MINUTES OF THE
CITY COUNCIL
SAN JOSÉ,
CALIFORNIA FRIDAY, MARCH 2,
2001
The Council of the City
of San Jose convened in Adjourned Session at 8:10 a. m. in Council Chambers at
City Hall.
Present: Council Members: Chavez, Cortesé, Dando, LeZotte, Reed, Shirakawa Jr., Williams, Yeager; Gonzales
Absent: Council Members: Diquisto (excused)
Vacant: District 5.
7.1 (a) Approval of the San Jose Smart Energy
Plan.
(b) Authorization for the
Administration to develop a Request For Qualifications for the development of
energy generation plants on City-owned property.
(c) Approval
of the City Manager's recommendations regarding the City's Energy Conservation
Plan for City facilities, as outlined in the San Jose Smart Energy Plan.
(d) Direction to the City
Manager to develop a procedure for processing permits required
for energy generation plants less than 50 megawatts.
(City Manager's Office)
Documents Filed: (1) Memorandum from Mayor Gonzales and Council Members Cortesé, LeZotte, Reed, and Yeager, dated March 1, 2001, recommending Council approve recommendations contained therein. (2) Memorandum from Director of Environmental Services, Carl W. Mosher, dated February 16, 2001, providing background information on the energy activities in the City of San José, and attaching the binder cataloguing the items for discussion during the meeting. (3) Agenda of the scheduled Study Session on Energy, which was changed to an Adjourned Meeting of the City Council, listing projected outcomes for the meeting.
Discussion/Action: Mayor Gonzales welcomed the attendees to the City Council meeting on the San José Smart Energy Plan and the opportunity for the City Council to identify and address a wide range of energy activities involving San José. Mayor Gonzales stated the February 1st State of the City Address incorporated a 7-Point Smart Energy Plan, focusing on generation and conservation, which will be enhanced in areas such as exploration of alternative fuel uses in the City of San José and neighboring jurisdictions. He stated the Plan was conceived with two fundamental objectives – to meet the ongoing needs for new energy in appropriate locations throughout the City of San José, and to reach an ultimate objective of making the region energy self-sufficient – and calls for at least ten percent reduction in energy use at City facilities and operations, with inclusion of specific actions recommended by the City Council during today’s meeting. Senior Deputy City Manager Darrell Dearborn stated the information compiled by the Administration is for the purpose of informing Council about energy conservation and the production of energy for municipal and other uses as a basis for future policy decisions. He stated the five presentations are intended to focus on innovative strategies to achieve the City’s energy goals for conservation, creative partnerships, and new opportunities for generation identified in the Mayor’s 7-Point Smart Energy Plan, identify energy policies and programs, legislative and economic issues, and discuss the City’s supply and use of energy, clean and green technologies, and land use decisions. He introduced Carl J. Weinberg of Weinberg Associates, keynote speaker who for 25 years was employed by PG&E as Chief of Research and Development, and in recent years a consultant and advisor on matters of clean alternatives for and sustainable sources of energy. Using overhead transparencies, he presented comprehensive documentation in support of the Mayor’s proposals, the City’s goal, and the requirement to achieve an investment portfolio for energy that includes fossil generation, renewables and energy efficiency, both centrally located and distributed for reliability and security, and the utilization of information technology to customers, making them efficient in use and allowing them meaningful choices. He began with the history of the traditional utility, which from 1900 to 1970 succeeded as a regulated, natural monopoly, vertically integrated, with a regulatory compact, which began to unravel with the oil crisis in the 1970s. He described the workings of new federal regulations that were introduced – Public Utility Regulatory Policy Act (PURPA) and the Energy Policy Act of 1992 – which opened up transmission to non-utilities and increased the federal government’s role in wholesale markets. Citing three major forces at work – governance, increased emphasis on environment impact both locally and globally, and shift in technology from large central stations constructed energy to smaller more modular, flexible manufactured energy and the increase role of information technology – he described California’s progression toward gas turbine technology and large industrial customer thrust for deregulation of the industry; with the California Public Utilities Commissions publication of AB1890, the restructuring of the utility industry materialized and the 1994 Biannual Resource Planning Update (BRPU) was developed as a plan for future electric systems. He stated the Public Utilities Commission (PUC), during the development of the BRPU plan, approved utilities paying approximately $100 million for renewables not to build, approximately 5/6c per kilowatt-hour (kwh). He stated the underlying assumptions when AB 1890 was proposed assured California that enough supply reserves existed, new power plants could cost less than the older plants, old dirty plants will not continue to run, there would be robust competition, wholesale and retail, and that consumers would have accurate information on power use and options to switch to alternative suppliers. He stated the proposed AB1890 passed the Legislature, by acclaim, with no dissenting