Utilities Advisory Commission - September 4, 2024

Staff prioritizes a second southern transmission connection

Palo Alto utility staff is prioritizing a second transmission connection from the south through the California Independent System Operator’s planning process as projected data-center growth and electrification increase the city’s load forecast. The Utilities Advisory Commission received the informational update and took no action.

The city now relies on three 115-kilovolt lines that share one northern corridor and one receiving substation, leaving both as potential single points of failure. Staff cited the 2010 airplane crash that disrupted all three lines for 10 to 12 hours and left two out for 48 hours. A comparable event today could require 48 to 72 hours to restore minimum service, staff said, while avoiding the anticipated reliability upgrade would require an estimated 30- to 40-megawatt reduction in peak demand.

Staff has submitted Palo Alto’s load forecast to CAISO and is working with the California Energy Commission on revisions reflecting data-center growth. If the reliability need is accepted, CAISO could consider an upgrade in its December 2025 planning process at the earliest, and an approved project would likely take five or more years to build. Staff said most qualifying transmission costs could be spread across the broader regional rate base, while Palo Alto would pay for receiving-substation work estimated at about $5 million, depending on the route.

Commissioners asked about undergrounding the existing lines, a possible Stanford-SLAC connection and whether distributed energy resources or community microgrids could reduce the need for new transmission. Staff said undergrounding would likely not be cost-competitive and would require PG&E’s cooperation. It is keeping Stanford-SLAC as a separate possibility, but said the CAISO route is the current priority; a SLAC concept discussed in 2021 would have required roughly $30 million in upgrades.

Commissioners seek quantitative resilience analysis

Commissioners urged staff to make planned reliability and resiliency work more explicit and quantitative, asking for analysis of conservation, demand-side management, microgrids, critical-facility protection and outages lasting several days. They also sought scenarios measuring outage frequency, duration, affected customers and costs rather than relying mainly on qualitative indicators. The commission did not vote, and staff said it would consider the feedback in the consultant scope and related work.

Staff said automated demand-side management is already intended to be part of the consultant analysis, while utility-scale storage and the Palo Alto Airport microgrid are being studied separately. A grant-funded distribution-system analysis will model current and fully electrified conditions to estimate available capacity and avoided investment from distributed and flexible technologies. The airport work is expected to inform longer-duration outage planning, coordination with the Office of Emergency Services and potential protection for critical facilities, including the wastewater treatment plant.

Staff cautioned that local utility-scale batteries face space and scale constraints, saying projects generally gain economies of scale at 200 to 300 megawatt-hours or more and that Palo Alto substations may not have room for enough storage to materially improve resilience. The broader analysis is intended to compare combined energy-supply, distribution and outage-resilience benefits without predetermining a technology.

Staff planned to seek Council approval for a consultant contract on Sept. 23, 2024, present results in the first half of 2025, seek policy direction in fall 2025 and begin major implementation in 2026.

One Margin energy code awaits state approval

Council-adopted revisions to Palo Alto’s Energy Code and Green Building Code were awaiting state review, with staff anticipating state consideration on Sept. 11, 2024, and an Oct. 4 effective date if approved. The Utilities Advisory Commission discussed implementation but took no action.

The amendments remove prior all-electric requirements that staff believed could conflict with a Ninth Circuit decision. They instead establish stricter, uniform hourly source-energy standards for all-electric and mixed-fuel buildings while retaining electric-readiness rules. Staff said the framework applies to all buildings, although industrial buildings have no additional local requirements beyond state standards because of process-heating complexity. Indoor gas stoves remain allowed because the hourly metric applies to space and water heating, not cooking.

Staff reported that more than 75% of new buildings remained all-electric during the moratorium on the earlier requirement. The local amendments also require 100% EV readiness in multifamily buildings and prohibit gas connections for outdoor grills, stoves and barbecues while allowing standalone propane canisters.

Projects with approved permits are unaffected. Staff said detailed guidance would address pending applications, and the code is scheduled to remain in effect through the end of 2025. Staff also said it adjusted the requirements to make compliance more feasible for smaller accessory dwelling units and is developing outreach materials.

Gas reserve adder is expected to raise $4.5 million

Staff reported that the City Council approved a gas-price mitigation reserve mechanism on Aug. 19, 2024. The measure includes a 5.5-cent adder over three years and is expected to generate about $4.5 million, while the gas commodity charge remains $4 per therm. The commission took no action on the update.

Primary sources

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