City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Utilities
Meeting Date: February 12, 2024
Staff Report:2311-2211
TITLE
Reliability and Resiliency Strategic Plan for the City’s Electric Utility
RECOMMENDATION
This is a study session to review the draft Reliability and Resiliency Strategic Plan (RRSP) that has been recommended for approval by staff and the Utilities Advisory Commission. The RRSP will return for Council approval at a later date.
EXECUTIVE SUMMARY
The RRSP is a work item in the 2023-2025 Sustainability and Climate Action Plan (S/CAP) Work Plan. The RRSP is intended to address the need for a reliable, well maintained electric system with enhanced reliability to support an electrified community and a desire among some residential community members for ways to maintain some level of electric supply during outages, particularly with an electrified home. The proposed RRSP is provided in Attachment A and incorporates the input previously provided by the UAC. Attachment B provides the progress update on RRSP Strategies as of December 2023 and incorporates input previously provided by the UAC.
The six strategies of the RRSP are as follows:
•Strategy 1: Replace and modernize electric distribution infrastructure •Strategy 2: Implement operational practices to improve reliability and manage outages effectively
•Strategy 3: Integrate and ease adoption of flexible and efficient technologies and strategies
•Strategy 4: Evaluate the benefits of flexible and resiliency technologies and efficient electrification strategies to the utility and community •Strategy 5: Evaluate the resource needs to promote the adoption of various flexible demand reduction and resiliency solutions and efficient electrification strategies. •Strategy 6: Implement any utility-driven programs identified in Strategy 5 that are chosen by the City Council
The Council Climate Action Ad Hoc Committee will review the RRSP at their February 2, 2024 meeting. Staff will incorporate any Committee feedback and/or recommendation as well as any Council feedback from the study session into the final document before returning for Council approval in March.
BACKGROUND
At the December 6, 2023 UAC meeting staff and the UAC discussed the draft Reliability and Resiliency Strategic Plan (RRSP). The UAC recommended that the City Council approve the RRSP with the inclusion of input provided by UAC at the meeting. Staff has incorporated the UAC input into the proposed RRSP, attached.
More background on the RRSP and detail on the strategies above is provided in the December 6, 2023 UAC staff report. 1 UAC feedback can be found in the meeting minutes and is summarized below.2 Both are available online at:
https://www.cityofpaloalto.org/Departments/Utilities/Utilities-Advisory-Commission/Current- UAC-Agendas-Minutes.
DISCUSSION
The RRSP is intended to address questions the community has had regarding the electric system’s:
•Reliability: how frequently the system experiences outages, •Modernization: how the system will be upgraded to integrate and effectively utilize new and existing flexible technologies like solar with batteries or vehicle to grid technology, •Capacity: the capacity of the system to handle electrification, and •Resiliency: the system’s ability to minimize the consequences of a major event, recover quickly, and the role of the utility in helping individual customers maintain service during outages.
Reliability
High profile outages in recent years have likely led some people to lose some confidence in system reliability. Still, a recent utility survey found that 85% of customers rated the City highly (7-10 on a scale of 1-10) in “providing consistent and reliability electric service” and 80% rated it highly on “restoring power in a reasonable amount of time after an outage.” These were significantly higher ratings than most utilities nationwide and in Northern CA. However, they did 1 https://www.cityofpaloalto.org/files/assets/public/v/3/agendas-minutes-reports/agendas-minutes/utilities- advisory-commission/archived-agenda-and-minutes/agendas-and-minutes-2023/12-dec-2023/12-06-2023-packet- v2.pdf#page=129
2 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/utilities- advisory-commission/archived-agenda-and-minutes/agendas-and-minutes-2023/12-dec-2023/12-06-2023- approved-uac-minutes.pdf
not give high marks on how outages were communicated. And very few customers would confidently state whether Palo Alto was ready to manage a major emergency, unlike at other utilities, where customers generally had confidence their utility was prepared.
In general the City of Palo Alto's electric reliability exceeds the national average and PG&E's Peninsula Division (the area of PG&E's system between San Jose and San Francisco). Chart 1 shows the most common standard utility metric of reliability, System Average Interruption Duration Index (SAIDI), for the City of Palo Alto, PG&E’s Peninsula Division3 (which represents just the San Francisco Bay Area Peninsula between San Jose and San Francisco, the area Palo Alto is in), and national data by quartile. 4 SAIDI represents the amount of time each customer experienced an outage on average. 5 Both PG&E and the City benefit from the Bay Area's good weather when comparing to the national average, but the City has fewer outages than PG&E.
