Utilities Advisory Commission - June 4, 2025

Water agreement heads to Finance Committee after split votes

A regional water-supply package will go to Palo Alto’s Finance Committee in August without a recommendation from the Utilities Advisory Commission. A motion to recommend City Council approval tied 3-3, while a subsequent motion to continue the item failed 2-4.

Staff sought support for two amendments to the wholesale Water Supply Agreement with the San Francisco Public Utilities Commission and an updated Tier 2 drought-allocation plan. The package, negotiated over nearly three years among 26 wholesale agencies, would reset certain minimum-purchase obligations to 80% of actual use during the previous four non-drought years, allow participating agencies to meet minimums collectively and revise drought allocations.

Staff estimated the cost effect for Palo Alto at 0.4 to 0.7 cents per CCF, or about 0.13% to 0.72%. For a 20% wholesale-customer cutback, Palo Alto’s percentage under the Tier 2 formula would change from 16% to 18%. Supporters called the negotiated package fair and questioned what a delay would accomplish. Commissioners favoring a continuance wanted more information about drought assumptions, alternative supplies and the $293 million in projects referenced in the materials.

Public comment was also divided. Two speakers urged a delay until more information was available, while another said Mountain View would soon face charges for unused water and called for prompt approval. The amendments and drought plan require approval by all 26 agencies to take effect.

Commission backs voluntary time-of-use electric rates for 2026

The commission unanimously recommended that City Council establish voluntary residential time-of-use electric rates beginning Jan. 1, 2026. Individually metered customers who opt in would pay peak rates from 4 to 9 p.m., with a super-off-peak period from 9 a.m. to 3 p.m.

The revised proposal delays the program from a previously proposed July 2025 start and no longer calls for moving all residential customers to time-of-use rates in 2027. Enrollment would begin with a limited group and expand in phases. Net-energy-metering customers would not initially be eligible because of billing constraints, and staff expects about 95% of residential advanced meters to be installed by December 2025.

Staff estimated customers could save $6 to $77 per month if they shifted all use to the super-off-peak period. Commissioners supported testing the program but requested clear measures for financial benefits, sustainability, emergency preparedness, adverse selection and effects on seniors who rely on electricity for medical needs. Staff plans to take the rates to the Finance Committee in August and City Council in September, then return to the commission with an implementation plan in October.

Wildfire plan approved as foothills undergrounding reaches 80%

The commission voted 6-0 to approve Palo Alto Utilities’ 2025 Wildfire Mitigation Plan and directed staff to implement it and file it with the Wildfire Safety Advisory Board before July 1. Staff projected a $15.1 million wildfire-mitigation budget and expected spending of $11.6 million through the end of the fiscal year.

Staff reported no utility-caused wildfires during the previous year and said more than 8,000 trees had been trimmed. Two outages occurred in the high-fire-threat district, one caused by a vehicle striking a pole and the other by an overhead transformer failure.

The city’s foothills undergrounding project is about 80% complete. Approximately four miles were finished in 2024, allowing about 40,000 feet of overhead line to be deenergized. Staff plans additional substructure and cable work during summer 2025 and aims to complete underground service through customer meters by the end of the year. The utility will also assess facilities in areas added to Cal Fire’s elevated-risk maps and review its public-safety power-shutoff criteria and customer outreach.

Regional transmission line clears key hurdle as utility projects advance

California ISO approved the Palo Alto–NASA Substation Transmission Line on May 22 as part of its 2024–2025 transmission plan. The project would connect Palo Alto with the NASA substation in Mountain View and reconductor an existing corridor for 115-kilovolt service. Its estimated in-service date is 2034.

Staff said it will discuss possible acceleration with PG&E and address the project in a future grid-modernization update. Commissioners also requested more information about data-center electricity demand and related competitiveness research.

The director’s report also highlighted other major capital work. City Council approved an approximately $47 million contract in May for the Advanced Water Purification System, which is intended to improve recycled-water quality for Palo Alto and Mountain View customers. Staff estimated the broader electric grid-modernization initiative at roughly $300 million and described three proposed engineering consulting contracts totaling about $15 million to $25 million over three years.

Primary sources

Watch the meeting on YouTube · Read the official meeting agenda