fifty (50) N5 Sensors, advanced gas monitors for early wildfire detection. Of these, Stanford installed twenty-five (25), Palo Alto installed twelve (12), and Woodside installed thirteen (13). While coverage in the Foothills is not complete, these sensors have been strategically placed in the high fire threat area to enhance early warning capabilities. 2025 Goals (Prior Year Objectives): • Continue to enhance our OMS and update our GIS data to help with locating outages and decrease response time. 2025 Accomplishments (Prior Year Overview): • CPAU staff updated its membership with the Electricity Information Sharing and Analysis Center (E-ISAC) to ensure continued receipt of timely operational, physical security, cybersecurity, wildfire, and severe weather alerts and advisories, enhancing situational awareness and supporting informed operational decision-making. 2026 Goals (Current Year Objectives): • Continue to enhance our OMS and update our GIS data to help with locating outages and decrease response time. • Leverage the new fiber infrastructure to enhance wildfire monitoring capabilities by improving communications, data transmission, and reliability for the AlertCalifornia Wildfire Camera, CPAU's weather station, and future wildfire monitoring technologies. 2026-2028 Planned Initiatives (Future Strategies): • As part of the Electric Grid Modernization effort, CPAU is in the early planning stages to implement an Advanced Distribution Management System (ADMS). The ADMS will integrate various functionalities such as the OMS, Distributed Energy Resource Management (DERM), and real-time monitoring to enhance grid reliability, efficiency, and resilience. The new system will help manage issues like severe weather, the • As part of the City's ongoing commitment to wildfire preparedness, the City engaged independent auditor BakerTilly to conduct the Emergency Preparedness Wildfire Audit in 2024. The audit evaluated current efforts and provided recommendations to strengthen evacuation planning and wildfire mitigation to enhance local wildfire resilience. Item #5 Packet Pg. 56 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 6 • A tabletop exercise for wildfire mitigation: Conduct a comprehensive tabletop exercise to assess and improve the City’s response plans for wildfire events. This exercise will simulate wildfire scenarios, engage key stakeholders, and identify potential gaps in communication, coordination, and resource management to strengthen preparedness and response strategies. • City staff is in the process of updating two existing plans, the OES Emergency Operations Plan (EOP) and the Foothills Fire Management Plan (FFMP), part of Annex 3 of the Santa Clara County Community Wildfire Protection Plan, to improve coordination of emergency response and wildfire prevention efforts. 2025 Accomplishments (Prior Year Overview): • The Water Utility led a wildfire mitigation tabletop exercise on June 25, 2025. The exercise included participation from the Water, Gas, Wastewater, and Electric Operations and Engineering teams, the Utility Control Center, the City's Office of Emergency Services (OES), and the Fire Department. The exercise simulated wildfire response scenarios to strengthen coordination, communication, and preparedness across participating departments. • CPAU staff participated in PG&E's wildfire tabletop exercise on 4/30/2026 to strengthen emergency preparedness and interagency coordination. The exercise enhanced CPAU's understanding of wildfire response protocols, communication processes, and utility coordination during a wildfire event. • The City updated its emergency planning documents to strengthen emergency preparedness, wildfire prevention, and coordinated response efforts. The Emergency Operations Plan (EOP) was updated in March 2025 and outlines how the City and its partners coordinate preparedness for, response to, and recovery from major emergencies and disasters. The City also updated the Community Wildfire Protection Plan (CWPP) (2017) and Foothills Fire Management Plan (FFMP) (2016). The new April 2025 CWPP/FFMP replaces both plans and now serves as the City's current CWPP/FFMP and Annex 3 of the Santa Clara County Community Wildfire Protection Plan. These updates improve emergency management and wildfire preparedness. Consistent with the Healthy Forest Restoration Act of 2003. 2026 Goals (Current Year Objectives): • Continue coordinating wildfire preparedness messaging and community outreach efforts with City departments and stakeholders to provide consistent public communication regarding wildfire preparedness, mitigation activities, and emergency response. 2026-2028 Planned Initiatives (Future Strategy): • Continued participation in tabletop exercise for wildfire mitigation. This exercise aims to improve internal awareness, validate updated plans mentioned above, build collaboration with our public safety staff, and Item #5 Packet Pg. 57 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 7 2.Notification and response Community Outreach and Engagement •Updated the "Utilities Wildfire Mitigation Response and Communications Procedure for Public Safety Power Shutoff (PSPS)," enhancing coordination with city departments and improving communication with the community, impacted customers, and media outlets. Enhanced customer communication functions through modifications to the OMS for recorded messages, outbound SMS text notifications, and phone calls. 2025 Goals (Prior Year Objectives): •Continue to refine best practices to disseminate information across the City’s website and other communication channels so customers can easily find information and updates on PSPS, specifically during and post event(s). 2025 Accomplishments (Prior Year Overview) • Delivered print and digital correspondence to customers in the Foothills area with information on PSPS protocols, reminder to update contact information for notifications via OMS, and encouragement to sign up for emergency notification platforms such as AlertSCC. 2026 Goals (Current Year Objectives): •Continue coordinating wildfire preparedness messaging and community outreach efforts with City departments and stakeholders to provide consistent public communication regarding wildfire preparedness, mitigation activities, and emergency response. 2026-2028 Planned Initiatives (Future Strategy): •Continue to educate customers about PSPS, including increased risks of wildfire due to climate change. Inform customers about CPAU’s efforts to mitigate risks such as through utilities undergrounding, system monitoring, and other improvements. Ensure all customers in high fire threat areas are well-informed about how to take steps to prevent wildfire (in coordination with the Fire Department), how to prepare for emergencies and what to do during PSPS, and what to expect from CPAU in terms of communication and response. •Review the PSPS Policy and Process and the Utilities Wildfire Mitigation Response and Communications Procedure and update them as appropriate to reflect the completion of the Foothills Undergrounding Item #5 Packet Pg. 58 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 1 Appendix B: PSPS Policy and Process for Public Safety Power Shutoff Item #5 Packet Pg. 59 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 2 Item #5 Packet Pg. 60 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 3 Item #5 Packet Pg. 61 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 1 Appendix C: Utilities Wildfire Mitigation Utilities Response and Communications Procedure for Public Safety Power Shutoff (PSPS) Policy The City has established a Public Safety Power Shutoff (PSPS) Policy which defines the conditions for a Public Safety Power Shutoff (PSPS) and establishes general procedures. Public Safety Power Shutoff (PSPS) High winds can cause trees and debris to contact energized electric power lines, damage equipment, and potentially lead to wildfire ignition. Utilities may temporarily turn off power to specific areas to reduce the risk of fires caused by electric infrastructure. This temporary outage is called a Public Safety Power Shutoff (PSPS). The City of Palo Alto Utilities (CPAU) prepares for a PSPS when severe weather may create the risk for wildfire. Criteria for PSPS CPAU aligns PSPS criteria with Pacific Gas and Electric (PG&E), the primary electricity provider for the region where Palo Alto is located. Conditions for a PSPS are: • Red Flag Warning issued by the National Weather Service; • Low humidity levels less than 30%; • Forecasted high winds above 19 miles per hour and gusts above 25-40 miles per hour. High Fire Threat Areas The California Public Utilities Commission (CPUC) has sorted regions according to their wildfire risk. Homes and businesses in Tiers 2 and 3 wildfire risk areas are more likely to experience a PSPS. • Tier 2: An area where there is an elevated risk of wildfire. • Tier 3: An area where there is an extreme risk of wildfire. View the CPUC map and information on fire-threat areas 10. The electric lines most likely to be considered for PSPS are lines in Palo Alto west of Highway 280 which are in a Tier 2 (elevated risk for wildfire) area on the CPUC Fire Threat Map. Palo Alto could also be impacted by PSPS activities initiated by PG&E on the transmission system. Purpose and Scope of the Utilities Wildfire Response and Communications Procedure This document provides details on responsibilities and instructions for the implementation of a PSPS. 10 CPUC map and information on fire-threat areas https://www.cpuc.ca.gov/industries-and-topics/wildfires/fire- threat-maps-and-fire-safety-rulemaking Title: Utilities Wildfire Mitigation Response and Communications Procedure for Public Safety Power Shutoff (PSPS) Document Date: Item #5 Packet Pg. 62 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 2 The purpose of this procedure is to establish a process, assign responsibilities, and define a communication plan for the discontinuation of electrical service to high fire threat areas in Palo Alto to prevent potential wildfires ignited by electrical power lines and equipment. Pertinent documents including contact information for staff in critical responder roles and backup support, messaging templates, customer list, and more, are maintained by the CPAU. Procedure A.Monitoring for a PSPS Utilities System Operators are responsible for monitoring the weather forecast for Red Flag Warnings issued by the National Weather Service (NWS) for the Santa Cruz Mountains. NWS will often forecast Red Flag Warnings up to five day forecast. The operator will note the date of the Red Flag Warning in the daily log and will inform their Supervisor (or designee) of the conditions. The Supervisor of the Utilities System Operators (or designee) will become the Incident Commander for PSPS. The Incident Commander is responsible for managing the dissemination of information and executing the PSPS procedure upon approval from the Utilities Director. In coordination with the Utilities Director, the Incident Commander will specify the anticipated timeframe for a potential PSPS and notify City staff listed in the Notification Section of PSPS conditions. B.Declaring a PSPS The Utilities Director (or designee) is responsible for declaring a PSPS event and directing the Incident Commander to initiate a PSPS event. The Incident Commander will notify City staff listed in the Notification Section of this PSPS protocol that a PSPS event has been initiated and provide the following information: •State that a PSPS event has been declared. •The approximate timeframe of the event. •The affected areas. CPAU has aligned the PSPS criteria with PG&E. The latest 2024 PSPS guide is as follows: •Red Flag Warning issued by the National Weather Service; •Low humidity levels, generally 30% and below; •Forecasted high winds above 19 miles per hour and gusts above 25-40 miles per hour. C.Preparation for a PSPS The Incident Commander (or designee) will be responsible for the following: •Instruct the Electric Operations Manager to prepare personnel for the power shutoff and restoration process. •Instruct the Water-Gas-Wastewater (WGW) Manager to prepare personnel and Water and Wastewater facilities in the high-fire threat area for an electrical shutdown. •Inform City staff enrolled in the outage communications chain (“top 20 list”) via text message thread. •Instruct the Utilities Communications Manager and the Utilities Customer Service Manager to initiate notifications to affected customers, the Customer Service Call Center, Utility Program Services, as well as other City staff in public-facing customer roles. •Provide updates about PSPS conditions at mutually agreeable regular intervals to the Utilities Communications Manager and the Utilities Customer Service Manager so staff in public-facing customer roles will be able to edit scripted messages and address customer inquiries across Item #5 Packet Pg. 63 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 3 communication platforms (website, email, text, call center recordings, social media). The Utilities Customer Service Manager (or designee) is responsible for the following: • Maintain and provide contact information for customers in the high-fire threat area. This list will be used to contact customers before, during, and after PSPS events. This list will be updated as follows: o In May or leading into fire weather season, and/or; o When the Utilities Customer Service Manager indicates changes to the customer list maintained on the PSPS/Outage internal SharePoint site. • Prepare Customer Service Representatives for calls and customer inquiries related to PSPS. • Activate recorded messages for the Customer Service Call Center Automatic Call Distribution (ACD) for customers to hear information about a PSPS when calling (650) 329-2161. • Relay updates from Electrical Operations on PSPS conditions to the Customer Service call center staff and direct appropriate updates to Customer Service communication platforms to address customer inquiries. The Utilities Communications Manager (or designee) is responsible for the following: • Prepare and get approval from the Utilities Director (or designee) for scripts to be used for customer notifications. • Maintain template messaging that will be used in notifications to customers about PSPS. • Inform the Utility Program Services Manager about PSPS to inform key account and business customers in affected areas. • Ensure that the appropriate staff, including Utilities Customer Service Representatives, Utilities Key Account Representatives, and Utilities System Operators have access to these protocols for PSPS communication and customer notifications. • Initiate customer notifications before, during, and after a PSPS. • Update status of PSPS conditions via website, social media, and other communication platforms. D. Monitoring Weather Condition Forecasts The Utilities Incident Commander is responsible for monitoring the weather forecasts and informing the Utilities Director of conditions, including establishing a recommended start time and duration for a PSPS event. Once the Utilities Director has declared a PSPS and established a timeframe in coordination with the Incident Commander, the Incident Commander will notify all City staff listed in the Notification Section of this PSPS protocol. The Incident Commander will contact the Utilities Communications Manager and Utilities Customer Service Manager to initiate the approved Second Tier Message. That message will be sent to customers who will be impacted by the PSPS and provide an estimate of the time of the PSPS. (See example in the Messaging Section). E. Power Shutoff The Utilities System Operators will monitor wind conditions and the status of the Red Flag Warning after the PSPS event has been declared and provide updates to the Utilities Director and Incident Commander. Operators will record wind conditions in the Dispatch Log every 30 minutes. The Utilities Director (or designee) is responsible for declaring a PSPS. Upon approval from the Utilities Director, the Utilities System Operators will initiate a power shutoff if the following conditions are met: Item #5 Packet Pg. 64 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 4 • Red Flag Warning issued by the National Weather Service; • Low humidity levels less than 30%; • Forecasted high winds above 19 miles per hour and gusts above 25-40 miles per hour. The Utilities System Operators will inform the Incident Commander that the power shutoff is being initiated. The Incident Commander will notify City staff in the Notification Section of this PSPS protocol that the power is being shutoff. The Utilities System Operators are responsible for the following: • Notify the Incident Commander when conditions meet PSPS criteria. • Initiate PSPS following direction from the Incident Commander and inform the Incident Commander when power is shutoff. • Document the time the PSPS occurs and confirm the area of impact and number of customers affected. • Open the switch that terminates power to the affected areas. • Update the Outage Management System (OMS) outage map, customer SMS text notification, voicemail recording for the Utilities Control Center, and email and/or phone call notifications – if the latter is determined by the Incident Commander to be required - with PSPS