City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Public Works
Meeting Date: March 2, 2026
Report #:2508-5090
TITLE
Status Update on Implementation of the Reliability and Resiliency Strategic Plan; Accept 1) Palo Alto’s Electric System Reliability Indices and Recommended Goals and Reporting, 2) the “Evaluation of Local Energy Resources to Lower Costs and Improve Reliability and Resiliency” Report (as recommended by Climate Action and Sustainability Committee and Utilities Advisory Commission) to Complete Reliability and Resiliency Strategic Plan Strategy Four and Strategy Five; and Provide Direction to Pursue Various Activities Related to Flexible Energy Resource and Efficient Electrification to Improve Reliability and Resiliency; CEQA Status - Not a Project
RECOMMENDATION
Staff recommends that the City Council:
1. Accept Palo Alto’s electric system reliability indices and recommended goals and reporting.
The Climate Action and Sustainability Committee (CASC) and the Utilities Advisory Committee (UAC) recommend that the City Council:
2. Accept the “Evaluation of Local Energy Resources to Lower Costs and Improve Reliability and Resiliency” report to complete Reliability and Resiliency Strategic Plan Strategies Four (Value the benefits of flexible technologies to the utility and community) and Five (Evaluate the resource needs for various demand reduction and resiliency programs).
3. Direct staff to:
a. Promote City of Palo Alto Utilities (CPAU) customer’s use of energy in off-peak periods to reduce both greenhouse gas emissions and strain on the electric grid, and lower energy costs;
b. As opportunities present themselves, and to the extent staff time is available, evaluate large scale solar and battery opportunities in Palo Alto, either at publicly owned facilities or through partnerships with private land owners; and
c. Engage the Utilities Advisory Commission, Climate Action and Sustainability Committee, and Council in an additional discussion on microgrids and long-term resiliency in 2026.
The UAC and CASC differed on the level of effort that should be expended on the promotion and reduction of barriers to adoption. The CASC recommended a higher level of effort, with recurring and widespread outreach, more educational materials, online decision tools, and other resources, active auditing of regulations and processes for streamlining opportunities, and more active integration of these technologies into energy and climate programs. The UAC recommended that no additional resources should be added for work and work should proceed as staff time is available. The recommendations are below:
The Climate Action and Sustainability Committee (CASC) recommends that the City Council:
3. Direct staff to:
d. Promote and reduce barriers to adoption, as appropriate, for demand response capable technologies, solar photovoltaics (PV), battery energy storage system (BESS), thermal storage, and vehicle to load, home, and grid technologies, including, but not limited to:
i. Recurring and widespread outreach;
ii. Developing educational materials, online decision tools, and other resources to help community members evaluate these technologies for themselves;
iii. Actively auditing regulations and processes for streamlining opportunities; and
iv. Actively and continuously integrating flexible energy technologies and efficient electrification into energy programs;
e. Within two years, update cost-benefit analysis for demand response, solar PV, batteries, thermal storage, and vehicle to load, home, and grid technologies; Note: Accommodating this higher level of effort without impacting other climate programs or utility operations would require additional staff resources. If the City Council adopts the CASC recommendation staff would identify the resource needs and funding sources and return with a proposal through the FY 2027 budget process.
The Utilities Advisory Committee (UAC) recommends that the City Council:
3. Direct staff to:
d. Promote and reduce barriers to adoption, as appropriate, for demand response capable technologies, solar photovoltaics (PV), battery energy storage system (BESS), thermal storage, and vehicle to load, home, and grid technologies, including, but not limited to:
i. Regular outreach as opportunities present themselves; ii. Posting available educational material on the City’s website; iii. Facilitating regulatory and process changes as staff becomes aware of them and as staff time is available; and
iv. Integrating flexible energy technologies and efficient electrification into energy programs as staff time is available;
e. Within two years, update cost-benefit analysis for demand response, solar PV, batteries, thermal storage, and vehicle to load, home, and grid technologies, with an annual update focused only on electric supply costs; The UAC also recommended that a simplified update of the cost-benefit analysis be done within one year, just updating utility supply cost projections. Staff agreed that this was a simple update and will incorporate the simple update into its work plan.