votes, and established the basic rules of AB1890 that (1) utilities were out of utility generation, would run distribution wires only, and lease the transmission to the Independent System Operator (ISO), (2) utilities were allowed to sell remaining generation only through the Power Exchange (PX), which would mitigate the market power in terms of manipulating prices, and no long-term contracts, and (3) utilities would be allowed during a four-year period to recover stranded costs through retail cap (total recovery was estimated to be $25 billion among all utilities in California), which capped the electricity to the consumer; since the price of electricity was lower than the cap, the difference between the cap and the actual price would go to the utility as payment for the cost of the power plants. Continuing with the provisions of AB1890, he stated customer aggregation was difficult and retail competition was discouraged. With respect to the possibility of San José having a municipal utility in accordance with the present rules of AB1890, Mr. Weinberg stated the City of San José, would have to purchase transmission wires from PG&E. Explaining the concept of a “muni-light” system, he stated San José as a municipality could negotiate for the power, have it delivered to customers over PG&E transmission lines, without having to purchase the lines, by so doing, the City would not have to incur huge capital expenditures for the infrastructure, but could aggregate customers. He stated “community choice” is the best approach, and pending legislation suggests that communities organize and buy their own power for their citizens without having to purchase the equipment. For clarification, he stated the present legislation precludes the City of San José contracting with private enterprise to purchase power; when the State of California became the purchaser of power, the Public Utilities Commission suspended “direct access”. With regards to the variable that caused the structure to collapse, he stated there was some indication that the established bidding system – the Second-Tier Auction System – was flawed; for example, when supply and demand get very close, and the needs of the delivery systems (PX and the ISO) are realized, owners of power plants control the system to their benefit, resulting in higher prices. Using a slide of an electric bill, he explained the net charges – the rate based on the weighted average costs for purchases through the Power Exchange – concentrating on the “Competition Transition Charge” (CTC) as the amount going to the utility to pay for the stranded cost and the “Trust Transfer Amount” (TTA) which paid for the bonds that got the residential customer’s Legislated 10% rate Reduction. He stated the current Electric Energy Charge is approximately $0.26, and the “Competition Transition Charge” is now a negative, which is the amount of money the utility is losing on the customer because of the cap. Continuing with the PowerPoint presentation and sequence of events leading to increase in electric prices, Mr. Weinberg stated the Natural Gas System line capacity in California was insufficient to meet winter demand; thus, PG&E acquired large storage fields where fuel was stored in the summer and withdrawn in winter. With respect to industry changes and diminishing capacity, he stated El Paso, Texas, sold pipeline capacity to unregulated subcontractors, then an explosion occurred in the pipeline which reduced available capacity; resulting in increased natural gas prices in the U.S. He stated the newly deregulated power plant owners did not store gas but bought it on “spot market”; spot market prices rose. He stated the increased natural gas prices increased electric prices, and given increased demand in the United States, prices increased from $2.50 per million BTUs to $12.00 per million BTUs. He described the changes in environmental regulations involving Selective Catalytic Reduction (SCR) for smog (NOx.). With the beginning of the planned reduction of credits for NOx in the year 2000, he stated the costs of credits soared to $50/lb, which is equal to the cost of fuel – gas prices increased, credits increased, and the costs were passed on to the customer. He stated the regulation was relaxed and utilities were free to pay a penalty of $7.50/lb for NOx, which has depressed the prices particularly in Southern California. He stated one of the most controversial issues dealt with maintenance scheduling. When the market was regulated the maintenance schedule was coordinated by the utility; when restructured, there was no coordination of maintenance by the Independent System Operator, and maintenance outages grew from approximately 5-10% of the total capacity to over 40% of capacity, meaning many power plants were now out for maintenance. He stated the State of California is a summer peaking State of approximately 50,000 MW, but currently operates at 30,000 WM – in the winter the State of California is having an energy crisis. He stated “capacity withholding” was introduced recently and can exist for many reasons, since “capacity” does not mean the same as “supply”. He stated “supply” means that one entity is generating and providing a community with electricity; if that agency decides not to generate, then capacity is not supply. He stated the rules and regulations governing maintenance and maintenance schedules and the requirement to serve are not the same for all ISO areas around the Country. Between December of 1999 and December 2000, he stated prices rise sharply when supply is close to demand; the utilities are forced to buy high and sell low and bankruptcies are inevitable; the suppliers don’t want to