information. F. Ending PSPS Event The Utilities System Operators will continue to monitor weather conditions and will inform the Incident Commander when the wind speeds have decreased, or the Red Flag Warning has been called off. The Incident Commander will inform the Utilities Director of the conditions. The Utilities Director will make the determination that the PSPS event has ended and inform the Incident Commander. The Incident Commander will inform City staff in the Notification Section that the PSPS declaration is over and when restoration is complete. G. Restoration of Power The Incident Commander will direct the Utilities System Operators to begin the process of restoration. The Utilities System Operators will call out line personnel for line patrol inspections. All line patrol inspections will be conducted during daylight hours to ensure the lines are in working order. Any damage will be assessed, and any necessary repairs must be complete before power can be restored to those sections or anything downstream. Overhead lines will be restored after line patrol inspections are complete. Power restoration will occur in phases starting at the open switch near Junipero Serra Boulevard. Line configuration at the time of reclosing will determine the sequence of restoration. Utilities System Operators will coordinate the sequence of power restoration under guidance of the Incident Commander. The Incident Commander will inform the Utilities Communications Manager and Customer Service Manager that power has been restored. The Utilities Communications Manager and Customer Service Manager (or designees) will notify affected customers that their power has been restored. H. Coordination with Departments Outside of Utilities The Utilities Director (or designee) will be responsible for communicating activities outside of the Utilities Department and is the main channel of communication for the Incident Commander. Item #5 Packet Pg. 65 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 5 The Office of Emergency Services will be responsible for the following: • Assist the inter-departmental coordination efforts resulting from a PSPS incident. • Assist with external communications as needed. • Assist with the coordination of external entities and agencies required by the incident. City Staff Notification List Those on the CPA Top 20 Internal Emergency Alerts Text Group include: City Manager Assistant City Manager Utilities Director Utilities Chief Operating Officer Utilities Communications Manager Utilities Customer Service Manager Assistant Director of Electric & Fiber Utilities Utilities Electric Operations Manager Utilities Electric Operations Supervisors Chief Communications Officer Office of Emergency Services Director Office of Emergency Services Coordinator Fire Chief Police Captain Information Technology Director Utilities Strategic Business Manager Utilities Communication Projects Coordinator Also inform: Public Works Director Assistant Director of Customer Services Assistant Director of Water-Gas-Wastewater Utilities Manager of Water-Gas-Wastewater Operations Urban Forester I. Utilities Communication Plan The Utilities Communications Manager (or designee) will send out First Tier messages warning customers that a PSPS is possible, Second Tier messages informing customers that power will be shut off for PSPS, and eventually messaging about power restoration following the end to a PSPS event: • First Tier Message - CPAU is monitoring conditions for a potential PSPS. • Second Tier Message – CPAU expects a PSPS. • Third Tier Message – PSPS initiated. Customer Notification Steps: 1) The Utilities Communications Manager will coordinate with the Utilities Director (or designee) on status of potential PSPS and customer notifications. 2) The Utilities Communications Manager will coordinate with staff in Electric Operations to update and activate OMS voicemail recording on the Utilities Control Center phone line and OMS SMS text messaging for customers in the affected areas. Item #5 Packet Pg. 66 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 6 3) The Utilities Communications Manager will coordinate with the Customer Service Manager to call customers without mobile phones in the affected areas and update outgoing messages in the Utilities Customer Service Call Center to alert customers about a PSPS event. The following communication platforms will have coordinated messages: • OMS - Outage Management System voicemail recording and SMS text • Website • Emails to affected customers • ACD – Automatic Call Distribution recording on Utilities Customer Service Call Center line at (650) 329-2161 • Social media – X (formerly Twitter) and Facebook – if deemed appropriate by the Utilities Director and Utilities Communications Manager. Template Messaging First Tier (Monitoring for a potential PSPS) 1) OMS Text (SMS) Red Flag Warning in effect from Date and Time through Date and Time. CPAU is monitoring conditions in the Foothills for possible power shutoffs. More info at paloalto.gov/utilities 2) Outlook Email a. (Use either Utilities Customer Service or Utilities Communications email address) Subject Line: Potential Public Safety Power Shutoff (PSPS) for the Palo Alto Foothills The National Weather Service issued a Red Flag Warning for parts of the Bay Area due to dry and windy conditions from Date and Time through Date and Time. The City of Palo Alto Utilities is monitoring conditions to determine if a Public Safety Power Shutoff (PSPS) will be required to reduce the potential for wildfire in the Foothills area of Palo Alto. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. Do not call 9-1-1 if your power is out unless there is a threat to life safety. View the power outage map at www.paloalto.gov/outagemap 3) Website Potential Public Safety Power Shutoff (PSPS) Red Flag Warning: Date The National Weather Service (NWS) issued a Red Flag Warning for parts of the Bay Area due to dry and windy conditions that pose a risk of wildfires spreading quickly. The Red Flag Warning is in effect Date(s) and time. Status: Monitoring Conditions Due to current weather conditions, the City is monitoring winds to determine if a Public Safety Power Shutoff (PSPS) will be required to reduce wildfire potential. Electric lines most likely to be considered for a PSPS event are those in the Palo Alto Foothills west of Highway 280. We do not expect that the Item #5 Packet Pg. 67 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 7 remainder of the City’s businesses and residences will be impacted by a power shutoff. Do not call 9-1-1 if your power is out unless there is a threat to life safety. View the power outage map at www.paloalto.gov/outagemap This page will be updated as conditions evolve and new information becomes available. Learn more about preparing for power outages at www.paloalto.gov/PSPS Information for Palo Alto PG&E Customers There are a few Palo Alto residents in the Palo Alto Foothill served by PG&E who may be impacted by a shutoff from PG&E. If you are a Palo Alto resident served by PG&E, visit their website for information on their Public Safety Power Shutoff plans. Second Tier (CPAU expects a PSPS) 1) OMS SMS Text Red Flag Warning in effect from Date and Time through Date and Time. CPAU is monitoring conditions in the Foothills for possible power shutoffs. View power outage map at www.paloalto.gov/outagemap 2) Outlook Email a. (Use either Utilities Customer Service or Utilities Communications email address) Subject Line: Public Safety Power Shutoff (PSPS) May Occur The National Weather Service (NWS) issued a Red Flag Warning for parts of the Bay Area due to dry and windy conditions that pose a risk of wildfires spreading quickly. The Red Flag Warning is in effect from Date and Time through Date and Time. Due to current weather conditions, the City of Palo Alto Utilities is monitoring conditions to determine if a Public Safety Power Shutoff (PSPS) will be required to reduce the potential for wildfire in the Foothills. Our records show that you are in an area that may require a power shut off for safety precautions. We will do our best to inform you as conditions evolve and new information becomes available. View Palo Alto PSPS updates at www.paloalto.gov/utilities (insert link to specific news item if available). View the power outage map at www.paloalto.gov/outagemap Read more about PSPS at www.paloalto.gov/psps Additional Resources Ensure we have your current mobile number to be notified of outages and updates through the City’s Outage Management System. Log in to MyCPAU at www.paloalto.gov/mycpau or contact Utilities Customer Service at (650) 329-2161 to update your contact information. Do not call 9-1-1 unless you are experiencing a life-threatening emergency. For non-emergency public safety issues, call (650) 329-2413. Information for PG&E Customers Item #5 Packet Pg. 68 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 8 In response to the current forecast, PG&E is also monitoring conditions for their electric utility customers. There are a few Palo Alto residents in the Palo Alto area west of highway 280 served by PG&E who may be impacted by a shutoff from PG&E. These customers should contact PG&E for information on their Public Safety Power Shutoff plans. Visit https://pgealerts.alerts.pge.com/psps- updates/ Outage Preparations You may want to consider the following steps to be prepared for a power outage: • Utilize an emergency supply kit with enough water, food, medicine, batteries and flashlights to last several days. • Consult with your medical professional regarding medical treatment, backup generators, or other power supplies for medical or other needs. • Have your vehicle gas tank filled or electric battery charged and cash on hand (as electronic transaction devices and ATM machines may be without power). 