Climate Challenge Participation AccordDOE's Energy Partnerships for a Strong Economy
March 24, 1995
The Honorable Hazel R. O'Leary Dear Secretary O'Leary: I am pleased to report that the City of Palo Alto Utilities has accepted the Climate Challenge and has already taken several actions to reduce greenhouse gas emissions. In my December 9, 1993 letter to you, I conveyed that we are committed to stabilizing our greenhouse gas emissions at 1990 levels by the year 2000. Even in the face of dramatic changes in the California electric utility industry, we are still striving to attain this goal. We have already taken several actions toward this end, but are concerned that the recent initiative to sell the Power Marketing Authorities threatens our commitment. Over the past year, we initiated several demand- side management programs that have led to more efficient energy use. These programs include: * Incentive programs that resulted in improved efficiency of heating, ventilating, and air conditioning (HVAC) equipment at commercial and industrial customer sites, * Incentive programs that spurred the purchase of highly efficient refrigerators and compact fluorescent lights by residential customers, and * A streetlight conversion project that improved the efficiency of the City's streetlights. We have carried out several other activities as well. We spearheaded an initiative to improve the energy conversion efficiency of a generator at Shasta Dam. We have a methane recovery facility in place that captures methane leaking from a landfill in Palo Alto and uses it to generate electricity. We have an ongoing voltage optimization program whereby we are upgrading our electric distribution system so that fewer line losses are incurred. We are in the process ofconverting a fleet of 100 City vehicles to natural gas and already use three electric vehicles for parking enforcement. Furthermore, our investments in research and development help to ensure that greenhouse gas reductions will continue. From the above activities, it should be clear that we are actively making an effort to control our greenhouse gas emissions through measures that make both environmental and economic sense. The future for Palo Alto efforts, however, is uncertain. As you know, the California electric utility industry is in the process of going through a dramatic change to a more competitive environment. In this environment, the City's priorities are being shifted to customer retention. Coupled with this uncertainty, we face the specter of losing access to our major source of electricity supply -- the Western Area Power Administration (Western). We currently serve roughly 80% of our load with electricity purchased from Western. Should Western be sold to private interests, the City of Palo Alto Utilities Department will be forced to dramatically change the way it does business. For example, we are currently looking at additional DSM and renewable resources such as wind and solar in our current integrated resource plan. However, competition has already forced us to increase the importance of rate impacts and decrease the importance of environmental externalities in determining what resources will be selected. This shift in priorities makes it difficult for DSM and renewables to compete, thereby making it difficult for us to take an aggressive stance in following through with our commitment to greenhouse gas emission stabilization. However, the DOE has an opportunity to help us follow through with our commitment by using Western as a tool to encourage DSM and renewables. While the sale of Western would generate revenues for the federal government in the short-run, we maintain that the federal government would gain more value by not selling it. Instead, Western's marketing strategy could be redirected so that Western could be used to further encourage greenhouse gas reduction. We are pleased with the voluntary greenhouse gas reduction efforts we have taken to date. We have accepted the President's Climate Challenge and believe that we can meet our commitment to stabilizing greenhouse gas emissions at 1990 levels by the year 2000. However, given the threat of competition coupled with the potential of losing Western, our greenhouse gas reduction commitments will have to take a lower priority. On the supply-side, our efforts will be consumed with finding new sources of low cost electricity. On the demand-side, our efforts will be consumed by customer retention efforts. By helping to prevent the sale of Western you could help us maintain a strong commitment to greenhouse gas reductions that make environmental and economic sense. I hope that you share our vision and will help us maintain this commitment. Sincerely,
(original signed by) EJM:vh
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