The City is typically in the first (best) quartile nationally, while PG&E’s Peninsula Division is sometimes in the 2nd quartile and worse in some years. The City did see some increased outage activity for 2018/2019 and 2022/2023 that may have impacted customer perceptions. Some of this can likely be attributed to major events like storms, but some of it is likely due to aging infrastructure and challenges in recruiting and retaining staff.
Chart 1: Outage Performance (SAIDI) for City of Palo Alto and Other Utilities 3 Source: Pacific Gas and Electric 2022 and 2017 Annual Electric Reliability Reports to the California Public Utilities Commission: https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/infrastructure/electric- reliability/electric-system-reliability-annual-reports
4 SAIDI can be reported with major events like storms included or excluded. The City reports SAIDI including major events, and the PG&E Peninsula Division and national data reported here also include major events. 5 SAIDI is calculated as the total amount of outage time multiplied by the total number of customers affected divided by the total number of utility customers. Not every customer will experience an outage each year, and those affected may experience more or less outage time on an individual basis than the number reflected in the SAIDI index.
Various factors affect reliability. Table 1, below, shows some of these factors and how the RRSP tasks address each one.
Table 1: Factors that Impact Perceptions of Reliability Factor How Addressed in RRSP
Aging infrastructure is more likely
to fail, leading to more frequent
outages
Replace aging infrastructure through the grid
modernization effort (Strategy 1, Action 1)
Reducing the number of people
affected by outages when they
occur will improve reliability
Add more connectivity through grid modernization to
allow staff to isolate outages in smaller areas using
switching (Strategy 1, Action 3)
Good outage communication can
mitigate the impact of outages
Use the newly installed outage management system to
continually improve outage communications (Strategy 2,
Action 3)
Key workforce vacancies and
turnover mean less staff capacity
to do maintenance and capital
investment, less experienced staff
who require more time and
support, and a longer time to
recover from outages
Continue to improve workforce retention and
recruitment strategies and use contractors to support
basic functions until vacancies can be filled (Strategy 2, Action 1)
In the Foothills – wind can lead to
power safety shutoffs and storms
can damage power lines
Implement the maintenance strategies in the Wildfire
Mitigation Plan (Strategy 2, Action 2) and continue to
underground overhead lines in the Foothills (Strategy 1, Action 5)
In rare cases air accidents have
cut power to all of Palo Alto due
to its single transmission pathway
Seek partnership from PG&E and the California
Independent System Operator to install a second
transmission connection to Palo Alto (Strategy 1,
Action 4)
Modernization
Community members are adopting modern technologies like solar, battery storage, electric vehicles, smart appliances, and smart panels at higher and higher levels. Technologies are in existence or being commercialized that would allow electric vehicles or smart home appliances to respond to grid conditions or back up a home. Community members have asked how we are modernizing the grid to accommodate and take advantage of these new technologies.
One aspect of this modernization effort involves ensuring the electric distribution system can accommodate these technologies. When distributed technologies are deployed they can cause issues on a grid not designed for them. For example, the City’s electric system, like most systems, was designed for one way power flow from large central generators to homes and businesses.
Adding high penetrations of technologies like solar and batteries that can feed the grid instead of just consume from it can cause voltage drops or even conditions when power is flowing the opposite direction. Voltage drops can cause flickering lights and issues with electrical equipment, while reverse flows can be a serious issue because existing grid protection devices like fuses or voltage control systems are only designed to work when power is flowing one way, so two-way flow can create dangerous conditions. A high enough reverse power flow can even overload the capacity of transformers or power lines.
On the other hand, if the grid is upgraded to integrate these technologies properly they can provide benefits. The utility could provide price signals or education to get people to use energy at times when the grid is less crowded or less dirty, for example. And if people consistently operate these technologies in a grid-friendly way – for example, charging vehicles or batteries mid-day or at night rather than in the evening when the grid is most heavily used – it could also mitigate the capacity impacts of electrification on the electric distribution system.
Table 2, below, shows the various issues and opportunities associates with new technologies and how the RRSP tasks address each one.
Table 2: Modernization Issues and Opportunities
Issues and Opportunities How Addressed in RRSP
High penetrations of new
technologies can cause voltage
drops and reverse power flows
Grid modernization will upgrade feeders and
transformers where needed to integrate new
technologies and make use of smart switches and
updated controls to avoid voltage drops and mitigate
the impacts of reverse power flow (Strategy 3, Action 1) Making adoption of flexible
technologies easier will encourage
adoption
Review City codes, policies, rules, and regulations to
ensure easy adoption of these technologies (Strategy 3, Action 2)
Raising awareness of these
technologies and how to use them
in ways that help the electric
system will encourage adoption
and proper use.
Promote these technologies and how to use them in a
grid-friendly manner through outreach (Strategy 3,
Actions 3 and 4)
Strategy 3 ensures that at minimum the City has prepared the electric system to accommodate these technologies and that we have made adoption easy and encouraged them to be used in a grid-friendly manner. However, it may also be worthwhile to create utility programs to encourage these technologies if they can help with the capacity issues created by electrification. And if the community is interested in the utility taking more of a role in customer resiliency, these technologies can also provide benefits in that role as well. Strategies 4, 5, and 6, discussed below, address these potential programs.
Capacity
The utility is currently embarking on a grid modernization effort that will, among other things, increase the capacity of the system to accommodate increased electrification. This is noted in Strategy 1, Action 2 of the RRSP. Without these upgrades the City cannot maintain a reliable electric system as more people electrify their vehicles and buildings. In general this means adding more and larger transformers in the neighborhoods, as well as upgrading the feeder lines, the wires. The utility is aiming to complete the areas of the city with overhead lines by 2027. This represents over 90% of the single-family neighborhoods, meaning the vast majority of homeowners in Palo Alto will have the capacity for vehicle and building electrification by the end of 2027 if the schedule holds.
However, as noted above, it may be possible to use new technologies to do this modernization effort more cost efficiently, perhaps with fewer transformers, and also allow for more electrification using existing capacity while modernization proceeds. The RRSP Strategy 4 focuses on doing a cost / benefit analysis to understand the value of these technologies to the utility in this area. In Strategy 5 we will evaluate a range of programs we could launch and the resources needed for them. And if Council wishes to move forward with any of the identified programs, these would be added to Strategy 6.
Table 3, below, shows the various tasks and studies included in the RRSP that address capacity.
Table 3: Capacity-Related RRSP Tasks
Tasks How Addressed in RRSP
Increase electric system capacity
to accommodate electrification
Grid modernization will upgrade feeders and
transformers where needed to accommodate
electrification (Strategy 1, Action 2)
To determine whether utility
programs could provide a net
benefit to the utility, evaluate the
costs and benefits of new
technologies in reducing peak
demands
Evaluate the benefits and costs of new technologies on
electric supply costs and on the electric distribution
system (Strategy 4, Actions 1 and 2)
Identify potential programs and their resource needs
(Strategy 5, all actions)
Implement programs if cost
effective and approved by Council
Strategy 6
Resiliency
Many of the technologies to be evaluated under Strategies 4 and 5 also have potential resiliency benefits. Examples include batteries or vehicle to load technology, which can be used to reduce grid peak loads, but could also back up a home during a major event. And as people start relying more on electricity some will want to ensure they have some kind of service during both routine outages and major events. Different residential and business community members will assess their needs differently. To-date the utility has not taken a role in providing customer backup power needs. But some community members have expressed interest in utility services in this area. Newer technologies like solar, storage, and vehicle to grid can provide both utility benefits and individual customer benefits, which was less applicable (though still somewhat applicable) with technologies like backup diesel generators. As a result it may make sense to evaluate whether the utility should reconsider its role.
Table 4, below, shows the various tasks and studies included in the RRSP to facilitate UAC and Council policy discussions on the role of the utility in providing customer resiliency.
Table 3: Resiliency-Related RRSP Tasks
Tasks How Addressed in RRSP
Before considering utility programs it
is worth considering whether there are
market gaps.
Characterize existing backup generation alternatives
available to customers (Strategy 4, Action 4)
Consider whether it is possible to value
resiliency economically. This may be
challenging because different
individuals and organizations value it
differently.
Explore estimating the value of resiliency to the
community (Strategy 4, Action 3)
Identify the various types of resiliency
programs the utility could provide,
both at an individual customer and
neighborhood level, and identify the
resources needed to implement
Strategy 5
Implement programs if approved by
Council
Strategy 6
COMMISSION RECOMMENDATION
In general the UAC felt the RRSP was aligned with Council policy direction and feedback from the UAC at earlier meetings. Some minor changes were requested to the document by UAC members at the December 6, 2023 UAC meeting and were incorporated into the proposed RRSP by staff:
•Use words like “promote” or “encourage” in Strategy 3, Actions 3 and 4 rather than “communicate”
•Where the word “community” is used, specify whether the residential or business community (or both) is being referred to
•In Strategy 6, change “chosen by the community” to “chosen by the Council” •Clarify the intent of Strategies 3 and 4 to be clear why Strategy 3, which involves promotion and implementation of certain technologies, proceeds before Strategy 4, which involves quantifying the benefit of those technologies •Status updates should include timelines
UAC members had other feedback that was not incorporated directly in the RRSP:
•The implementation of the resiliency aspects of the plan should be coordinated with the office of emergency services
•Staff should seek community input on resiliency projects as part of the process of providing Council a list of potential utility-driven resiliency programs for consideration following completion of the analyses in Strategy 5.
•Consider using mailers as a way to promote utility resources, programs, and practices. •Specify in the resources section of the report whether funding is already available or needs additional funding; when reporting on progress of implementing RRSP specify if implementation is on schedule and within allocated budgets.
The UAC unanimously (7-0) approved staff’s recommendation to recommend to the City Council the adoption of the RRSP, with modifications discussed by the Commission.
FISCAL/RESOURCE IMPACT
The staffing and consulting resources needed to implement Strategies 1 through 5 are already in place (though some longer-term CIP projects will need future budget approvals, like grid modernization, which will require additional budget approvals for later year spending, as will yet-to-be-defined CIP projects, like the second transmission line). Additional resources would likely be needed to implement Strategy 6 depending which customer resiliency programs Council chooses to approve.
Strategy 1: Replace and modernize electric distribution infrastructure: Implementation of this strategy has already been budgeted as CIP for Grid Modernization. Cost is estimated at $200 to $300 million and would require 5 to 8 staff over the seven-year period. This estimate includes replacement of aging infrastructure and to increase capacity of the system to accommodate additional loads projected as a result of electrification. The cost of the second transmission line has not been estimated.
Strategy 2: Implement operational practices to improve reliability and manage outages effectively: The new utility outage management system became operational in September 2023 and cost $630,000, including five years of annual maintenance. Ongoing 0.25 staffing is required to maintain the system. Other activities under this strategy are operationalized and would not require any additional resources.
Strategy 3: Integrate and ease adoption of flexible and efficient technologies and strategies: This effort is estimated to cost $30,000 to $50,000 for consulting assistance and 0.25 staff effort. This amount would solely cover analysis and not any subsequent implementation.
Strategy 4 (Evaluate the benefits of flexible and resiliency technologies and efficient electrification strategies to the utility and community) and Strategy 5 (Evaluate the resource needs to promote the adoption of various flexible demand reduction and resiliency solutions and efficient electrification strategies): The plan to retain a consultant to assist with this analysis effort and is estimated to cost $70,000 to $120,000, and will require 0.25 existing staff effort to complete the analysis and bring forth potential customer programs for community consideration.
In addition, more consulting work or academic partnerships may be needed at additional cost and staff time to value the distribution benefits of flexible and resiliency technologies and strategies (Task 4.2).
Strategy 6: Implement any utility-driven programs identified in Strategy 5 that are chosen by the Council for implementation: The effort and cost associated with this strategy is unknown at this time.
STAKEHOLDER ENGAGEMENT
Extensive public engagement on this topic was undertaken to-date as outlined below:
•Two public meetings in August 2018 and November 2019 to seek community input on utility resiliency framework. The engagement resulted in the development of a vision, set of goals and nine projects to enhance utility resiliency – these aspects were discussed with the UAC in March 2020, and has since been incorporated into the CPAU’s on-going work plans. •Discussion of these topics with the S/CAP Working Group 2022-23 •Addition of topic to 2023-2025 S/CAP Work Plan, which was discussed with S/CAP Working Group and S/CAP Committee, then adopted by Council June 6, 2023 (Report #:2303-1158) •Discussions with the UAC on a variety of reliability and resiliency topics over the past three years, 2021-23: OMS updates, Wildfire Mitigation Plan, Workforce, etc. •Analysis of the Impact of Decarbonization on the Resiliency of Single Family Homes in Palo Alto was presented to the UAC November 2021
•Analysis of Costs and Reliability of Different Back-up Electricity Technologies presented to the UAC in December 2022.
•Strategic Plan discussions w/ UAC (which include resiliency topics) • Electric Distribution Infrastructure Modernization Update provided to the UAC in June 2023 • Discussion of Reliability and Resiliency Strategic Plan Policy Guidelines with the UAC in September 2023
Progress in implementing the RRSP will be reported to the UAC periodically as progress is made in implementing projects contemplated under the plan.
ENVIRONMENTAL REVIEW
Development of a Reliability and Resiliency Strategic Plan is exempt from the California Environmental Quality Act (CEQA) because it can be seen with certainty that completing a study will not result in any environmental impacts. Implementation of individual programs/installations chosen by the community in Strategy 6 may need CEQA evaluation.
ATTACHMENTS
Attachment A: Draft Reliability and Resiliency Strategic Plan Attachment B: December 2023 Status Update on Reliability and Resiliency Strategic Plan AUTHOR/TITLE:
Dean Batchelor, Director of Utilities
Staff: Jonathan Abendschein, Assistant Director of Utilities/Resource Management