EXECUTIVE SUMMARY
As an electric utility service provider, reliability and resiliency of that service is key to maintain high service levels and continue to advance climate adaptation and sustainability goals that increasing rely on electric infrastructure and services. This report provides a comprehensive update on RRSP and if approved results in acceptance of key performance indicators for electric services, completion of RRSP strategies four and five, and direction to staff to further Flexible Energy Resource and Efficient Electrification to Improve Reliability and Resiliency.
RRSP Strategy 1, Action 6 (Reliability Standards) Key Performance Indicators: for service today and into the future KPIs are critical to measure system reliability and set targets to instill confidence as customers increasingly rely on electric services. The System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI), and Customer Average Interruption Duration Index (CAIDI) are standard indices used across the utility sector.
They provide a good measure of system performance and the ability to compare performance between various utility systems. Palo Alto’s electric system reliability shows improvement over time and compares favorably to other utilities within the region and nationally. These metrics are reported quarterly to the Utilities Advisory Commission (UAC); staff recommends continuing this practice going forward and to forward this reporting to the City Council with the addition of at least annual comparisons of Palo Alto’s performance to adjacent systems (PG&E) and nationally to the City Council as an information item. This additional reporting will ensure heightened awareness of these metrics as the City continues to work to achieve its reliability and electrification goals.
Acceptance of RRSP Strategies 4 and 5: With respect to assessments of flexible energy technologies and efficient electrification, staff, the UAC, and the CASC recommend acceptance of a consultant report implementing Strategies 4 and 5 of the RRSP, along with direction to staff based on the study results. The technologies and strategies discussed in the attached report (Attachment B) benefit the electric grid and the community when voluntarily installed and properly operated. Strategies 4 and 5 ask whether the City should be going further and providing incentives or more intensive programs to actively drive greater participation, which would require additional funding and resources. While the attached report is not a cost of service analysis that will be used to determine utility rates, it does evaluate potential utility- provided incentives, and finds no cost/benefit ratio that supports providing City or ratepayer- funded incentives or more intensive programs.
Direction to Further Flexible Energy Resource and Efficient Electrification The UAC, CASC, and staff recommend continuing to do outreach and reducing barriers to adoption, as described in this report, while also monitoring and analyzing the cost-effectiveness of these technologies periodically, evaluating larger commercial projects as opportunities arise, and pursuing further discussion of the policy options for long-term resiliency and microgrids described in the attached report. Strategy 3 of the Reliability and Resiliency Strategic Plan (RRSP), which is already being implemented, focuses on promoting these technologies and strategies, helping people learn to operate them well, and reducing barriers to adoption. These activities can be performed with existing staff.
This staff report and the attached consultant report complete Strategies 4 and 5 of the RRSP.
BACKGROUND
The RRSP1 resulted from discussions with the UAC and the Council’s Sustainability and Climate Action (S/CAP) Committee and its Working Group leading up to and following the June 5, 2023, adoption of the S/CAP and the 2023-2025 S/CAP Work Plan2. Included in the S/CAP Work Plan were work items 1.B and 1.C to create and implement the Electric RRSP. At its December 6, 2023, meeting the UAC discussed the elements and scope of the RRSP and recommended Council approval3. The City Council approved the Reliability and Resiliency Strategic Plan (RRSP) on April 15, 20244. The RRSP includes a variety of strategies and actions to improve reliability and resiliency citywide. The status of these strategies and actions is summarized in Attachment A and this staff report.
1 Reliability and Resiliency Strategic Plan, Approved by the City Council April 14, 2024: https://cityofpaloalto.prime gov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=f90b4733-eb24- 4699b4f1229af03f8fd5
2 Adopted 2023-2025 S/CAP Work Plan: https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/repo rts/2023-2025-scap-work-plan_final.pdf
3 UAC, Staff report 2311-2263, December 6, 2023, S/CAP Strategic Plan on the Reliability and Resiliency for the Elec tric Distribution Utility. https://www.cityofpaloalto.org/files/assets/public/v/3/agendas-minutesreports/agendas- minutes/utilities-advisory-commission/archived-agenda-and-minutes/agendas-and-minutes-/12-dec-2023/12-06- 2023-packet-v2.pdf
4 City Council, Staff Report 2401-2496, April 15, 2024, Approve the Reliability and Resiliency Strategic Plan as Reco mmended by the Utilities Advisory Commission, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplate Type?id=4485&meetingTemplateType=2&compiledMeetingDocumentId=9592 One of those actions is Strategy 1, Action 6, to develop reliability metrics. A report on Council’s June 16, 2025 consent calendar9 recommended acceptance of reliability metrics and goals, but was pulled from the consent calendar and is being presented for discussion tonight.