3) ACD Recording on Customer Service Call Center Phone Line The National Weather Service issued a Red Flag Warning for parts of the Bay Area due to dry and windy conditions from Date and Time through Date and Time. The City of Palo Alto Utilities is monitoring wind conditions to determine if a Public Safety Power Shutoff (PSPS) will be required to reduce the potential for wildfire in the Foothills area of Palo Alto. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. Please do not call 9-1-1 if your power is out unless there is also a threat to life safety. View the power outage map at www.paloalto.gov/outagemap 4) Website Potential Public Safety Power Shutoff (PSPS) Red Flag Warning: Date The National Weather Service (NWS) issued a Red Flag Warning for parts of the Bay Area due to dry and windy conditions that pose a risk of wildfires spreading quickly. The Red Flag Warning is in effect Date(s) and time. Status: Monitoring Conditions Due to current weather conditions, the City is monitoring winds to determine if a Public Safety Power Shutoff (PSPS) will be required to reduce wildfire potential. Electric lines most likely to be considered for a PSPS event are those in the Palo Alto Foothills west of Highway 280. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. Do not call 9-1-1 if your power is out unless there is a threat to life safety. View the power outage map at www.paloalto.gov/outagemap This page will be updated as conditions evolve and new information becomes available. Item #5 Packet Pg. 69 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 9 Learn more about preparing for power outages at www.paloalto.gov/PSPS Information for Palo Alto PG&E Customers There are a few Palo Alto residents in the Palo Alto Foothill served by PG&E who may be impacted by a shutoff from PG&E. If you are a Palo Alto resident served by PG&E, visit their website for information on their Public Safety Power Shutoff plans. Messaging – Third Tier (PSPS initiated) 1) OMS Text (SMS) Public Safety Power Shutoff necessary. View power outage map at www.paloalto.gov/outagemap 2) OMS Voice Recording for incoming calls to UCC Public Safety Power Shutoff for customers in the Foothills. Due to anticipated fire weather conditions, the City of Palo Alto Utilities shut off power to reduce the potential for a wildfire. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. View the power outage map at www.paloalto.gov/outagemap 3) ACD Recording on Customer Service Call Center Phone Line Due to Red Flag Warning conditions from the National Weather Service, the City of Palo Alto Utilities shut off electricity to customers in the Foothills to prevent the risk for a potential wildfire. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. Do not call 9-1-1 if your power is out unless there is a threat to life safety. View the power outage map at www.paloalto.gov/outagemap 4) Outlook Email a. (Use either Utilities Customer Service or Utilities Communications email address) Subject Line: Public Safety Power Shutoff (PSPS) for Palo Alto Utilities Customers in the Foothills Due to anticipated fire weather conditions, the City of Palo Alto Utilities shut off power in the Foothills to reduce the potential for wildfire. Our records show that you are in this area and may be impacted by a power shutoff for safety precautions. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. The City will continue to monitor conditions and do our best to keep you informed as conditions evolve and new information becomes available. View Palo Alto PSPS updates at www.paloalto.gov/utilities (insert link to specific news item if available). View the power outage map at www.paloalto.gov/outagemap Read more about PSPS at www.paloalto.gov/psps Item #5 Packet Pg. 70 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 10 The State’s Office of Health & Human Services has set up a non-emergency hotline at 1 (833) 284-3473 to help those who are medically vulnerable. Dial 9-1-1 in the event of a life-threatening emergency. For non-emergency public safety issues, call (650) 329-2413. For Public Safety Power Shutoff updates, call Utilities Customer Service at (650) 329- 2161. The City of Palo Alto also uses AlertSCC to communicate during emergency events such as natural disasters, crime bulletins, power outages, and more. You can sign up to receive Alert SCC notifications at https://emergencymanagement.sccgov.org/AlertSCC and follow our Emergency Preparedness page at www.paloalto.gov/preparedness 5) Website Due to a Red Flag Warning from the National Weather Service, electricity has been shut off for customers in high fire threat areas in the Foothills to avoid potential risk of wildfire. We do not expect that the remainder of the City’s businesses and residences will be impacted by a power shutoff. View Palo Alto PSPS updates at www.paloalto.gov/utilities (insert link to specific news item if available). View the power outage map at www.paloalto.gov/outagemap Read more about PSPS at www.paloalto.gov/psps At this time, we do not know when power will be restored. Restoration will begin as soon as possible after conditions clear. Prior to energizing power again, Utilities must patrol the lines during daylight hours for safety precautions. This may take multiple hours or days depending upon the conditions. The State’s Office of Health & Human Services has set up a non-emergency hotline at 1 (833) 284-3473 to help those who are medically vulnerable. Dial 9-1-1 in the event of a life-threatening emergency. For non-emergency public safety issues, call (650) 329-2413. For Public Safety Power Shutoff updates, call Utilities Customer Service at (650) 329- 2161. 6) Social media (Upload image if possible and tag @cityofpaloalto and @paloaltopolice in social media posts) Power has been shut off for customers in the Foothills to prevent risk of wildfire. CPAU must patrol lines during daylight hours for safety before reenergizing. This could take hours to days, depending upon the conditions. View the power outage map at www.paloalto.gov/outagemap or call 650-496-6914 for other electrical emergencies. Messaging - Restoration 1) ACD Message, Email, and Website The City of Palo Alto Utilities has restored power to customers in the Foothills following a Public Safety Item #5 Packet Pg. 71 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 11 Power Shutoff to prevent the risk of wildfire. If your power was shut off during this period and you still do not have power, please contact us at (650) 496-6914 to report a continuing outage. 2) Social Media (only if deemed necessary by the Utilities Director and Utilities Communications Manager) POWER OUTAGE UPDATE: CPAU restored power to the Foothills as the Red Flag Warning has been lifted. Call 650-496-6914 to report a continuing outage and/or power issue. Thank you for your patience as we work to ensure the safety of all in our community. www.paloalto.gov/utilities Item #5 Packet Pg. 72 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 1 Appendix D: Plan Revision Log of Key Changes Plan Revision Log of Key Changes Date Plan Section/Location Description 9/2/26 Section IV Monitoring the Plan C. Applying previous Plan metrics to this Plan, ii Fire ignitions Section D. Community Wildfire Protection Plan/Foothills Fire Management Plan Appendix A – Wildfire Mitigation Activities •Updated Section D with new document title and updated footnote and link. •Updated Appendix A – Wildfire Mitigation Activities to correct trees trimmed in 2024 within the Tier 2 zone and provided accomplishments for 2025, goals for 2026, and 2026-2027 future initiatives. •Updated ii Fire ignitions verbiage to be more generic, still use the previous metrics. •General editorial improvements for clarity and consistency. 