Utilities Advisory Commission - July 9, 2025

Commission advances a 50-megawatt battery share

The Utilities Advisory Commission voted 7-0 to advance staff’s recommended action on a proposed 20-year agreement giving Palo Alto a 50-megawatt share of the Trolley battery-storage project. The proposal is not final; staff said it expected Finance Committee review in August or September, followed by City Council consideration in mid-September.

At $12.71 per kilowatt-month, Palo Alto’s share would cost approximately $7.6 million annually. The price would remain flat for 20 years except for a possible audited increase of up to 6% tied to specified tax-law or supply-chain changes. Staff projected a net benefit of slightly less than $3 million per year and an estimated 1% to 1.5% reduction in electric rates.

Staff framed the resource as a hedge against energy-price swings and potential resource-adequacy shortages as legacy contracts expire. The Northern California Power Agency would schedule charging and discharging, meaning the remote battery would not be physically dedicated to serving Palo Alto’s load. Commissioners questioned the 50-megawatt commitment, future storage prices, tax and tariff risks, and the consequences if the project failed after the city passed on other opportunities.

Proposition 26 will guide the new gas cost study

The commission approved using Proposition 26’s cost-based requirement as the guiding design principle for a new gas cost-of-service analysis intended to support 2026 rates. It also approved forming a limited, non-Brown-Act subcommittee to work with staff and the city’s consultant on the analysis.

The study follows the City Council’s June action raising gas distribution rates uniformly across customer classes beginning July 1 and directing an expedited cost review. Staff’s schedule calls for the commission to review the analysis in September, the Finance Committee in October and the council in November, with resulting rates proposed to take effect Jan. 1, 2026.

The decision followed debate over whether the commission should adopt more detailed written principles covering allocation methods, customer classes, transparency, rate stability and climate considerations. Some commissioners and public commenters also wanted clear documentation of changes from the 2020 analysis. Staff and legal representatives cautioned that prescriptive principles could lengthen the process and create combinations of methodologies and customer impacts that would be more difficult to defend.

Commissioners seek deeper resilience analysis

Commissioners took no vote on preliminary work implementing the Reliability and Resiliency Strategic Plan. Instead, they asked staff for clearer objectives and more detailed cost, benefit, reliability and resilience analysis before recommending specific programs or projects.

Staff said only one evaluated technology package produced benefits exceeding costs based on energy-supply and short-term resilience value. Preliminary screening also found no strong opportunity to defer distribution upgrades through residential batteries or efficient electrification. Deferring work on about 360 transformers could avoid roughly $16 million in upfront investment, but staff estimated it would require about 2,400 Powerwall-sized batteries whose annual debt service alone would exceed the estimated debt service for the transformer work. A time-of-use rate pilot is already proceeding; studies reviewed by staff found peak-demand reductions ranging from 1% to 6%.

Staff’s initial analysis also found that a large airport microgrid partnership would need about $2.5 million in annual resilience value to be financially viable, rising to about $5 million if the federal investment tax credit ended. Several commissioners supported continued exploration, better economic measures, coordination with emergency-preparedness and Public Works staff, and identification of grid locations where solar and storage could offer the most value. Others cautioned that subsidies could raise costs for other customers and favored targeted projects and periodic reassessment rather than broad new programs. Staff will incorporate the feedback into its final report while Public Works continues evaluating long-term resilience options for the water quality control plant.

Primary sources

Watch the meeting on YouTube · Read the official meeting agenda