On a quarterly basis, staff presents outage indices to the Utility Advisory Commission (UAC). As an industry standard, power outages and overall system reliability are tracked through standardized indices that measure average system performance over a defined period, typically 12 months. Three indices are used to track the average duration of outages (SAIDI), average frequency of outages (SAIFI), and the average restoration times for customers experiencing outages (CAIDI). Presentation of this data provides the UAC and City Council with an ongoing indication of system performance and the impact of newly implemented operating procedures, replacement of legacy equipment, and the implementation of modern utility equipment.
The City Council has established these three electric reliability metrics as Key Performance Indicators (KPI) and tasked City staff with recommending goals for reliability metrics and standardized reporting methodology. This staff report presents updated reliability metrics for Palo Alto based upon outage data through the end of calendar year 2025, recommendations for a reporting methodology, and annual reliability goals.
Below is a brief overview of these metrics.
•SAIDI (System Average Interruption Duration Index): This measures the average duration of a power outage for the average customer within a given period (usually a year). A lower SAIDI means customers experience less time without power, indicating better overall reliability.
•SAIFI (System Average Interruption Frequency Index): This measures how often the average customer should expect to experience a power outage over a given period (typically 12 months). A lower SAIFI means customers experience fewer power outages, indicating better service reliability.
•CAIDI (Customer Average Interruption Duration Index): This measures the average time in minutes it takes to restore service to customers who have experienced an outage. A lower CAIDI generally means utilities are able to restore power more quickly when outages do occur, reflecting efficient outage response and quick restoration times.
In essence, these metrics are used by utilities to assess and improve the reliability of their electrical distribution systems. Lower values across all three indicate a more reliable and efficient power supply for customers.
9 City Council, Staff Report 2506-4769, June 16, 2025, Item 11, Accept Electric System Reliability Key Performance I ndices, https://portal.laserfiche.com/Portal/DocView.aspx?id=187543&page=3&repo=r-704298fc&searchid=82efb d8eb3b3-4fc2-8b0f-0e53df677bdf
Progress on Strategies 4 and 5 of the RRSP is also highlighted in this report; this involved performing a cost/benefit analysis of the contribution flexible energy technologies and efficient electrification strategies could have to reducing electric utility supply costs, deferring electric distribution system investment, and enhancing short-term and long-term reliability and resiliency in the community. This work item responds to early feedback from the City Council’s Ad Hoc Committee and its Working Group on exploring this topic as part of the S/CAP, and strategies to pursue this analysis were added to the RRSP when it was adopted in April 2024.
The UAC and CASC have been involved regularly in the development and completion of these studies as discussed in the Stakeholder Engagement section below.
ANALYSIS
The City is making progress on a variety of aspects of the RRSP, as described in Attachment A.
Some highlights include:
The first pilot neighborhoods to be upgraded under the Electric Grid Modernization Project have been completed, and the results are being assessed to inform the next phases of the project.
The City’s Electric Utility has received approval from the California Independent System Operator (CAISO) for a second transmission line into Palo Alto to reduce the chance of an outage due to damage to the current single transmission pathway serving Palo Alto (such as occurred in 2009 from an airplane accident).
The new outage management system allows CPAU to more quickly detect and respond to power outages and provide customers with timely notifications and updates. Undergrounding in the Foothills to reduce the chance of wildfire-related outages is nearly complete, with a goal of completion by the June of 2026. Barriers continue to be reduced for the adoption of solar, battery storage, and efficient electrification. Examples include the incorporation of circuit sharing technologies into building permit load calculation worksheets, and programs the City has put in place to help people avoid panel upgrades when electrifying.
Some specific strategies and actions are highlighted for discussion, including Strategy 1, Action 6 (Reliability Standards) and Strategy 4 (Value the benefits of flexible technologies to the utility and community) and Strategy 5 (Evaluate the resource needs for various demand reduction and resiliency programs).
Strategy 1, Action 6 (Reliability Standards)
Palo Alto’s CY2025 system reliability numbers, or KPIs, are improved from CY2023 and CY2024.