6/4/25 Section III Roles and Responsibilities - Sections A.City of Palo Alto Utilities Department C.Deenergization-related communication (including revised Appendix C) Section IV Monitoring the Plan C. Applying previous Plan metrics to this Plan Appendix A – Wildfire Mitigation Activities Added Appendix D – Plan Revision Log of Annual Update, Plan will be dated June 4, 2025 upon UAC adoption. •Updated organizational chart to reflect current structure. •Updated outage metric since 2020 from ten (10) to twelve (12). •Revised Appendix A using a hybrid format based on the recommended WSAB template to summarize mitigation activities such as project progress. •Added Appendix D: Plan Revision Log of Key Changes to formally track Plan changes, included high level of past updates/changes. •Updated sections related to deenergization to align with the latest PSPS communication protocols. •General editorial improvements for clarity and consistency and including listing out Appendices and Table of Figures. (HFTD) Map Appendix A – Wildfire Mitigation Activities •Updated Appendix A, minor changes were made to reflect current status of wildfire mitigation activities and project status. •Initiated a review and update of the Utilities Wildfire Mitigation Response and Communications Procedure for Public Safety Power Shutoff (PSPS) to enhance community readiness. This included incorporating Outage Management System (OMS) features to support outbound communications during potential PSPS 11 Staff Report ID 2404-2905 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=15094 Item #5 Packet Pg. 73 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 2 • • •Comprehensive revision of the Plan was completed to determine its efficacy, legal compliance, and provide suggestions for improvement. The comprehensive review was completed by an Independent Evaluator (IE) Dudek. • Date Plan Section/Location Description Context Table Cross Reference Table Appendix G - Utilities Wildfire Mitigation Response and Communications Procedure for Public Safety Power Shutoff (PSPS) Appendix E- Status of Proposed Activities •Submitted redlined Plan document as part of the WSAB’s request and; o Updated Plan placement on the Utilities website for easier navigation. o Included the WSAB’s Context Table. o Included Dates of past years’ public presentations. o Added more context to community outreach efforts during a fire o Added Appendix G Utilities Wildfire Mitigation Response and Communications Procedure for Public Safety Power Shutoff (PSPS). o Updates made to the status of reported projects, including: the installation of a weather station, progress on undergrounding lines, assessments for emergency back-up generators, etc. (Appendix E). o to Reduce Risk of Wildfire or Improve •The primary revision focused on updating the status of proposed wildfire 15 12 Staff Report ID 2301-0900 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=11331 13 Staff Report ID 14175 https://www.cityofpaloalto.org/files/assets/public/v/2/agendas-minutes-reports/agendas-minutes/utilities-advisory-commission/archived- agenda-and-minutes/agendas-and-minutes-2022/06-08-2022/06-08-2022-id-14175-item-3-wildfire.pdf 14 Staff Report ID 12190 https://www.cityofpaloalto.org/files/assets/public/v/2/utilities/id-12190-item-2.pdf 15 Staff Report ID 10670 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-archive/2020/id- 10670-mini-packet-01212020.pdf?t=53268.17%20 Item #5 Packet Pg. 74 City of Palo Alto Utilities Wildfire Mitigation Plan 2026 Update Page | 3 Item #5 Packet Pg. 75 This page intentionally left blank. Date: September 2, 2026 12-MONTH ROLLING CALENDAR FORECAST *Numbers at the end of titles correspond with Workplan line City Council CCM – City Council Meeting 2026 September 2, 2026 •Commission Norms •Commissioners Memo •Utilities Reserve Management Policies (#4) •Electric Long Duration Resiliency (#2) • • •CAD Master Amendment #2 •A3 Contract for Sewer Lateral Replacement Project •City of Palo Alto Utilities Electric Utility Physical Security Plan Update • 2026 October 7, 2026 •Bond Financing for Grid Modernization Project •Rates, Reservation Fees, Contracts, Policies, and Development Requirements for Data Centers (#7 & #15) •Time of Use Update (#8) •Palo Alto Low Carbon Fuel Standards Program Update (#10) •Informational Report - Dahl and Park Storage • •Approval of UAC Workplan - Oct. 5th •Veolia Contract for Efficiency and Electrification Program •Accent Gold Contract for Customer Program Management •Woodard and Curran Contract for Hydraulic Modeling Support •Muni Code Change to Allow Power Purchasing Agreements Unsolicited Negotiations •Recommend Approval of Bond Financing for Grid Modernization Project (FCM) 2026 November 4, 2026 •FY 2028 Preliminary Rates (#3) •Fiber Expansion and Fiber to the Premises (FTTP) Update (#6) •Water COSA Guidelines •Utilities Legislative & Regulatory Updates (#11) •Discussion on Utilities Quarterly Report FY26 – • •Purchase Fiber Cables for Fiber Backbone Rebuild •Transmission Agency of Northern California Contract Modifications •Fiber Expansion and FTTP Update (FCM) November 9, 2026 or November 16, 2026 •Joint Session with City Council and BAWSCA on Water Demand Forecast (#13) December 2026 December 2, 2026 •S/CAP Funding and Revised Carbon Neutral and C&I Use (#10) •Study Results from CASC and UAC Joint Meeting (#10) •Informational Report - Annual Review of the City’s Renewable Procurement Plan, Renewable Portfolio Standard Compliance, and Carbon Neutral Electric Supplies for 2025 (#9) • •Approval of the City of Palo Alto’s Updated 2027 Water, Gas, and Wastewater Utility Standards •Approval of Bond Financing for Grid Modernization Project •Utilities Reserve Management Policies (FCM) •Informational Report on FY 2026 Cap and Trade Program •Informational Report on the Annual Review of the City’s Renewable Procurement Plan, Renewable Portfolio Standard 2027 January 6, 2027 •5 Year Capital Improvement Project (Includes Treatment Plant) (#5) •Utility Legislative Guidelines (#11) •Gas Transition Study (#1) •Fiber Expansion and FTTP Update (#6) •Informational Report – Utilities Quarterly • 2027 February 3, 2027 •Electric Utility Business Strategy (#15) •Interim update on Electric Supply Costs (3/02/26 Council Action minutes) (#9) •Business and Key Account Customer Item #A Packet Pg. 76 March 2027 March 3, 2027 • FY2028 Water Rates and 5 Year Forecasts (#3) • FY2028 Wastewater Rates and 5 Year Forecasts (#3) • Informational Report – Utilities Quarterly • • FY2028 Wastewater Rates and 5 Year Forecasts (FCM) April 7, 2027 • FY2028 Electric Rates and 5 Year Forecasts (#3) • FY2028 Gas Rates and 5 Year Forecasts (#3) • FY2028 Fiber Rates and 5 Year Forecasts and • • FY2028 Gas Rates and 5 Year Forecasts (FCM) • Interim update on Electric Supply Costs (3/02/26 Council Action minutes) • May 5, 2027 • FY2028 Utilities Operating and CIP Budget • Election of the UAC Chair and Vice Chair FY2028 Fiber Rates and 5 Year Forecasts and Next Steps (FCM) June 2027 June 2, 2027 • UAC Workplan • • FY 2028 Utilities Operating and CIP Budget • July 7, 2027 • Informational Report – Utilities Quarterly COUNCIL SUMMER BREAK August 4, 2027 Council Recap on Utilities Items – August 2026 Approved By Council: • Adoption of a Resolution Approving a Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank for a Portion of the City’s Natural Gas Requirements • Approval of Contract with "High Point Power Systems“ for the repair and refurbishment, and extension of the critical life of a load tap changer (Adobe Creek • Adoption of a Resolution to Transact for Electric Supplies to Meet the City’s Electrical Needs under Electric Master Agreements • Approval of Contract No. C27196740 with “Blackhawk Painting Inc.” for Electric Substations Equipment and Mechanical Structures Painting Services Work Plan Items to Be Scheduled Items to Be Scheduled • Review Load Projections & Grid Upgrades (#14) • Informational Report - Customer Communications (#12) • Upcoming Power Purchasing Agreements One Year look back at DER, Cost Effectiveness (#10) • LAFCO, Water and Wastewater Review Link to UAC Workplan Pending Council Approval: https://www.paloalto.gov/files/assets/public/v/1/utilities/utilities-advisory- commission/uac-approved-fy-2027-utility-advisory-commission-priorities.pdf Item #A Packet Pg. 77 Item No. 3 Page 1 of 15 1 0 2 1 4 Utilities Advisory Commission Staff