In a move that city leaders say will make the city's municipal utilities more efficient and resilient, the Palo Alto City Council voted to approve $18.1 million in contracts on Monday to convert all electricity, gas and water customers to smart meters.
The 6-1 vote, with council member Greg Tanaka dissenting, followed about eight years of exploration of what is known as "advanced metering infrastructure" — a system that includes five base stations, 10 radios and about 74,000 new or upgraded meters for utility customers. The city plans to start installing the meters gradually between next year and 2024.
To facilitate the switch, the council approved a $16.8 million contract with Sensus USA, the company that will be installing the new equipment and a $1.3 million contract with E Source, which will provide consulting services relating to project management and system integration for four years. The project will also entail a shakeup in the Utilities Department, as the city will no longer require meter readers. Instead, staff is suggesting creating three new positions, an AMI manager, a systems technician and a data analyst.
Many current staff members will get new responsibilities. Shiva Swaminathan, senior resource planner at Utilities Department, said between 50 and 60 individuals will be involved with the smart meters project.
"It's a large, all-encompassing project," Swaminathan told the council.
In making the case for the new system, staff suggested that smart meters will improve the customer experience by providing residents with more information about electricity usage and alerting them — and the city — about water and gas leaks. For the council, however, the biggest selling point was the flexibility it will give to the city when it comes to setting electric rates. As the council tries to encourage more customers to convert to electric vehicles, solar panels and energy storage systems to meet the city's carbon reduction goals, the system will allow utilities to raise and lower rates based on demand at any given time. As such, it will provide an incentive for customers to use electric appliances such as washers and dryers in off-peak times.
"AMI is what's going to enable us to do time-of-use rates, which will enable us to use solar at the right times, and other sources of energy when we need it," council member Alison Cormack said. "Which will mean we'll be able to reduce our greenhouse gases."
Mayor Tom DuBois agreed and suggested that the new system will allow the city to run its utilities more efficiently.
"We're definitely not leading on this," DuBois said. "There are other utilities that have moved ahead with smart meters so it's no longer really a novel thing."
The project is nearly a decade in the making. Palo Alto began exploring smart meters in 2012, putting together a pilot program for about 300 customers that stretched between 2013 and 2017. The following year, the council endorsed the new technology and directed staff to move ahead with plans for a citywide system. Staff estimates that the system ultimately cost about $20.9 million, though it is not expected to raise costs for customers.
Tanaka, who voted against the contracts, suggested that's not good enough. With meter readers no longer required, the system should be saving money rather than simply allowing the city to break even, he said.
"I would've thought that should actually net some benefit, some cost savings for utility customers," Tanaka said. "But basically, we're soaking it all up in staff costs, which is just hard for me to stomach."
His colleagues, however, overwhelmingly supported the staff proposal, with council member Greer Stone suggesting that the smart meters will help Palo Alto reach its ambitious goal of slashing carbon emissions by 80% by 2030, with 1990 as the baseline. Vice Mayor Pat Burt said the system will also include various functions that don't translate as easily into costs and revenues but that are nevertheless valuable. This includes enhancing the city's ability to quickly restore power during outages, detect water leaks and make utilities more reliable.
"I think that it's important for us to recognize that we're anticipating … a whole series of benefits that are extremely valuable," Burt said.