Some of the improvements can be attributed to changes in system restoration procedures while some improvements are due to milder winter weather. Impacts of weather and large system outages are seen when comparing the SAIDI, SAIFI, and CAIDI numbers on the left side of the chart below (Major Event Days Included) against the right side (Major Event Days Excluded).
Major Event Days Included Major Event Days Excluded
CY SAIDI SAIFI CAIDI SAIDI SAIFI CAIDI
2019 132.8 1.065 124.7 25.3 0.225 112.0
2020 46.2 0.830 55.7 20.9 0.165 126.7
2021 39.7 0.277 143.1 9.4 0.029 329.3
2022 71.7 0.622 115.3 13.4 0.070 190.5
2023 154.1 1.182 130.4 43.5 0.176 247.0
2024 134.7 0.844 159.7 67.4 0.474 142.1
2025 68.1 0.614 110.9 27.2 0.111 245.2
Two sets of numbers are presented for the current and past calendar years. One set represents all primary level outages (excludes single customer outages), and a second set of data removes Major Event Days (MED) from the first data set to remove the influence of significant weather events or other large outages that do not represent normal day-to-day operations. By identifying and removing MEDs from outage indices, year over year trends can be established to better indicate if system performance is improving or declining. For the data presented, MED are defined as 24-hour periods with more than 10 percent of Palo Alto’s electric customers impacted by power outages.
Tracking the City’s year-to-year reliability indices is a good measure of internal progress toward improved reliability but does not provide an indicator of industry-wide (national) or regional system reliability. The charts further below present PG&E’s outages indices for the DeAnza Division, Santa Clara, Alameda, and American Public Power Association’s (APPA) tracking of nationwide system reliability. PG&E’s DeAnza Division, which covers the cities and surrounding areas of Cupertino, Los Altos, Los Gatos, and Mountain View, represents our local region’s electric system reliability and the impacts of local weather events. APPA’s collection of nationwide system reliability is narrowed to show the cutoff for the best performing systems (top 25 percent) in the United States. Combined, these comparisons provide additional relevance to Palo Alto’s efforts to provide safe and highly reliable electric service.
In comparison of both regional and national outage reliability indices, staff is recommending Palo Alto set a goal of remaining within the five-year average of APPA’s top quartile for SAIDI and SAIFI when excluding MED. Staff is further recommending that Palo Alto, at all times, outperform PG&E’s system reliability numbers for the DeAnza Division. Setting these targets will allow comparisons on a national level regardless of weather events and on a local level with and without the impacts of localized weather events.
Future quarterly and annual presentations of outages indices will include these comparisons to aid the UAC, City Council, and utility staff in identifying trends in system reliability.
Strategy 4 (Value the benefits of flexible technologies to the utility and community) and Strategy 5 (Evaluate the resource needs for various demand reduction and resiliency programs) The attached consultant report titled “Evaluation of Local Energy Resources to Lower Costs and Improve Reliability and Resiliency” contains the results of several analyses to evaluate the electric utility supply cost savings, short-term reliability benefits, and potential for deferral of distribution investment. The analyses found that benefits exceeded costs at a community level (the combination of costs and benefits for both the utility and its customers, analogous to the “Total Resource Cost Test” commonly used in analysis of energy efficiency and other demand- side management programs)11 only for commercial solar plus batteries, and that benefits would no longer exceed costs for that category of projects once the Federal Investment Tax Credit (ITC) expires. They found that using batteries to defer distribution investment was not cost- effective at a community level. They found that commercial solar and batteries could become cost-effective (at a community level) by 2030, but that residential-scale projects were not projected to become cost-effective (at a community level) until 2040. However, both residential-scale and commercial-scale solar and battery projects could be viable for the building owner if the building owner valued long-term resiliency higher than the cost of mitigating an outage (as described in the report, Attachment A, Section 7.3, page 43). The report lays out a framework for considering how to approach the value of long-term resiliency and potential policies the community could adopt.