sell because they’re not getting paid; the Governor enters the deliberations and decides whether to protect the consumer and utilities, or neither. He stated the State of California, at this point, takes over the utility function of buying power and negotiates to take over the transmission system, which is known as the “single buyer model”. He stated the City has available to it two alternatives: Permit or Aggregate. He stated direct access of electricity is in question; however, the City can permit, purchase, locate, harness emergency and backup power, and with distributed power, predicated upon the rules and regulations in effect at the time. He stated current legislation allows the City to aggregate Demand Reduction, thereby organizing the City to bid into the ISO process, if possible. He stated AB48, a California Community Choice Bill, returns to the community some of the choices available, which authorizes customers to aggregate their electrical loads as individual consumers with private aggregators, with the potential of purchasing additional energy at a lower rate. In summary, Carl Weinberg urged the City Council to firmly establish the City’s goal of providing energy services that are clean, sufficient, affordable and tailored to “smart” efficient users, and reaffirmed the Mayor’s proposals to involve regional representatives who can participate in identifying appropriate locations and explore creative energy partnerships for supply. Director of Environmental Services Carl W. Mosher presented background information on a variety of energy activities conducted by the Administration during the past eleven years for both City facilities and the community at large. Beginning with the development of the Sustainable City Energy Strategy, which was incorporated into the Horizon 2000 General Plan in 1989, he stated the City’s strategy has been to promote resource efficient land use, transportation, energy and water use, and resource conservation by developing a prosperous and healthful urban system, which established the long-term goal of conserving 10% of the energy projected to be used in San José by the year 2000; through a series of conservation efforts, the City of San José has been given an additional 10% energy reduction goal for the short-term. Spanning the eleven-year period, he stated the City has established an extensive set of programs to meet the 10% energy goal, developed a comprehensive energy information program for residents, developed the IDEAS Program, expanded the Solar Access Design Guidelines in the City’s Residential Design Guidelines, along with technical studies and workshops, included Capital improvements as part of the In-House Energy Program, ensured that certain energy conservation measures were included as part of the rehabilitation loan programs offered by the Housing Department, conducted workshops for teachers and students on energy curriculum and ideas, and provided “lighting point-of-sale” information on compact fluorescent bulbs and other energy saving measures. He referenced seven of the innovative energy programs that have continued throughout the years, which were funded by State and Federal grants, and identified several key areas where the City can affect energy consumption, and defined the goals of a few of the City’s energy policies as included in the City’s 2020 General Plan. He stated City Administration continues to monitor legislative issues and significant bills for energy and other technical issues pending before the Senate and the Assembly; of primary concern to the City of San José are AB39, AB47, AB48, AB61, SB5, SB27, and SB28, which will be closely monitored to ensure appropriation of general funds from the State to San José and that the City maintains control over its jurisdiction. For possible consideration by the City Council and the Green Building Task Force, he stated the City of Santa Monica has enacted an ordinance requiring many new commercial buildings and hotels/motels achieve a 25% reduction from Title 24 and that retail buildings achieve a 20% reduction; in other words, in addition to San José’s current achievements, what is the appropriate percentage for San José to accomplish. He stated the Administration has met with the Mayor’s Office regarding expanded education and outreach efforts to occupants of apartments, mobile homes, and renters of residential units, and to make the information available through community meetings, Tri-County Apartment Association, and other neighborhood associations, thereby ensuring all residents are adequately informed of their options. He discussed the economic issues associated with energy, and Electricity and Gas Utility Taxes and Revenues, and how the utility rates impact City facilities. Mayor Gonzales stated the Senate and Assembly Bills referenced indicate potential removal barriers that would be helpful to carrying out the City’s 7-Point Energy Plan; conversely, there is legislation that could hinder a local community’s ability to respond. When the Administration comes back to Council with this issue for action, he requested Staff include any information on Bills that could hinder the City’s going forward with its Energy Plans. Mayor Gonzales stated the AB39 approval process presents some interesting questions; namely, if cities and local governments are supposed to be able to respond to their energy needs, why have the 100 MW limit; and could the State agency be eliminated and the cities be allowed to deal with their needs as they see fit? With respect to the number and sizes of MW plants, Senior Deputy City Manager, Darrell Dearborn, stated as a point of clarification that the California Energy Commission (CEC) jurisdiction is over single-site power plants in excess of 50 MWs; there is an indication that through a decision pending in a case involving a City project in which the CEC would look both at the individual gas power plant, 49.9 MWs in the project, and the total energy derived from back-up diesel generators in that project. Because the total of both of those sources of energy on the project site would exceed the 50 MWs, the CEC would most likely assume jurisdiction over that entire project site. Director of Environmental Services, Carl W. Mosher, stated the California Energy Commission continues to debate their position on the processes and how to assure their mission and goals are sustained, which is a competing interest; however, Staff will provide Council with that information upon receipt. He stated the Administration will also provide Council with information on SB28 and whether retrofitting to bring back on line those facilities currently closed, conversion from diesel to gas, and how many potential sites will be affected. In addition, he stated Staff would ascertain and report to Council the implications of “protecting public health and air quality”. Using a “sample utility bill for a residential customer”, Carl Mosher explained the gas and electric rates, percentage of increase reflecting the new rates and increased amounts. Translating that information into Utility Taxes, he stated the percent of increase reflects approximately 120% increase, with most of the increase in personal utility bills relating to the increase in the cost of natural gas. He stated the per-unit cost would decrease as the demand decreases over the next several months; however, the question is going to be what happens to the City’s particular personal electricity charge during the next several months, as the State takes action. Referencing the overhead graphics, Mayor Gonzales stated the information is very important to share with consumers, as the current energy crises is a direct response to natural gas prices. Regarding the utility tax revenue to the City’s General Fund, Senior Deputy City Manager, Darrell Dearborn, stated the tax revenue was authorized in the 1960s as unrestricted General Fund Revenue, and has been treated and budgeted accordingly during its tenure. Deputy Director of General Services, José Garcia, used a PowerPoint presentation of data obtained from the California Energy Commission which illustrates Silicon Valley and the State of California’s annual consumption and expenditures for both gas and electricity for residential and non-residential customers. He stated the data reflects a 21% reduction in electricity consumption within the City from 1996 to 1999; the increase in the year 2000 reflects the increased purchase of electricity from PG&E by the Water Pollution Control Plant, rather than generating electricity through the Plant’s cogeneration system and the purchase of Natural gas. He stated the City’s top energy users – Water Pollution Control Plant, Civic Center, Airport Central Plant, South Concourse & Terminals, Convention Center, Center for Performing Arts, Art Museum, Civic Auditorium Complex, and the Municipal Water Pumping Stations – account for more than 50% of the total City consumption and have been identified for energy conservation efforts. Darrell Dearborn stated the significant increase in electricity consumption between 1999 and 2000 in the aggregate of all City facilities was not indicative of increased energy consumption, but reflective of the economic decision to switch from natural gas, which price is increasing, to electricity because it was cheaper to generate the required energy. In response to Council request for total electrical usage and its source, José Garcia stated Staff would provide Council with the total City electrical usage, as a baseline, and whether it comes off the power grid or is cogenerated, would include usage information for the Convention Center and the Arena, and would verify the accuracy of the information reflected in the legend on page 16 regarding KWH consumption. Describing the City’s consumption of KWH in the year 2000, as displayed on page 19 of the Staff presentation, José Garcia he stated the Water Pollution Control Plant is the largest consumer of electricity in City operations, approximately 57% of the total City consumption, and included in the category of “Facilities” – the second largest consumer at 42M kwh – is the Civic Center, Libraries, Fire Stations, Community Centers and some Downtown facilities. José Garcia stated an interdepartmental energy team was established and has identified energy conservation measures for implementation throughout the City and established clear baseline and monitoring procedures. He stated a wide range of activities have been put in place to achieve the 10% energy conservation goal which involve heating and ventilation, air conditioning systems, interior and exterior lighting, office and building equipment, proactive employee efforts, and posting signs to inform guests and patrons of the City’s energy conservation efforts. Regarding electricity purchased versus produced, Carl Mosher stated the Water Pollution Control Plant has the ability to produce electricity for its needs through the cogeneration system and through the purchase of natural gas and with on-site methane. When natural gas costs were low, he stated WPCP produced approximately 90% of the power at the Plant; as the cost of natural gas increased, the Plant reduced onsite production by using methane. Regarding ISO and summer energy demands, he stated the Plant has submitted a bid to the Independent System Operator for summer months whereby