After years of skepticism, Palo Alto officials embraced this week a shift toward "smart grid" technology when they adopted a roadmap for installing smart meters throughout the city by 2023.

By an 8-0 vote, with Councilman Adrian Fine absent, the City Council swiftly approved on Monday night a strategic plan that will help Palo Alto boldly go where most utilities had already gone. About 80 percent of investor-owned utilities, including PG&E, use smart grid technology for electricity, said Shiva Swaminathan, senior resource planner at city of Palo Alto Utilities. So do about 50 percent of publicly owned utilities, he said.

Palo Alto has flirted with smart meters before, most recently in 2012, when the council stopped short of moving ahead with full-scale adaptation of the technology, opting instead for a wait-and-see approach in the hopes that costs will drop. In the meantime, the city launched a pilot program for 300 homes to test the new technology.

The program showed plenty of promise, both for the department and for the participating customers. Over the roughly four-year period, the system detected water leaks in 30 percent of the homes. The city had also implemented a "time of use" program for electric-vehicle charging, with rates fluctuating based on whether the charging is occurring during a high- or low-demand period. There are currently about 300 customers on the waiting list for that pilot program, Swaminathan said, underscoring strong local demand.

"We gained a lot of operational experience through the pilot program," Swaminathan. "So staff is knowledgeable and able to implement it full-scale."

On Oct. 16, Swaminathan joined other utility officials in making the case for moving ahead with the new plan for smart grid adoption in front of the council's Finance Committee. Swaminathan noted that the costs for smart-grid technology hadn't come down too much since 2012. However, the impetus to have such a system in place has "increased considerably."

"Electric distribution systems are transitioning away from their original purpose of delivering energy from the utility to the customer," said Swaminathan, who has been heading the city's exploration effort. "The new distribution system is evolving into a complex network that will allow integration."

Jon Abendschein, senior resource planner at utilities, pointed to the increasing prevalence in Palo Alto of electric vehicles, solar panels and energy-storage systems. He called smart meters "a critical foundation to be able to take advantage of some of those benefits and to avoid some of those cost impacts."

"As levels of penetration of those resources increase, we're going to see both potential opportunities to use those opportunities to decrease costs through the use of AMI (advanced metering infrastructure)," Abendschein told the Finance Committee in October.

The case for a local smart grid was buttressed by the new Smart Grid Assessment and Utilities Technology Implementation Plan, an independent analysis that made a financial case for the new smart grid system. The consultant, UtiliWorks Consulting LLC, estimated that the $19-million project would likely break even over the 18-year life of the investment. And while the costs of operating the new system would be around $1.9 million annually, this would be more than offset by the roughly $3.3 million that Palo Alto Utilities is expected to save in conservation and reduced staffing.

If the system is adopted, the city would eliminate nine existing meter-reader positions, said Dean Batchelor, chief operating officer at Palo Alto Utilities. Utilities management has already spoken with the meter-reading group about the potential shift to smart meters, Batchelor told the Finance Committee on Oct. 16. He noted that the employees would have another opportunity to get training and move into other open positions in Utilities.

The savings from the reduced staffing costs are just one of the benefits that Swaminathan and Abendschein had identified. The new system would reduce the costs of field checks, improve reading accuracy, reduce water leaks, spur conservation by giving customers more data about their energy use and reduce complaints over high bills. Swaminathan said that in one case, a customer who was out of town detected a water leak through the smart meter. The discovery, which prompted the city to repair, saved the customer about $100 on the water bill, Swanimathan said.

The effort, however, is not without risks. According to the report, factors that can complicate the city's adoption of smart-grid technology include competition from other infrastructure projects; poor staff engagement and management; ill-defined contracts that lead to improper levels of configuration or missed integrations; and lack of council-approved policies and protocols to "effectively respond in a new technology environment," which includes the risk of cyber-attacks.

Because Palo Alto is such a late adopter of smart-grid technology, the city can take many lessons from other communities that have adopted such technology over the past decade, said Judith Schwartz, a member of the city's Utilities Advisory Commission and president of To the Point, a consulting firm that focuses on smart-grid technology. At the Oct. 16 meeting, Schwartz urged the council to carefully consider the different needs of its customers so that it can use different tools to shift their behavior.

One of the benefits of adopting advanced metering infrastructure, Schwartz said, is "the variability you're allowed to give to different people in the community." She urged the council to seriously consider the city's needs and objectives before moving ahead with a new system.

"We can do it as a giant mess or we can have people be really happy," Schwartz told the Finance Committee. "Unless we have an open opportunity to really talk to the City Council about what works and what doesn't work, you can very easily give direction to staff that could be really problematic."

Palo Alto's march toward a new smart-grid system is occurring at the same time as the city is preparing to switch to a new ERP (enterprise resource planning) system and to adopt a new customer-billing system. The city plans to move ahead with contracts for the latter two systems next year and to implement them shortly thereafter. Swaminathan said staff expects to bring forward the contracts for the new smart grid system in 2020 and then gradually adopt them over the next three years, with the goal of completing the rollout in 2023.