Based on the report, staff developed several follow-up recommendations for implementation, organized under five categories:
1) time of use promotion
2) technology promotion and barrier reduction
11 A good definition of the Total Resource Cost Test is included on page 18 of the California Public Utilities Commission “California Standard Practice Manual for Economic Analysis of Demand-Side Programs and Projects,” October 2001, which is still used for investor-owned utilities. Publicly-owned utilities use similar analytical methods for their energy efficiency and demand-side cost-effectiveness analyses. https://www.cpuc.ca.gov/- /media/cpuc-website/files/uploadedfiles/cpuc_public_website/content/utilities_and_industries/energy_- _electricity_and_natural_gas/cpuc-standard-practice-manual.pdf 3) cost-benefit monitoring and projection
4) case by case commercial scale project evaluations
5) policy review of microgrids and long-term resiliency These are summarized below:
1. Time of Use Promotion
As the City’s Advanced Metering Infrastructure (AMI) project is completed, the City’s Utilities Department will provide customers a time of use billing option that can shift energy use to off- peak periods that reduces emissions and passes through lower energy import costs to the customer. Outreach will include mailers, utility bill inserts, and information on the City’s website.
2. Technology Promotion and Barrier Reduction
Staff currently encourages adoption of demand response, solar PV, BESS, thermal storage, and vehicle to load, home, and grid technologies as staff becomes aware of them, such as recent changes to Fire Department regulations recognizing the lower fire risk of lithium-ferrous- phosphate battery technologies or the City’s adoption of SolarApp+ for solar permitting.
Information on these technologies is also available on the City’s website. Staff currently has a Guide to Electrification posted on the City website detailing approaches to efficient electrification. Staff integrates these technologies into programs, such as including a rebate in the City’s Advanced Single Family Electrification Pilot Program that can be applied to circuit sharing technologies, or the inclusion of managed charging technologies in the design guidelines for the next generation multi-family electric vehicle charging program.
The CASC recommended a higher level of effort than what is currently being done, which staff noted would require bringing on hourly assistance for a few years to make a focused effort to actively review and identify streamlining opportunities in City regulations and processes to make it easier to install these technologies (including outreach to contractors), to track the state of the technologies, and to develop material for an outreach campaign focused specifically on these technologies. Any staff augmentation and funding requirements would be incorporated into the City’s budget approval process if the City Council adopted the CASC recommendation.
The UAC recommended against devoting additional resources. If the City Council adopted this recommendation, the current level of effort would continue, seeking opportunities to increase efficiencies to scale programs, and promote and incorporate these technologies as staff time and opportunities present themselves. Staff would also investigate low-cost technical assistance for these technologies when developing programs. No additional resources would be requested.
3. Monitoring Cost-Benefit of Various Technologies
With the creation of the cost-benefit model used to generate this report, staff now has a manageable way to regularly update the analysis results. Staff would update the model periodically as opportunities presented themselves, such as when a summer intern was available or when workload permitted full-time staff to update the model, but not less than every two years. This may require consulting expenditures, but these could be absorbed within the existing budget. Staff will also do a minor update annually, updating only the electric utility supply costs.
4. Commercial Facility Partnerships – Case by Case Evaluation As opportunities arise, staff evaluates solar and batteries on City-owned sites and partners with commercial property owners who approach the City. Examples include evaluations currently being done for the Cubberley Community Center project and the VMware community microgrid partnership (now defunct) that was established several years ago. Staff will also continue to explore backup power needs at the Regional Water Quality Control Plant (RWQCP) and airport to determine the most economically feasible backup power alternatives to determine whether an electric utility / treatment plant partnership for a solar and storage microgrid at the airport can be made economically feasible, which, per the City’s consultant, would require substantial funding from the RWQCP related to reliability services, since the cost of the power was significantly higher than the City’s avoided cost of power without that additional funding, and would raise electric supply costs if implemented without it. The number of project evaluations completed would depend on staff capacity and available funding for consultants.
5. Microgrids and Long-term Resiliency
The recommendation from the UAC and CASC was to maintain the City’s current policies on microgrids and backup power at this time, but to pursue further discussions on long-term resiliency in 2026. Currently, the City passes on the utility supply cost savings of solar and batteries through its net energy metering and feed-in tariff programs but does not provide additional incentives for solar and batteries. The report describes alternative policies that could be pursued, such as providing incentives for solar and battery microgrids at private facilities that would be valuable to the community in a major emergency (like grocery stores) or providing income-qualified incentives. In 2026, staff will bring forward an additional discussion on these topics, highlighting the community-level planning and equity considerations involved.
FISCAL/RESOURCE IMPACT
The fiscal impact of RRSP strategies and actions is summarized in Attachment A for each strategy and action.