Report From: Alan Kurotori, Director Utilities Lead Department: Utilities Meeting Date: September 2, 2026 Report #: 2606-6492 TITLE Discussion of Baker Tilly Reserves Advisory Report and Recommendation to the City Council of Proposed Policy Updates to the Utilities Reserve Management Practices RECOMMENDATION Staff recommends that the Utilities Advisory Commission (UAC) recommend the City Council (via the Finance Committee) adopt the following: 1. Revisions to the Utilities Reserve Management Practices based on staff’s proposed policies for the reserve targets: a. Replace the Capital Improvement Program (CIP) Reserve minimum and maximum guidelines with a reserve target based on the Average Annual CIP Budget. b. Add a Rate Stabilization Reserve (RSR) target based on 10% of operating expenses and define rules for when reserve balance is above or below target; and 2. Proposed 5-year timeline for achieving revised RSR policy targets; and 3. Proposed timelines for achieving revised CIP Reserve policy targets: 5 years for the Gas and Water Utilities and 10 years for the Electric Utility; and 4. Proposed FY 2027 workflow for revising and approving the Utilities Reserve Management Practices. EXECUTIVE SUMMARY Staff recommends establishing a RSR target (based on 10% of operating expenses) and a CIP Reserve target (based on Average Annual CIP Budget). The overall combined impact of staff’s recommendation adds an estimated 0.3% to 0.5% per year for the Electric, Gas, and Water Item #3 Packet Pg. 78 Item No. 3 Page 2 of 15 1 0 2 1 4 Utility’s rate trajectory forecast, as shown in Table 7.1 Staff’s recommendations balance affordability with a measured transition to the financial practices described in this report. 2. In March 2026, Baker Tilly Advisory Group, LP (Baker Tilly), in its capacity serving as the Office of the City Auditor, completed an assessment of the City's utility reserve policies. This assessment resulted in the Advisory Report, which evaluated the City’s existing reserve policies and compared them with industry best practices and peer agencies. BACKGROUND 3, and Policy and Services Committee (P&S) accepted the results on April 14, 20264. Discussion at the P&S meeting centered on developing a plan to steadily and sustainably increase reserves. 1 Staff’s recommendation assumes a 5-year timeline for achieving revised RSR targets for all utilities; 5-year CIP Reserve timeline for Gas and Water Utilities; and 10-year CIP Reserve timeline for the Electric Utility. 2 City of Palo Alto Utility Reserves Advisory Report, March 27, 2026: https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=ab3102f7-8c84-4348-a68d- 2e6bee10328c 3 City Council Staff Report #2650-6353, June 8, 2026: https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=2e6cf5 71-d9f1-4ba5-b71d-a3f042acbefb; and Management Response, April 2, 2026: https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=b4ab74b3-645b-44bb-a72c- a5ca87b97e0c. 4 Policy and Services Committee Staff Report #2509-5177, April 14, 2026: https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=64580 a69-262d-4e61-b2a9-3b18cf4eccb6 Item #3 Packet Pg. 79 Item No. 3 Page 3 of 15 1 0 2 1 4 The Advisory Report made five key recommendations that relate to the Electric, Gas, Water and Wastewater Collection Utilities. One additional recommendation addressed outdated policies and structures of the Wastewater Treatment, Refuse, and Stormwater reserve policies; that recommendation is being separately addressed by the Public Works Department. Do not eliminate any of the current reserve funds in place: This recommendation notes that Palo Alto’s Operations, Rate Stabilization, and Capital Improvement Program (CIP) Reserves are in line with benchmark communities and that Palo Alto’s separate reserve funds are in place for specifically defined and valid purposes and should remain in place until those purposes are accomplished or are no longer applicable. No action needed Clarify CIP reserve fund language: This recommendation notes that the Electric Special Project (ESP) Reserve is distinct from the CIP Reserve within the Electric Utility and recommends clarity on the intended use of funds. An update on the Council-adopted policy on the use of the ESP Reserve is appropriate. Staff plans to bring forward proposed revised policy within a year. Formalize reserve tracking: This recommendation proposes reporting requirements to the City Council. As noted in the management response, staff provides information about the reserve balances to the City Council in the Operating Budget, Annual Comprehensive Financial Report and Utility Financial Forecasts each year, and staff plans to continue this practice. Staff recommends exception-based reporting added to the existing quarterly financial report to Council. Staff is in the process of implementing this recommendation by the end of 2026. Staff plans to include this reporting in the Utilities quarterly report that will be provided to the City Council as an informational report going forward. Consider adjustment to CIP reserve guideline levels: The Advisory Report recommends maintaining the CIP reserve at 20% of 60 months of budgeted (cash-funded) CIP expenses or alternatively one-year of depreciation expense. Adjust RSR policy to align with bond covenants and benchmark communities: The Advisory Report recommends establishing RSR target levels based on bond covenants, as applicable, or a percentage of total operating revenues or operating expenses. Item #3 Packet Pg. 80 Item No. 3 Page 4 of 15 1 0 2 1 4 the utility’s costs, risks, and operating contingencies, which may differ for each of the Electric, Gas, Water and Wastewater Collection Utilities. Electric Reserves FY 2027 Projected Balance (Target, $38.2M to $76.4 M)9 Electric Special Projects (managed in accordance with Council guidelines set forth in Resolution 1007610) $31.2M Underground Loan (adjusted each year by the principal payments made against outstanding underground loans) $0.7M Hydro Stabilization (used to manage the supply cost impacts associated with variations in generation from hydroelectric resources with a target level of $19M in accordance with the Council Resolution 974411) $18.8M Electrification Reserve (tracks City’s building appliance and vehicle electrification projects and programs) $2.0M Public Benefit, Low Carbon Fuel Standard, Cap & Invest (tracks net of revenues and expenses for each of these special revenue sources) $18.8M Gas Reserves FY 2027 Projected Balance (Target, $10.1M to $20.2M)12 ($4.5 million to be reserved for future short-term gas price spikes13) Cap & Invest 9 The FY27 financial forecast projected the Electric Operations reserve year-end balance at $54M. The FY27 adopted budget assumed higher bond revenue proceed by about $19M 10 Resolution #10076, October 3, 2022, Resolution of the Council of the City of Palo Alto Establishing an Electrification Reserve and Amending the Electric Utility Reserves Management Practices: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=61565&dbid=0&repo=PaloAlto 11 Resolution #9744, March 19, 2018, Resolution of the Council of the City of Palo Alto Adopting Electric Rate Schedule E-HRA (Electric Hydro Rate Adjuster) and Amending the Electric Utility Reserve Management Practices: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=54142&dbid=0&repo=PaloAlto 12 The FY27 financial forecast projected the Gas Operations reserve year-end balance at $7.3M. The FY27 adopted budget overstated revenue by about $16M due to over-reported grant funding and Cap-and-Invest revenues 13 Resolution #10187, August 19, 2024 Resolution of the Council of the City of Palo Alto Amending the Gas Utility Long-term Plan Objectives, Strategies and Implementation Plan, Amending the Gas Utility Reserves Management Practices, Amending the FY 2025 Gas Fund Budget Appropriation, and Amending Rate Schedules G-1 (Residential Gas Service), G-2 (Residential Master-Metered and Commercial Gas Service), G-3 (Large Commercial Gas Service), and G-10 (Compressed Natural Gas Service): https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=62063 Item #3 Packet Pg. 81 Item No. 3 Page 5 of 15 1 0 2 1 4 Water Reserves FY 2027 Projected Balance Operations (Target, $9.2M to $18.5M)$11.86M Rate Stabilization $4.00M CIP Reserves $9.00M In addition to the reserves listed above, each utility also has a reserve for commitments and reserve for reappropriations. The reserve for commitments holds an amount equal to the remaining spending authority for all active contracts while the reserve for reappropriations holds the amount of all remaining budgets that will be reappropriated to the following fiscal