Palo Alto staff propose phased grid modernization to match electrification; cost estimates range into the hundreds of millions

City staff provided a midyear update on electric grid modernization, describing technical priorities, tentative schedules and high-level cost estimates. Terry Crowley, the city's chief operating officer, said the program's objectives are to replace aging distribution equipment while increasing capacity to meet electrification-driven demand (EV chargers, heat pumps).

Staff described a completed pilot that increased capacity for roughly 900 homes at a cost in the order of $10 million, and presented high-level estimates that distribution upgrades for electrification could amount to roughly $240'$250 million, with total grid-mod investments (including substations and sub-transmission reconductoring) potentially exceeding $300 million and, by some aggregations, up toward $500 million over time. Staff recommended prioritizing sub-transmission reconductoring and certain substation upgrades (Colorado, Adobe Creek, Hopkins, East Meadow) and spreading distribution rebuilds out to reduce risk of stranded assets if customer electrification ramps more slowly than earlier projections.

Commissioners focused on policy tools to manage peak demand and equitable cost allocation: staff described plug-sharing and managed EV charging, time-of-use pricing and potential residential demand/capacity charges as options to reduce peak-driven capital needs. Commissioners also requested AMI-driven diagnostics and benchmarking, standardized transformer strategies and a clearer integration plan with SCAP climate goals. Staff said transformer lead times are long (four to five years), which affects procurement and schedule planning.