ISO will pay the City for not buying power from the power grid, and will repay the City for producing energy onsite; that proposal is in place with a response to those bids due April 2001; the Administration will report back to Council on the bid results. He reviewed energy savings accomplishments within the Water Pollution Control Plant, which improvements resulted in HD&R consultants declaring the Plant as the most energy efficient plant in the Country in 1998, and its use as a model for other wastewater plants to develop strategies in offsetting the project energy crisis for the Summer of 2001, and identifying additional measures for reducing energy consumption at the Treatment Plant. Given the number of issues remaining for Council discussion and the amount of time remaining in the meeting, Mayor Gonzales suggested a five-minute recess to allow the Administration an opportunity to rearrange their material for presentation. Following the break, Carl Mosher stated the Administration is proposing a presentation on Community Energy Activities, Distributed Energy, and Permitting Processes and Activities. Environmental Program Manager, Mary Tucker stated the City provides numerous activities for the residents and businesses in San José – The Call Center, the Environmental Services Web Sites, and through the City’s Green Building Website. She presented an overview of the seminars and workshops conducted through various programs funded by PG&E, through the distribution of energy smart brochures, and through teamwork with the City’s Strong Neighborhoods Initiative and other venues. She stated the Council-approved agreement with PG&E has provided financial incentives for commercial building owners that install Energy Smart-Cool Roof technologies, and working with the Mayor’s Office, Staff has scheduled an Energy Fair for vendors to display energy savings technologies, conduct workshops for renters, mobile home owners, and residents. She elaborated on the meaning of Green Building, as defined by the Green Building Task Force, and explained the City’s Green Building Guidelines, reported the Work Group has reviewed several State and National “green building guidelines” to determine what is most appropriate for San José, and with the assistance of community stakeholder, the implementation plan for the guidelines is being developed with an internal City Steering Committee, with final recommendations forthcoming in May 2001. With regards to Energy Partnerships, as proposed in the Mayor’s Energy Plan, she stated partnerships are being explored with utilities, local governments and regional agencies, universities and community colleges, business and environmental organizations, community and neighborhood groups, and trades and construction organizations. Regarding future opportunities for partnerships and education within the community, as provided for in the Governor’s Energy Conservation and Renewable Energy Programs, she stated the opportunities include $800 million in energy conservation and remand reduction, $50 million for solar rebates with a possible 50% tax credit, the California Energy Commission’s additional rebates and incentives for Energy Star” Roofs Program, and an opportunity for San José to submit proposals to the California Energy Commission for Renewable Energy Educational Program grants. In response to Council Member Chavez’ question regarding energy education in the school systems, Carl Mosher stated the Council-approved Energy Policy Workplan included a component on purchasing power, which is the educational element of the Program, which will be integrated into a report concurrent with responses to Council directions from today’s meeting. In accordance with the Smart Energy Plan, Carl Mosher stated the Distributed Generation pertains to small-scale stationary applications of electric generating technologies, which may be combined with electric storage technologies such as batteries and flywheels – internal combustion or reciprocating engines, fuel cells, small and “micro” gas turbines, solar photovoltaic, or wind turbines. He outlined the benefits of and discussed deployment issues for fossil fuel-based distributed generation, commented on benefits of renewable based distributed generation and deployment issues of the same, and discussed renewable energy technologies, which is an opportunity for the City of San José to monitor the photovoltaic market by issuing an RFI to ascertain industry interest in installing photocells at some of the City’s facilities with large flat surfaces, e.g., parking garages. He displayed a slide of the most likely users of distributed generation within the next five years in industrial, commercial and residential related to each application. Director of Planning, Building and Code Enforcement, James R. Derryberry, presented a comprehensive overview of applicable land use policies and regulations for power generation facilities. For purposes of the City’s Zoning Code, he stated generation facilities fit into two broad categories – Utility Facilities and Private Power Generation, also known as Distributed Generation – and displayed photos of several facilities in San José – Agnews State Hospital Utility Facility existing on a one-acre site, and San José State University Co-Generation Facility and O’Connor Hospital Backup Diesel-Powered Generator Facility, which are examples of distributed generation or private power generation. He discussed key siting criteria for both private power generation and utility facilities and their appropriate General Plan designations and Zonings, and exhibited aerial photos of the industrial areas – Northern, Central, and Southern, and major publicly owned land – and their appropriate power facilities. He reviewed the four key environmental issues associated with power facilities – local and regional air quality, hazardous materials, water use and quality, and noise – and their connection to the siting criteria. He stated the potential impacts might trigger permits or requirements from other agencies, thereby requiring all distributed generation facilities would need the Bay Area Quality Management District permits in accordance with current regulations. With regards to the Key Siting Criteria and the proximity to transmission lines, substations, fuel sources, and recycled water, Mayor Gonzales expressed concern that the criteria should be balanced so the City’s long-term objective of creating greater self-sufficiency is primary, not the cost to an energy generator to supply portions of the infrastructure. He stated the City’s primary concern is the impact those changes would have on neighborhoods and other areas. Derryberry stated the existing permitting process in the Zoning Ordinance, which is based on the General Plan, requires Conditional Use Permits for both the Utility Facilities and the Distributed Generation. Depending on the size and area of impact, he stated community outreach and noticing would occur within 500 to 1000 feet and proper noticing would be completed for the public hearing before the Planning Commission on a Conditional Use Permit. In discussing the factors that directly affect permitting timelines for Conditional Use Permits, he stated BAAQMD exemption threshold must be considered, in addition to fuel types, enclosed within a building versus open, completeness of project application and environmental documentation, and public involvement. He stated the Department of Planning, given the importance of getting new energy facilities on line quickly, is committed to giving Special Handling status to applications; in addition, Staff is exploring other process modifications to reduce processing times, and is preparing a brochure explaining the existing permitting process for energy facilities, which will be useful as an outreach tool to potential developers. With regard to citing power plants, James R. Derryberry stated the environmental impact process would identify the location of backup generators. He stated the Zoning Code contains criterion for sizes of fuel tanks, and if 1,000 gallons or greater, would require a permit; however, BAAQMD would ascertain air emissions in the proposed vicinity and convey the same to the City, through established procedures. Mayor Gonzales stated the Administration should be working to identify supporting legislation for the level of activity throughout the Bay Area. In response to Council’s inquiry regarding the Staff decision on the Metcalf Power Plant and what has changed in the Staff research since November 2000, James Derryberry stated for the record that the decision was not the independent judgment of City Staff. He stated the decision was based on information made available by the California Energy Commission that substantial generating capacity was in process to be approved and built. He stated Staff’s decision was based on CEC’s projections, and Staff reported that statement. Noting his concerns that the generation and consumption of power remain in the City of San José, Mayor Gonzales stated the City’s ultimate objective is to have a City and a region that is more self-sufficient. In terms of being energy self sufficient or more self-sufficient on a regional approach, Council Member Reed stated the City must develop a basic graphic presentation. He requested Staff provide Council with a single-sheet graphic, a map showing what needs to be done in order to become energy sufficient, including projects in progress; the final staff analysis for the Metcalf Center had 13 local infrastructure items that were either in the approval process or proposed; identify projects that should be added, not just generation capacity but transmission and distributive capacity. He asked Staff to provide Council with a document that identifies what is occurring with the City, in what direction is the City going, and what is necessary to accomplish the goal toward energy self-sufficiency, and to include the entire Bay Area. He stated Moss Landing is part of the City’s power grid, therefore, it should be shown; and if it’s Northern California that needs to be energy sufficient, because ample power is unavailable through the transmission lines from the South, Staff should create a Northern California map and make it available to the public. Council Member Williams expressed support for a hybrid system that would allow the City to take advantage of the natural sources of energy, independent of fossil burning fuel or generators, which would reduce pollution, and provide clean energy at efficient rates. He stated the Distributive System is an excellent concept because it permits everyone to share in the responsibility of delivering energy; however, to take full advantage of the system, the implementation phase must be well planned. With respect to the “cumulative affect” and the use of small generators, whether diesel or turbine, and their proximity to each other, Council Member Chavez requested that Staff provide Council with a definition of “cumulative effect” as it relates to siting, and an implementation strategy. In response to Council Member Chavez question regarding the political climate that would foster San José’s involvement in power generation and whether it would be a good investment, Carl Weinberg stated the City should consider techniques for cutting “peak” – is it distributed generation, energy efficiency, solar photovoltaic – and consider what should be done for residential versus commercial customers, if peak is cut; small-scale generating technologies ought to combine heat and power, if possible, and utilize cogeneration to the extent possible; the City must establish limits for what equipment can produce, and must use energy efficiently and wisely. He stated the City should take all peaks out of the system and buy from the center of the system, including big power plants and base load users. In order to determine what can be done, he stated the City must review the “demand” side and the issue of self-sufficiency, which consists of the amount of power allowed the municipality. He explained the parameters of the City’s usage and what would happen under the Federal Energy Regulatory Commission (FERK), or under State jurisdiction, without rights to use distribution lines beyond the jurisdiction of the local utility. He stated the City of San José should have the right to send electricity from one City facility to another City facility without having to get involved in Federal and State jurisdictional issues; currently, the City of San José does not have the right to do that; it involves rules that govern how the City can get energy from Point A to Point B and then to reduce the peaks in those locations. The following individuals addressed Council on energy matters: Jay James, representing IBEW Local Union 332; Ross Signorino; Ken Miller, representing Energy Compliance System; Steve Spanjer, representing Kyocera; Kari Smith, representing Powerlight Corp; and Ken Abreu, representing Calpine/Bechtel, asked Council to reconsider its vote on the Metcalf Power Plant. With respect to incentives as mechanisms to encourage companies to change from diesel to gas or the use of other fuels, Council Member LeZotte requested the Administration to be proactive in finding those facilities, without the use of incentives. She suggested the development of a policy or language in an existing policy that diesel generators should not be used on “spare-the-air days”. She stated the City should make a strong policy statement about when, where, and under what circumstances backup generators are used. With respect to reducing the percentage of energy consumption in an effort to reach the newly established consumption goal, Council Members discussed various options for Staff to explore, including a shorter work week for City operations; utilization of the same strategy employed in the water rationing program during the drought; use of lighter colored materials in street resurfacing and pavement projects; available rebates for eligible customers; integrating into school curriculum smart energy activities; the use of web-base instruction to broadly disseminate information to the public; engage the City’s Housing Department expertise and participation in applicable aspects of the Program; petitioning the CEC for an increase in the total amount available for rebates and increases in the amount per rebate program; make available to Council Offices a “one-page fact sheet” instructing San José residents on how to achieve 10% energy reduction; electronically mail to Council Members a list of the energy-related websites in the City of San José which can be used in databases for disseminating information to constituents; as an opportunity, Staff should ascertain the cost effectiveness, and efficiency of the various smaller systems compared to the larger systems for use by industrial, residential and commercial customers; to add a column to the “Commercial Status of DG/DER” chart for larger facilities for comparison purposes. Council directed the Administration to prepare a Request for Qualifications for energy generation opportunities on appropriate City-owned properties; to provide Council with a listing of Senate or Assembly Bills that have been introduced in the Legislature that would assist customers in saving money and becoming better consumers of energy services; and to provide Council with the following information prior to the Smart Energy Summit: The cumulative affect on multiple smaller power sources; the cost of power that will be used in various types of power plants, in conjunction with the cost of the facility; sites that have been identified within San José geographic boundaries that might be appropriate for larger power plants. Upon motion by Vice Mayor Shirakawa, Jr., seconded by Council Member Reed and unanimously carried, the recommendations contained in the March 1, 2001 memorandum from Mayor Gonzales and Council Members Reed, LeZotte, Cortesé, and Yeager to (a) approve the San José Smart Energy Plan as outlined by Mayor Gonzales; (b) direct the City Manager to implement a conservation strategy to achieve energy savings of at least ten percent for City facilities and operations in response to the San José Smart Energy Plan; (c) authorize the City Manager to develop a Request for Qualifications for energy generation opportunities on appropriate City-owned properties; and (d) direct the City Manager to review City procedures to establish criteria for clean generation plants and streamline and expedite permit applications for those new facilities in appropriate industrial locations, within the City’s approval authority, was approved with Staff directed to report back to Council with a list of tasks identified during today’s meeting and estimated timelines and resources required to fully respond to the various requests for information. Vote: 9-0-1-0-1. Absent: Diquisto. Vacant: District 5.
ADJOURNMENT
The Council of the City of San José adjourned at 11:55 a.m.
RON GONZALES, MAYOR
ATTEST:
PATRICIA L. O’HEARN, CITY CLERK