Implementing Strategy 1, Action 6 (Reliability Metrics) involves no fiscal or resource impact.
Future discussions may involve presentations of operating procedures, staffing, and recommended capital improvement program projects intended to improve system performance.
The studies and draft proposals for implementing RRSP Strategies 4 and 5 have been performed through existing Utilities Resource Management electric utility budget and contracts, which are adequate for project completion. These include:
•A $213,250 contract with Buro Happold for evaluation of supply and short-term resiliency, research and recommendations on potential programs, and development of the final Reliability and Resiliency Cost-Benefit Study and Program Inventory. All funding was utilized, and an additional $10,500 was required for additional analysis based on UAC and CASC feedback.
•A $32,185 contract with Energeia to complete the preliminary analysis of deferring distribution investment, which was completed for $28,676. •A contract with Burns-McDonnell for evaluation of solar and storage at the airport for $208,000, of which $178,000 is for evaluation of microgrid options and use of the energy and $30,000 is estimated for site evaluations to enhance planned Federal Aviation Administration filings for the airport to enable this project in the future. To date, $193,000 has been expended.
Pursuing additional analysis of the potential for deferring distribution investment would require an additional $150,000 to $200,000 in consultant costs and 0.5 FTE in staff time, though there is uncertainty about the amount of staff time needed. If Council directed staff to pursue this approach, staff would return with firmer numbers and a proposed funding source. The City has received a $75,000 grant from the American Public Power Association (APPA) for this work.
Staff is in discussions with APPA to explore reducing the grant and applying it to the preliminary study instead.
The recommended actions in this report require resources, in addition to those described above, as follows:
Promoting the voluntary use of energy in off-peak periods to reduce both greenhouse gas emissions and strain on the electric grid, and lower energy costs will be performed as part of the rollout of time of use rates through utility bill inserts and information on the web site and will require less than 0.1 FTE of staff time, absorbed from existing staff. If the CASC recommendation were adopted, staff would bring forward a budget proposal for an 0.5 FTE hourly to promote demand response, solar PV, BESS, thermal storage, and vehicle to load, home, and grid technologies and reducing barriers to their adoption at a higher level of effort than is currently being done. This would also require
0.1 to 0.2 FTE in communications staff time from existing staff. If the UAC recommendation were adopted, promotion and barrier reduction would be done as staff time is available and as issues arise. Staff is expecting this will require less than 0.1 FTE of work from existing staff capacity as time is available. Every two years, staff will update the cost-benefit analysis for demand response, solar PV, BESS, thermal storage, and vehicle to load, home, and grid technologies. This could be done using summer interns for around $15,000 in staff costs, or as staff time is available (about 0.1 to 0.2 FTE of work) or through about $14,000 in consulting budget from existing Utilities consulting budgets. Staff will also do a minor update annually by just updating the electric utility supply projections, which should require a small amount of staff work annually.
As opportunities present themselves, and to the extent staff time is available, staff can evaluate large scale solar and BESS opportunities in Palo Alto, either at publicly owned facilities/properties or through partnerships with private landowners. Staff would restrict these efforts to 0.1 to 0.2 FTE of work per year. Engaging the UAC, CASC, and City Council in an additional discussion on microgrids and long-term resiliency in calendar year 2026 is expected to take 0.1 to 0.2 FTE of staff time, one time, though additional work may be needed depending on Council direction.
STAKEHOLDER ENGAGEMENT
No stakeholder engagement was sought on the reliability metrics as the data collected is internal to City departments and comparison data is available publicly.
Use of flexible technologies and efficient electrification, both before and after adoption of the RRSP, has been the subject of many public meetings and stakeholder discussions, which were summarized in the Stakeholder Engagement section of the July 9, 202513 UAC staff report and again in the August 22, 2025 CASC staff report.14 The feedback from the July 9, 2025 UAC meeting on the preliminary results of the attached study was also summarized in the Stakeholder Engagement section of the August 22, 2025 CASC staff report.14 On August 22, 2025 staff presented the preliminary results of the attached study to the CASC.
