City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: December 2, 2024
Staff Report: 2408-3365
TITLE
Adoption of a Resolution Approving and Attesting to the Veracity of the City's 2023 Annual Power Source Disclosure and Power Content Label Reports; CEQA Status: Not a project
RECOMMENDATION
Staff recommends that the City Council adopt a resolution (Attachment A) approving and attesting to the veracity of the City’s two Power Source Disclosure reports for 2023 and the City’s two Power Content Labels for 2023.
BACKGROUND
Senate Bill 13051 was approved in 1997 to ensure that all retail suppliers of electricity disclose to consumers the sources of energy used to provide the electric service in an accurate, consistent, and easy to understand manner. The SB 1305 Report is commonly referred to as the Power Source Disclosure (PSD) report. The City of Palo Alto is required to submit an annual PSD report to the California Energy Commission (CEC) by June 1st of each year. The information contained in this report is used to prepare the annual Power Content Label (PCL), which is mailed to City Utilities customers and posted on the City’s website by October 1st of each year at www.cityofpaloalto.org/powercontentlabel and on the CEC’s website at energy.ca.gov/power-content-label.
ANALYSIS
CEC regulations governing the Power Source Disclosure Program2 require retail electricity sellers to engage a third-party certified public accountant to perform an audit to verify the specific purchases, resales, and self-consumption of energy by fuel type.3 However, publicly owned electric utilities are exempt from the audit requirement if the governing board of the 1 Senate Bill 1305 http://www.leginfo.ca.gov/pub/97-98/bill/sen/sb_1301- 1350/sb_1305_bill_19971009_chaptered.html
2 California Code of Regulations, Title 20, Sections 1391-1394. 3 California Code of Regulations Title 20, Section 1394.2(a).
utility “submits to the Energy Commission an attestation of the veracity of each annual report and power content label for the previous year.”4
In Palo Alto’s case, this means that the PSD reports and PCLs for the City’s two retail electricity products (the “standard rate” carbon neutral product and the voluntary PaloAltoGreen product, which is available to all commercial customers and allows them to pay a small premium in order to receive a power supply comprising only wind generation) can both be approved by the City Council, as described above.
In 2023, CPAU’s hydroelectric generation was about 30% greater than long-term average levels, due to the record levels of precipitation the state received during the winter of 2022-2023. Also in 2023, CPAU continued its REC Exchange Program, which involves taking a regional approach to fulfilling its Carbon Neutral Electric Portfolio goals by selling renewable energy from the City’s long-term renewable contracts and using the most cost-effective renewable energy from outside the state to fulfill carbon neutrality requirements.5 Although the power sourced out-of- state remains renewable and carbon-neutral, the CEC categorizes such power as “unspecified power” on the PSD and PCL documents.
Under the City’s REC Exchange Program, the City sold a total of 223,362 MWh of in-state renewable generation in 2023 and purchased the same volume of out-of-state renewable generation, yielding $7.71 million in net revenue. Per Council’s direction, all of this revenue will be invested locally in decarbonization efforts necessary to meet the City’s ambitious climate goals (Staff Report 11556 and Resolution 99136).
As a result of these renewable energy sales—and the fact that the CEC’s regulations do not recognize out-of-state renewable generation as an “eligible renewable” energy source—the share of the City’s standard power mix that is attributed to eligible renewables sources on the PSD reports and PCLs was lower in 2023 (36.7%) than in many previous years, such as 2018 (65%). However, as noted earlier, the City’s power supply remained carbon neutral in 2023 in accordance with the Council-adopted Carbon Neutral Plan (Staff Report 115567), and the City remained in compliance with the state’s Renewable Portfolio Standard (RPS) mandate. 4 California Code of Regulations Title 20, Section 1394.2(a)(2). 5 The City Council approved the REC Exchange Program in August 2020 (Staff Report 11556):
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020-2/id-11566.pdf.
6 Resolution 9913: “Consistent with the City’s Cap and Trade Revenue Use Policy, for Fiscal Years 2021 and 2022, an amount equivalent to at least one-third of the revenues earned from the REC Exchanges would be allocated from the City’s Cap and Trade Reserve to local decarbonization efforts; thereafter the City would prioritize local decarbonization efforts with these funds.” https://www.cityofpaloalto.org/files/assets/public/v/1/city- clerk/resolutions/reso-9913.pdf?t=40151.26
7 Staff Report 11556: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2020-2/id-11566.pdf Utilities Department staff submitted the City’s annual PSD reports for calendar year 20238 to the CEC in July 20249, along with the associated attestation forms. The City’s 2023 PCLs10 will be mailed to each electric utility customer as a bill insert and posted on the City’s website in December 2024, in accordance with the modified deadline established by the CEC for 2023. The attached resolution (Attachment A) approves the annual PSD reports and PCLs for both the standard power mix and the PaloAltoGreen product and provides for Council’s attestation to the veracity of these four documents as required for exemption from the third-party audit requirement.
Staff anticipates submitting the City’s annual PSD reports for calendar year 2024 to the CEC by June 1, 2025 and providing the 2024 PCLs to electric customers around September 2025.
FISCAL/RESOURCE IMPACT
Adoption of the attached resolution will not result in a financial impact to the City.
STAKEHOLDER ENGAGEMENT
Upon the adoption of the attached resolution, staff will mail a copy of the City’s 2023 PCLs to each electric utility customer as a bill insert and post them on the City’s website in December 2024.
ENVIRONMENTAL REVIEW
Adoption of the attached resolution is not subject to California Environmental Quality Act (CEQA) review as an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)).
ATTACHMENTS
Attachment A: Resolution Approving and Attesting to the Veracity of the City's 2023 Annual Power Source Disclosure and Power Content Label Reports APPROVED BY:
Dean Batchelor, Director of Utilities
8 Palo Alto’s 2023 PSD reports: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2024/cpau_2023_powersourcedisclosurereports.pdf 9 Although the PSD Program Regulations establish a deadline of June 1st to submit each year’s PSD Reports, due to technical issues with the Western Renewable Energy Generation Information System (a region-wide database used to track renewable and carbon-free energy supplies) CEC staff announced that the 2023 PSD Report submission deadline would be extended to July 29, 2024. As a result of this delay, CEC staff was delayed in producing the 2023 PCL template, and therefore they also announced that the deadline to distribute PCLs to customers, and for the City Council to approve and attest to their veracity, would be similarly extended, from October 1, 2024, to January 31, 2025.
10 Palo Alto’s 2023 PCLs: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2024/cpau_2023_powercontentlabels.pdf