year. ANALYSIS In its management response to the Advisory Report, staff proposed to develop a workflow over the coming year to review and revise reserve policies for City Council consideration with the assistance of the Utility Advisory Commission and the Finance Committee. While the Advisory Report contains several recommendations, the most significant policy considerations relate to the CIP Reserves and RSR Reserves due to their potential impacts on utility financial planning and customer rates. Accordingly, this section focuses on policy considerations for these two reserve categories as part of the FY 2027 Workflow. Workflow to Review and Revise Reserve Policies for City Council Consideration Table 1 lists the timeline for the workflow to review and revise reserve policies for City Council consideration. For reference, the current reserve management practices are available at the following links and were most recently approved by the City Council on June 15, 2026. Electric Utility Reserves Management Practices19 Gas Utility Reserves Management Practices20 Water Utility Reserves Management Practices21 Wastewater Collection Utility Reserves Management Practices22 19 Electric Utility Reserves Management Practices: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2026/june/rates/attachment-d-exhibit-3-fy27- electric-reserves-management-practices-redline.pdf 20 Gas Utility Reserves Management Practices: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes- reports/agendas-minutes/city-council-agendas-minutes/2026/june/rates/attachment-e-exhibit-3-fy27-gas- reserve-management-practices-redline.pdf 21 Water Utility Reserves Management Practices: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/agendas-minutes/city-council-agendas-minutes/2026/june/rates/attachment-a-exhibit-3-fy27- water-reserve-management-practices.pdf 22 Wastewater Collection Utility Reserves Management Practices: https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council- Item #3 Packet Pg. 82 Item No. 3 Page 6 of 15 1 0 2 1 4 27 The staff recommendations and proposed workflow breaks up the review into two phases. Phase 1 Workflow: Review and Revise CIP and RSR Policies The first phase will occur this year in preparation for the FY 2028 rate setting process, focusing on the Electric, Gas and Water Utilities. Wastewater reserve changes will be addressed separately, since the Regional Water Quality Control Plant is in the process of conducting a separate analysis with an outside consultant and the RWQCP’s partners, including the City of Palo Alto. The RWQCP is developing recommendations to go to Finance Committee in October 2026. Once those recommendations are available, as part of the workflow, staff would also present information and make recommendations for the Wastewater Collection Utility reserves.28 Table 1: Phase 1 Workflow - Review and Revise CIP and RSR Reserve Policies Meeting Date Governing Body Topic Sept 2, 2026 UAC Reserve policy recommendations for Electric, Gas, and Water (Action) Nov 2026 UAC Reserve policy recommendations for Wastewater Collection (Action) Nov/Dec 2026 Finance Committee Reserve policy recommendations for Electric, Gas, Water and Wastewater Collection (Action) January 2027 Council Adoption of Reserve Management Practices for Electric, Gas, Water and Wastewater Collection Utilities (Consent) March/April 2027 UAC FY 2028 rates and five-year forecast for Electric, Gas, Water and Wastewater Collection (in alignment with January 2027 Council action) (Action) April/May 2027 Finance Committee FY 2028 rates and five-year forecast for Electric, Gas, Water and Wastewater Collection (in alignment with January 2027 Council action) (Action) June 2027 Council FY 2028 rates and five-year forecast for Electric, Gas, Water and Wastewater Collection (in alignment with January 2027 Council action) (Action) agendas-minutes/2026/june/rates/attachment-b-exhibit-3-fy27-wastewater-collection-reserve-management- practices.pdf 28 Because the Wastewater Collection utility is responsible for its share of treatment costs to treat Palo Alto’s wastewater, the Wastewater Collection utility needs to contribute to reserves at the RWQCP. Additionally, the Wastewater Collection utility needs its own reserves in alignment with the Advisory Report recommendations. Showing the impact of the Advisory Report recommendations on the Wastewater Collection utility together with the recommendations from the RWQCP, once those are available, will provide a more complete picture of the impacts and risks. Table 1 shows that more information for the Wastewater Collection utility will be provided to the UAC. Item #3 Packet Pg. 83 Item No. 3 Page 7 of 15 1 0 2 1 4 The second phase is planned to occur in FY 2028 potentially for the FY 2029 rate setting process to focus on reserve specific proposals, such as the Hydro Rate Stabilization Reserve, and Gas Price Mitigation Adder. Revisions to the Reserve Management Practices may be needed after each phase. Phase 2 Workflow: Refinement of Reserve-Specific Detailed Policies UAC Fall 2027: Policy recommendations and results of rate consultant review of Hydro Rate Stabilization Reserve, Gas Price Mitigation Adder, and ESP Reserve Guidelines and sunset date. (Action) Finance Committee Fall/Winter 2027: Policy recommendations and results of rate consultant review of Hydro Rate Stabilization Reserve, Gas Price Mitigation Adder, and ESP Reserve Guidelines and sunset date. (Action) City Council Winter 2027/Spring 2028: Adoption of policy recommendations and results of review of Hydro Rate Stabilization Reserve, Gas Price Mitigation Adder, and ESP Reserve Guidelines and sunset date. (Action) Advisory Report Recommendations 30 and guidance from the Government Finance Officers Association (GFOA). Importantly, GFOA guidance allows for a capital reserve level that best serves the capital needs and financial capabilities of a given organization.31 Current CIP-related CPAU Reserve Policies 30 City Council Staff Report #2605-6353, June 8, 2026: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887085 (pg. 39-42) 31 Strategies for Establishing Capital Asset Renewal and Replacement Reserve Policies, Board approval date, Friday, March 8, 2019: https://www.gfoa.org/materials/strategies-for-establishing-capital-asset-renewal-and Item #3 Packet Pg. 84 Item No. 3 Page 8 of 15 1 0 2 1 4 - Regulatory requirements - Supply chain delays that can shift or accelerate capital investment project schedules - Emergency infrastructure failures requiring immediate response - Climate-related events including drought, wildfire, flooding and extreme weather that may require unplanned capital expenditure Currently, the Electric, Gas, Water and Wastewater Collection Utilities have a CIP Reserve maximum guideline of average annual CIP budget for 48 months of budgeted CIP expenses, and a minimum guideline of 20% of the maximum CIP reserve guideline level. The CIP Reserve policies do not include a target guideline level. In recent years the CIP Reserves for the Electric and Gas Utilities have been maintained below the current minimum guideline levels to moderate rate increases. The Fiscal Year Ending (FYE) 2027 projected CIP Reserve balances are shown in the table below. Table 2: FY 2027 CIP Reserve Projected Balances, Minimum and Maximum Guidelines ($ Millions) Electric Gas Water CIP Reserve Balance $ 5.88 $ 0 $ 9.00 CIP Reserve Minimum $ 5.66 $ 2.82 $ 3.43 CIP Reserve Maximum $ 28.31 $ 14.09 $ 17.13 While calculated from different base periods, the City's current CIP Reserve maximum guideline and the Advisory Report recommendation of 20% over 60 months are both equivalent to maintaining average annual CIP budget in reserve. For simplicity, this report refers to both approaches as Average Annual CIP Budget. Table 3 compares the current reserve policy guidelines with the Advisory Report recommendations. Table 3: Policy Targets by Utility Based on FY 2032 Projections (5 years) ($ Millions) Electric Gas Water Average Annual CIP Budget (Current Maximum Guideline & Advisory Report Recommendation) $ 35.32 $ 15.51 $ 15.93 Annual Depreciation Expense (Advisory Report Alternative Recommendation) $ 13.60 $ 5.60 $5.16 20% of Average Annual CIP Budget (Current Minimum Guideline) $ 7.06 $ 3.10 $3.19 Estimated Rate Impacts Staff estimates that adopting the Average Annual CIP Budget recommendation as the CIP target reserve level would require rate increases for the Electric and Gas Utilities. This policy recommendation would not require rate increases for the Water Utility as it is already Item #3 Packet Pg. 85 Item No. 3 Page 9 of 15 1 0 2 1 4 forecasted to achieve this target level by 2031. Table 4 shows estimated rate impacts to the Electric and Gas Utilities under two phase-in scenarios, over a five (5) or ten (10) year period. In each scenario, a fixed percentage rate increase is applied annually throughout the period so that the incremental revenue collected each year, compounded over the period, equals the necessary funds needed by the end of each phase-in period. Table 4: Estimated Annual Rate Impacts of Advisory Report CIP Reserve Target Recommendation of Average Annual CIP Budget Electric Gas 5-year Implementation 10-year Implementation 34 After the fifth year, and assuming all else is equal, these incremental adjustments would be removed from the rate. However, in practice, rather than resulting in a decrease in rates, customers would likely see a reduced magnitude of future rate increases that would otherwise be needed. The incremental adjustment can also be reevaluated annually based on financial performance, market conditions, and the extent to which reserve funds are needed to respond to market events or other financial needs. This approach allows for flexibility to adjust the rate increments over time while continuing to make gradual progress toward the target reserve levels. Policy Considerations, Recommendations and Next Steps 34 This example is for illustration only and does not take into account the compounding effects of rate increases but it is provided to clarify that this is not a sustained 0.3% increase and rather is an additional 0.3% added each year. Item #3 Packet Pg. 86 Item No. 3 Page 10 of 15 1 0 2 1 4 to manage capital risks. The calculation of the Average Annual CIP Budget only includes cash- funded CIP and it does not include CIP projects funded by grants or customer connection fees. Advisory Report Recommendations 36. The Advisory Report observed that Palo Alto’s Electric, Water, and Gas Utilities lack guideline levels, whereas peer utilities tend to have defined targets. The Advisory Report includes peer examples for reference and recommends that CPAU management set its targets based on the amount desired to be held in the fund to help stabilize future rate increases. 36 City Council Staff Report #2605-6353, June 8, 2026: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887085 (pg. 32-35). The Advisory Report also recommends aligning RSR guidelines with the bond covenants of the City’s 2009 Series A Water Revenue Bonds (2009 Revenue Bonds) and 2011 Utility Refunding Bonds (2011 Revenue Bonds). As staff outlined in the management response, staff plans to refund the 2009 Revenue Bonds under a new bond indenture in FY 2027, which would eliminate the current bond covenant reserve requirements. The 2011 Revenue Bonds fully matured in FY 2026. As a result, this eliminates the need to modify the minimum guideline levels solely for bond covenant considerations. Item #3 Packet Pg. 87 Item No. 3 Page 11 of 15 1 0 2 1 4 The Advisory Report also recommends revising the RSR policy to state that “if a Utility Financial Plan proposes a rate increase, the funds in the RSR Fund in excess of the target amounts must be drawn down to offset the proposed rate increase.”38 Current CPAU Reserve Policies The Reserves Management Practices outline the purpose for each utility’s RSR. These reserves are intended to manage the trajectory of future year rate increase and to mitigate temporary fluctuations in revenues or expenses from events such as: - Volatility in electricity rates resulting from fluctuations in power costs - The impact of short-term gas market price spikes - The impacts of drought or changing demand - Economic downturns that reduce customer demand or increase bad debt expense The existing RSR policy does not include a target level or guideline range. The projected RSR balances for the Electric, Gas, and Water Utilities are shown in the table below. Table 5: Projected RSR Balances ($ Millions) Electric Gas Water FY 2027 Projected Balance $ 0 $ 039 $ 4.00 FY 2032 Projected Target Based on 10% of Operating Expenses $ 11.01 $ 4.09 $ 3.13 For each of the RSRs, the Reserves Management Practices currently state that the utilities must plan to withdraw all the funds from the reserve by the end of the next financial planning period (unless Council approves an exception to this requirement). The Hydro Rate Stabilization Reserve funds are separate from the RSR in the Electric Utility. Estimated Rate Impacts Staff analyzed the rate impacts of a 10% of operating expenses (excluding supply expenses) RSR target scenario and estimates that this RSR target level would require additional rate increases for each utility. Table 6 shows estimated rate impacts to the Electric, Gas and Water Utilities under two phase-in scenarios, over a five- or ten-year period. In each scenario, a fixed percentage rate increase is applied annually throughout the period, so that the incremental revenue collected each year, compounded over the period, equals the necessary funds needed by the end of each phase-in period. This analysis assumes that the funds in the Hydro Rate 38 City Council Staff Report #2605-6353, Attachment A, p. 6: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887085. 39 The projected balance excludes funds being collected through the Gas Price Spike Mitigation Adder in the Gas Rate Stabilization Reserve for price spike mitigation purposes. Item #3 Packet Pg. 88 Item No. 3 Page 12 of 15 1 0 2 1 4 Stabilization Reserve as well as the Gas Price Spike Mitigation Adder accumulated funds are excluded and addressed separately in Phase 2. Table 6: Estimated Annual Rate Impacts of 10% of Operating Expense RSR Target Electric Gas Water 5-year Implementation 10-year Implementation 42 Policy Recommendations, Considerations and Next Steps Establish a target level of 10% of operating expenses (excluding supply expenses). Remove the current provision from the Reserves Management Practices that states that the utilities must plan to withdraw all the funds from the RSR by the end of the planning period. Require that if a Utility Financial Plan proposes a rate increase, the funds in the Rate Stabilization Reserve in excess of the target amounts must be drawn down to offset the proposed rate increase. 42 This example is for illustration only and does not take into account the compounding effects of rate increases but it is provided to clarify that this is not a sustained 0.3% increase and rather is an additional 0.3% added each year. Item #3 Packet Pg. 89 Item No. 3 Page 13 of 15 1 0 2 1 4 Credit Rating Considerations 44 and plans to issue refunding bonds (Series 2026A Water Revenue Refunding Bonds45) to refinance the Water Fund’s 2009 Revenue Bonds in fall of FY 2027. 46 outlining its rationale for the rating. The press release stated that the stable outlook reflects their view that the utility will “sustain historically robust liquidity” and adjust rates to sufficiently fund capital needs without materially drawing on reserves. The press release also stated that they “could lower the rating over the next two years if the utility’s debt service coverage or liquidity materially decline to levels observed in the past few years, either due to insufficient rate adjustments or unexpected capital needs that require additional debt or significant cash draws.” 44 Resolution #10209 A Resolution of the City of Palo Alto Declaring Intention to Reimburse Expenditures Relating to Modernization of the Electric Utility System Infrastructure from the Proceeds of Tax-Exempt Debt: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=62094&dbid=0&repo=PaloAlto&cr=1 45 Finance Committee Staff Report #2603-6099: https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=9d997ec2-d7ef-4322-bd41- 8904e984d6a2 46 S&P Global Ratings Press Release, August 17, 2026: https://www.spglobal.com/ratings/en/regulatory/article/- /view/type/HTML/id/3612769 Item #3 Packet Pg. 90 Item No. 3 Page 14 of 15 1 0 2 1 4 more cumulative revenue and reducing the annual rate impact needed to reach the reserve target. FISCAL/RESOURCE IMPACT Table 7: Estimated Annual Rate Impacts for Proposed Reserve Targets (FY 2028 – FY2031)* Electric† Gas Water Electric Gas Water Electric Gas Water Table 8: Rate Forecasts as Adopted by the City Council in the Financial Forecasts in June 2026 Electric Gas Water Item #3 Packet Pg. 91 Item No. 3 Page 15 of 15 1 0 2 1 4 Because these adjustments are rounded to the nearest whole percentage, this change only impacts the overall rate trajectory for the Gas Utility, as shown in Table 9. Table 9: Rate Forecasts Including Staff Recommendations for CIP and RSR Reserves Electric Gas Water STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW AUTHOR/TITLE: Item #3 Packet Pg. 92