At the July 9 and August 22 meetings, staff provided a straw proposal list of policy approaches to both the UAC and CASC for consideration with the intent of reflecting the UAC and CASC feedback in the final report. Below is the list of staff-proposed policy approaches with UAC and CASC feedback incorporated. The policy approaches below have been incorporated into the attached report:
1. Promote ways community members can reduce emissions by reducing peak period load (helping the electric grid) and, once time of use (TOU) rates are launched, potentially 13 UAC, Staff Report 2505-4687, July 9, 2025, Status Update on Studies Related to the Electric Utility’s Reliability an d Resiliency Strategic Plan (RRSP) Strategies 4 and 5 and Request for Feedback on Draft Proposals for Implementati on, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=8400&meetingTemplateType=2&co mpiledMeetingDocumentId=15055
14 CASC, Staff Report 2507-4944, August 22, 2025, Status Update on Studies Related to the Electric Utility’s Reliabili ty and Resiliency Strategic Plan (RRSP) Strategies 4 and 5 and Request for Feedback on Draft Proposals for Impleme ntation, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=9006&meetingTemplateType= 2&compiledMeetingDocumentId=15478
save money by doing so as well. The TOU Implementation and Communication Plan discussed at the UAC’s October 1 meeting incorporates this messaging.
2. Monitor demand response technologies for positive benefit-cost opportunities, but do not pursue a demand response program at this time (which continues existing City policies). Project changes to benefit to cost ratios and identify actions to take at the point benefits exceed costs.
3. Promote residential solar and battery adoption, standalone batteries, and thermal storage, but do not provide incentives at this time (which continues existing City policies). Project changes to benefit to cost ratios and identify actions to take at the point benefits exceed costs. Explore low-cost technical assistance programs if feasible.
4. Promote electric vehicle to home or grid as it becomes more available, but do not provide incentives at this time (which continues existing City policies). Project changes to benefit to cost ratios and identify actions to take at the point benefits exceed costs.
Explore low-cost technical assistance programs if feasible.
5. Explore opportunities for larger-scale solar + battery projects on commercial or community facilities on a case-by-case basis and bring forward for consideration if cost- effective options can be identified, while continuing to pursue utility-scale solar and storage and other renewables in parallel.
6. Monitor opportunities for distribution investment deferral using flexible technologies and efficient electrification but do not pursue additional analysis or new policies or programs at this time.
7. Maintain the City’s current policies on microgrids and backup power at this time, but bring forward additional discussion on long-term resiliency, highlighting community- level planning and equity considerations.
8. Explore backup power needs at the Regional Water Quality Control Plant (RWQCP) and airport to determine the most economically feasible backup power alternatives to determine whether an electric utility / treatment plant partnership for a solar and storage microgrid at the airport can be made economically feasible.
At the CASC’s August 22, 2025 meeting, there was a question about the electric capacity needs for electric aviation and whether microgrids could support that need. Staff noted that a microgrid was one of several potential approaches to providing electricity for electric aviation.
Staff plans to consider this item in the context of the 2026-2027 S/CAP Work Plan rather than the RRSP.
On November 20, 2025 the CASC reviewed the final draft consultant report and staff recommendation and voted unanimously (3-0) to recommend the City Council accept the report and the staff recommendation, also recommending for adoption the optional alternative staff recommendation with a higher level of effort for promotion and barrier reduction of the various technologies, as noted in the Recommendation section of this report. On December 3, 2025, the UAC reviewed the final draft consultant report and voted (3-2) to recommend the City Council accept the report and the staff recommendation, without the optional alternative staff recommendation. One Commissioner who voted against the recommendation said he had wanted to see the City actively promote and build microgrids, while the other Commissioner asked for more extensive quantitative analysis of the long-term resiliency benefits of these technologies and said there was not enough information in the report to audit the consultant’s methodology.
ENVIRONMENTAL REVIEW
Providing a status update on implementation of the Reliability and Resiliency Strategic Plan, the reliability metrics, the City Council’s acceptance of the Evaluation of Local Energy Resources to Lower Costs and Improve Reliability and Resiliency” Report to Complete Reliability and Resiliency Strategic Plan Strategies Four and Five, and Council’s direction to staff to promote various related activities does not require California Environmental Quality Act review, because these activities do not meet the definition of a project under CEQA Guidelines Section 15378(b)(5), as administrative governmental activities which will not cause a direct or indirect physical change in the environment.
ATTACHMENTS
Attachment A: Status Update on RRSP Implementation
Attachment B: Consultant Report, “Evaluation of Local Energy Resources to Lower Costs and Improve Reliability and Resiliency”
APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer