HomeMy WebLinkAbout2022-03-02 Utilities Advisory Commission Agenda PacketMATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the
City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
UTILITIES ADVISORY COMMISSION – SPECIAL MEETING
MARCH 2, 2022 – 6:00 PM
Council Chambers/ZOOM Webinar
NOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
Supporting materials are available online at https://www.cityofpaloalto.org/gov/boards/uac/default.asp on Thursday, 5 days
preceding the meeting.
Pursuant to AB 361 Palo Alto City Council meetings will be held as “hybrid” meetings with
the option to attend by teleconference/video conference or in person. To maximize public
safety while still maintaining transparency and public access, members of the public can
choose to participate from home or attend in person. Information on how the public may
observe and participate in the meeting is located at the end of the agenda.
HOW TO PARTICIPATE
VIRTUAL PARTICIPATION
CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/96691297246)
Meeting ID: 966 9129 7246 Phone:1(669)900-6833
The meeting will be broadcast on Cable TV Channel 26, live on YouTube at
https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center at
https://midpenmedia.org.
IN PERSON PARTICIPATION REQUIREMENT:
• Provide Proof of Vaccination or negative COVID-19 test (taken within 48 hours)
and a photo ID
• Wear a mask at all times
• Maintain social distancing
• If you cannot or do not wish to comply, you can still participate virtually
PUBLIC COMMENTS
Public Comments will be accepted both in person and via Zoom meeting. All requests to
speak will be taken until 5 minutes after the staff’s presentation. Written public comments
can be submitted in advance to UACPublicMeetings@CityofPaloAlto.org and will be provided to
the Commission and available for inspection on the City ’s website. Please clearly indicate
which agenda item you are referencing in your email subject line.
HEARINGS REQUIRED BY LAW
Applicants and/or appellants may have up to ten minutes at the outset of the public
discussion to make their remarks and up to three minutes for concluding remarks after
other members of the public have spoken.
Chairman: Lisa Forssell Vice Chair: Lauren Segal Commissioners: John Bowie, A.C. Johnston, Phil Metz, Greg Scharff, and Loren Smith Council Liaison: Alison Cormack
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the
City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
I. ROLL CALL 6:00 pm – 6:05 pm
II. AGENDA REVIEW AND REVISIONS 6:05 pm – 6:10 pm
III. ORAL COMMUNICATIONS 6:10 pm – 6:25 pm
Members of the public are invited to address the Commission on any subject not on the agenda. A reasonable time
restriction may be imposed at the discretion of the Chair. State law generally precludes the UAC from discussing or acting
upon any topic initially presented during oral communication.
IV. APPROVAL OF THE MINUTES 6:25 pm – 6:30 pm
1. Approval of Draft UAC Meeting Minutes of February 02 and 08, 2022
V. UNFINISHED BUSINESS
VI. UTILITIES DIRECTOR REPORT 6:30 pm – 6:45 pm
VII. NEW BUSINESS
2. Adoption of a Resolution Authorizing Use of Teleconferencing for Utilities A dvisory
Commission Meetings During Covid-19 State of Emergency (6:45 pm – 6:50 pm)
3. Discussion and Update on Palo Alto Fiber Community Engagement (6:50 pm – 7:10 pm)
4. Discussion and Update on REC Exchange Program Results for 2021 and Projections for
2022-2027 (7:10 pm – 7:30 pm)
5. Staff Recommends the Utilities Advisory Commission Recommend the City Council Adopt
Two Resolutions: 1) Approving an Amendment to the Amended and Restated Water
Supply Agreement Between the City and County of San Francisco and Wholesale
Customers in Alameda County, San Mateo County, and Santa Clara County, and
Authorizing the City Manager to Execute the Amended Agreement; and 2) Approving a
Minimum Purchase Transfer From the City of Mountain View to the City of East Palo Alto
(7:30 pm – 8:00 pm)
6. Staff Recommendation That the Utilities Advisory Commission Recommend the City
Council Adopt a Resolution Approving the Fiscal Year 2023 Water Utility Financial Plan,
Including Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W-1
(General Residential Water Service), W-2 (Water Service From Fire Hydrants), W-3 (Fire
Service Connections), W-4 (Residential Master-Metered and General Non-Residential
Water Service), and W-7 (Non-Residential Irrigation Water Service) (8:00 pm – 8:30 pm)
7. Staff Recommendation That the Utilities Advisory Commission Recommend the Ci ty
Council Adopt a Resolution Approving the FY 2023 Wastewater Collection Utility Financial
Plan Including Reserve Transfers and Increasing Wastewater Rates by Amending Rate
Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial
Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and
Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial
Discharger) (8:30 pm – 9:00 pm)
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the
City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
8. Staff Recommendation That the Utilities Advisory Commission Recommend the City
Council Adopt a Resolution Approving the Fiscal Year 2023 Gas Utility Financial Plan,
Including Proposed Transfers, and Increasing Gas Rates by Amending Rate Schedules G-1
(Residential Gas Service), G-2 (Residential Master-Metered and Commercial Gas Service),
G-3 (Large Commercial Gas Service), and G-10 (Compressed Natural Gas Service) (9:00 pm
– 9:30 pm)
9. Staff Recommendation That the Utilities Advisory Commission Recommend the City
Council Adopt a Resolution Approving the Fiscal Year 2023 Electric Financial Plan and
Reserve Transfers, Amending the Electric Utility Reserve Management Practices, and
Amending Rate Schedules E-1 (Residential Electric Service), E-2 (Residential Master-
Metered and Small Non-Residential Electric Service), E-2-G (Residential Master-Metered
and Small Non-Residential Green Power Electric Service), E-4 (Medium Non-Residential
Electric Service), E-4-G (Medium Non-Residential Green Power Electric Service), E-4 TOU
(Medium Non-Residential Time of Use Electric Service), E 7 (Large Non-Residential Electric
Service), E-7-G (Large Non-Residential Green Power Electric Service), E-7 TOU (Large Non-
Residential Time of Use Electric Service), E-14 (Street Lights), E-NSE (Net Metering Net
Surplus Electricity Compensation), and E-EEC (Export Electricity Compensation) (9:30 pm –
10:00 pm)
VIII. COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
IX. FUTURE TOPICS FOR UPCOMING MEETING April 06, 2022
SUPPLEMENTAL INFORMATION - The materials below are provided for informational purposes, not for
action or discussion during UAC Meetings (Govt. Code Section 54954.2(a)(3)).
Informational Reports 12-Month Rolling Calendar Public Letter(s) to the UAC
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE COMMISSION AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE UTILITIES DEPARTMENT AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the
City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
PUBLIC COMMENT INSTRUCTIONS
Members of the Public may provide public comments to teleconference meetings via email,
teleconference, or by phone.
1. Written public comments may be submitted by email to
UACPublicMeetings@CityofPaloAlto.org.
2. Spoken public comments using a computer will be accepted through the
teleconference meeting. To address the Commission, click on the link below for the
appropriate meeting to access a Zoom-based meeting. Please read the following
instructions carefully.
• You may download the Zoom client or connect to the meeting in-browser. If
using your browser, make sure you are using a current, up -to-date browser:
Chrome 30+, Firefox 27+, Microsoft Edge 12+, Safari 7+. Certain functionality
may be disabled in older browsers including Internet Explorer.
• You will be asked to enter an email address and name. We request that you
identify yourself by name as this will be visible online and will be used to notify
you that it is your turn to speak.
• When you wish to speak on an agenda item, click on “raise hand.” The Attendant
will activate and unmute speakers in turn. Speakers will be notified shortly
before they are called to speak.
• When called, please limit your remarks to the time limit allotted.
• A timer will be shown on the computer to help keep track of your comments.
3. Spoken public comments using a smart phone use the telephone number listed below.
When you wish to speak on an agenda item hit *9 on your phone so we know that you
wish to speak. You will be asked to provide your first and last name before addressing
the Council. You will be advised how long you have to speak. When called please limit
your remarks to the agenda item and time limit allotted.
Join Zoom Webinar Here
Meeting ID: 966-9129-7246
City of Palo Alto (ID # 14073)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Approval of Draft UAC Meeting Minutes of February 02 and 08, 2022
From: Director of Utilities
Lead Department: Utilities
Recommended Motion
Staff recommends the UAC approve the draft minutes from February 02, 2022 and February 08, 2022
Attachments:
• Attachment A: February 02, 2022
• Attachment B: February 08, 2022
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Utilities Advisory Commission Minutes Approved on: Page 1 of 9
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF FEBRUARY 2, 2022 SPECIAL MEETING
CALL TO ORDER
Chair Forssell called the meeting of the Utilities Advisory Commission (UAC) to order at 5:01 p.m.
Present: Chair Forssell, Vice Chair Segal, Commissioners Bowie, Johnston, Metz, Scharff and Smith
Absent:
AGENDA REVIEW AND REVISIONS
Chair Forssell announced Item No 2 would be pulled from the agenda and rescheduled on a special meeting
to be set for a later date.
ORAL COMMUNICATIONS
Lawrence Garwin stated that the City must implement and incentivize the use of electric vehicle (EV) bi-
directional charging and demand response load shedding to eliminate fossil fuels from the electricity supply.
EV-based grid storage was the best choice to decarbonize the electricity supply. He recommended that the
Utilities Department and City Council review the Interstate Renewable Energy Council’s (IREC) paper titled
“Paving the Way Vehicle to Grid Standards for Electric Vehicles”.
APPROVAL OF THE MINUTES
Commissioner Johnston noted the following edits: on the 1st pg toward the bottom Commissioner Bowie
Was misspelled, on pg 4, 3rd paragraph “Mr. Lait shared at the suggested” should be “suggestion”.
Council Liaison Cormack noted on pg 3 the final paragraph Mr. Dullitz stated “Palo Alto is wildly known”
should be “widely”.
Commissioner Johnston moved to approve the draft minutes of the January 5, 2022 meeting as amended.
Commissioner Scharff seconded the motion.
The motion carried 7-0 with Chair Forssell, Vice Chair Segal, and Commissioners Bowie, Johnston, Metz,
Scharff, and Smith voting yes.
UNFINISHED BUSINESS
None.
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Director's Report.
Water Supply Update: The latest California Drought Monitor shows the Bay Area and neighboring counties
in severe drought (we were in “exceptional” then “extreme”). SFPUC Regional Water System storage is only
DRAFT
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Utilities Advisory Commission Minutes Approved on: Page 2 of 9
slightly below normal for this time of year, but the SFPUC is continuing to monitor precipitation and snowpack
conditions, and concerns about the state’s order curtailing diversion from the Tuolumne River are a concern
for water supply availability. The SFPUC continues to ask for a 10% systemwide water use reduction; Palo
Alto’s specific reduction request is 8%, and based on water usage patterns since July 2021, Palo Alto is on
track to meet the 8% target.
On January 4th the State Water Resources Control Board adopted drought-related emergency regulations to
reduce California’s urban water waste. Palo Alto already includes most of these water waste provisions in its
permanent water waste restrictions. Staff is preparing a recommendation for Council consideration to modify
Palo Alto’s Water Shortage Contingency Plan to incorporate three new Stage I drought actions as required by
the emergency regulations: no irrigation within 48 hours of a measurable rain, no washing of hardscapes with
potable water except for health and safety and no irrigation of ornamental turf on publicly owned and
maintained street medians. Staff will update the website and other customer outreach collateral to reflect
the first two restrictions. Staff is working interdepartmentally to address a few medians in Palo Alto that have
turf.
Hydroelectric Update: The 2021-2022 water year started off strong with large volumes of rain and snow.
January, however, has been dry, and a lot more precipitation is needed to recover from the past several years
of drought. Palo Alto’s hydroelectric projections for FY 2022 remain fairly low. Combined, these resources
are projected to produce around 310 GWh this fiscal year, which is about 38% of our total load and about
35% below the long-term average level of hydro output. This is a slightly worse forecast than was described
to the UAC last month.
Planned Power Outage this Weekend: On Saturday, February 5, Utilities will be performing maintenance on
power lines around the area of the Crescent Park, Duveneck and St Francis neighborhoods. Operations staff
will be repairing electric lines that have been damaged by weather and natural causes over time. The
maintenance work on the electric distribution lines will require power to be shut off from around 8:00 a.m.
until around noon on Saturday. This scheduled power shut off is necessary to protect the safety of utilities
employees working on the power lines and for electric customers in the area. We are notifying customers
directly.
The power outage will affect approximately 700 electric customers in the areas of Edgewood Drive, south to
Hopkins Avenue & Southwood Drive, and east to Greer Road. This includes Duveneck Elementary School,
some facilities at Walter Hays School, one of the City’s power substations and Fire Station 3. The City will
maintain critical emergency response staff and abilities during the planned power outage.
Safety is our top priority and we work hard to maintain and ensure the integrity and reliability of our
infrastructure. We apologize for any inconvenience this power shut off may cause customers and thank all in
advance for understanding and patience. If there are questions or concerns about this planned power outage,
you may contact us at plannedpowershutdown@cityofpaloalto.org or (650) 496-6992.
SFPUC Blend Change: In early January, the SFPUC changed the water blend coming through the San Francisco
Regional Water System to accommodate maintenance work on the system. Water that is normally supplied
from Hetch Hetchy to customers along the Peninsula will come from local reservoirs through early March.
Some customers may notice a slight change in color, taste, or hardness in the water due to this blend change.
These water quality parameters can vary between water sources based on factors like type of rock, soil,
plants, organic and inorganic matter that is in or around a body of water or distribution system. Your water
is absolutely safe to drink, cook, and bathe with. SFPUC regularly collects and tests water samples from
reservoirs and designated sampling points throughout the water system to ensure the water delivered to you
meets or exceeds federal and State drinking water standards. Current water quality info, including a copy of
our annual water quality report, is posted on our website at cityofpaloalto.org/water.
2022 Bay Area SunShares solar and storage group-buy program
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Utilities Advisory Commission Minutes Approved on: Page 3 of 9
The 2021 Bay Area SunShares solar and battery storage group-buy-discount program administered by
Building Council for Climate Change ended on January 14, 2022. SunShares had a record-setting year with
the most residents served and most solar capacity contracted in the program’s six-year history. Palo Alto
ranked in first place among outreach partners for the number of SunShares signups (154 signups), number
of contracts signed (32 contracts), number of kilowatts (kW) of solar capacity (178.92 kW), and number of
kilowatt-hours (kWh) of storage capacity (211 kWh) that will be installed in Palo Alto through the program.
CPAU utilized SunShares as a launch-point from which to inform customers about programs such as the Home
Efficiency Genie and heat pump water heater rebates. Eight participants continued with the Home Efficiency
Genie’s in- home assessments and one participant applied for a Heat Pump Water Heater rebate. Staff will
continue to engage SunShares participants in coming weeks to increase uptake of CPAU programs.
Clean Fuel Rewards Program
Since the launch of the California Clean Fuel Rewards program in November 2020, Palo Alto residents have
earned 1,034 rebates valued at $1.4M. This translates to 4.1% of Palo Alto households that have purchased
an EV as part of this program, compared to 1.4% of customers in PG&E territory and 2.5% of Silicon Valley
Power customers. To date, Palo Alto has contributed $894,000 towards this state program and in February
2022, the City will make an additional annual contribution of ~$400,000. In November 2021, due to higher
than expected participation levels statewide, rebates were reduced from $1,500 to $750. To date, the most
popular battery EVs (BEVs) continue to be the Tesla Model Y and Model 3 and the most popular plug-in hybrid
continues to be the Toyota Prius Prime.
EV Education
We have launched the first of a series of EV education and outreach events for 2022. On Thursday January
27, our partner Acterra hosted a class on New EV Models and Insider Tips for the EV Buyer. There is definitely
a big appetite for classes like this as there were over 250 registrations for the class and 143 attendees. The
good news is, we have plans to host 25 more online and hopefully in-person events and classes throughout
the year, including the City’s first eBike workshop, a series of EV 101 classes, EV expos with new models,
EV102 classes for new EV owners, EV financial workshops including one-on-one case management for income
qualified customers and EV expos in neighborhoods – like fireside chats but in front yards with friends and
neighbors and an EV expert accompanied by their EV. Of course some of this will be dependent on COVID,
but our plan is to offer a variety of EV awareness events throughout 2022 combined with an aggressive EV
marketing campaign with our Communications team.
In answer to Chair Forssell’s inquiry regarding additional drought regulations and implementation of the
hydro rate adjuster, Batchelor confirmed that the additional drought restrictions are new restrictions.
Regarding the hydro rate adjuster, Batchelor answered that it will take 2-weeks for the hydro rate adjuster
to come online after Council adoption. In reply to Chair Forssell’s query regarding the power outages and the
neighborhood school, Batchelor concurred that the school, the library, and the fire station have been notified
of the scheduled power outage.
Batchelor apologized for having to remove Item No 2 from the agenda. The agenda title for the item was very
broad and did not disclose the topic was about fiber. Staff will be hosting workshops on fiber on February
24, 2022, and February 28, 2022.
Council Member Cormack recommended that staff communicate with the emergency service volunteers
regarding upcoming power outages.
Lawrence Garwin mentioned that there is no notification on the Palo Alto Utility’s website about the
upcoming power outage. Catherine Elvert, Manager of Utilities Communications, explained that customers
who will be impacted by the outage have been directly notified. The information is not posted on the website
due to cybersecurity concerns.
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Utilities Advisory Commission Minutes Approved on: Page 4 of 9
NEW BUSINESS
ITEM 1: ACTION: Adoption of a Resolution Authorizing the use of Teleconference for Utilities Advisory
Commission Meetings During Covid-19 State of Emergency
Commissioner Smith asked when the UAC meetings would return to a later start time.
In reply to Commissioner Smith’s inquiry regarding the start time for virtual meetings, Chair Forssell recalled
that the UAC voted that virtual meetings would begin at 5:00 p.m. and in-person meetings would begin at
6:00 p.m. Dean Batchelor, Director of Utilities, confirmed that was his recollection as well.
ACTION: Commissioner Scharff moved Staff recommendation that the Utilities Advisory Commission (UAC)
Adopt a Resolution (Attachment A) authorizing the use of teleconferencing under Government Code Section
54953(e) for meetings of the Utilities Advisory Commission (UAC) and its committees due to the Covid-19
declared state of emergency.
Seconded by Commissioner Smith.
Motion carries 7-0 with Chair Forssell, Vice Chair Segal and Commissioners Bowie, Johnston, Metz, Scharff
and Smith voting yes.
ITEM 2: DISCUSSION: Discussion of the Fiber Network Expansion Project by the Vendor, Magellan Advisors.
This item was removed and will be heard at a special meeting to be set for a later date.
ACTION: None
ITEM 3: DISCUSSION: Discussion and Presentation on the Electric Distribution Infrastructure Modernization
for S/CAP
Lawrence Garwin commented that having smart meters and/or sensors along the line was important to
understand the current flow. This would facilitate better capacity for transformers and distribution lines and
still be able to pick up unpredictable inputs.
David Coale appreciated Mr. Garwin’s comments. He inquired if the Utilities Department has considered the
advantages that Rule 21 has as it applied to all interconnected devices in the State of California. Rule 21
allowed for correction of reactive power and he predicted that would solve the problem without modification
of the existing grid.
Tomm Marshall, Assistant Director of Utilities, explained that the current grid and distribution system was
built in the 1950s, 1960s, and 1970s, and it was designed for the operational needs of those times. The
existing grid was reaching the end of its useful life. It had insufficient capacity for electrification, was designed
for one-way power flow, and it limited the energy from rooftop solar, battery storage, and other local
generation. The grid must be upgraded to allow two-way power flow as well as meet capacity, voltage
regulation, and system protection requirements. Also, it must incorporate local generation sources, and
provide higher levels of reliability. Also, the City should change funding for the grid away from an energy
consumption model. The current grid could not handle a large influx of folks installing heat pumps and the
grid was maxed out on capacity for EV charging.
In answer to Chair Forssell’s question regarding how much power does a typical heat pump draw, Marshall
answered 4 to 6 kilowatts (kW) and a level two EV charger draws 14 kW.
Marshall continued the presentation and shared what options the City has available. The first option was to
allow for electrification and fix any problems as they arise. The cons for that option was that there were
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Utilities Advisory Commission Minutes Approved on: Page 5 of 9
insufficient staff to review, design and construct system upgrades. Also, it was inefficient for construction
upgrades, it was unable to support market efforts, it would result in long delays for customers, and delay the
City is reaching its climate goal. The other option was to upgrade the system in advance. This would allow for
a more creative and organized planned upgrade for the grid, allow for more staff to be hired to manage the
grid upgrades, strengthen the system to accept electrification, improve reliability, and other benefits. This
option would take roughly 3- to 4-years before promotional activities could begin and customers may
experience near-term delays with their upgrades. To modernize the system, staff proposed to prepare a
general study to determine what universal changes are needed, analyze and prioritize feeders and
substations that require upgrades, establish contracts to design and build improvements for circuits and
substations, and establish a marketing plan for electrification that was targeted towards modernized circuits.
This plan would be rolled out either by neighborhood or by circuit and the marketing plans would be included
in the rollout for each area. The engineering and operation department for the Utilities Department was very
understaffed and there needed to be a plan in place to recruit and retain more staff. Other needs for grid
modernization included a process for streamlined contracting and how to handle governance to promote
streamlining.
Commissioner Smith agreed that there was a lot of information to unpack in the presentation. In answer to
his query regarding a risk assessment for neighborhoods that were being impacted by electricity capacity
loads, Marshall answered that a risk assessment would not been conducted for individual neighborhoods. He
noted that the majority of the secondary systems and transformers are undersized City-wide for
electrification. Commissioner Smith summarized that staff has determined the shortfall based on a certain
number of EVs and loads per household. Marshall answered yes and explained that the current system was
designed for 2 kW per home. It was typical to see a 37 kW transformer serve 15 homes which were not
sufficient to handle those homes moving to electrification. In answer to Commissioner Smith’s understanding
that the risk assessment was based on the design of the current system, Marshall added that there was data
for all the transformers and how many homes were connected to each transformer. In response to
Commissioner Smith’s query regarding financial modeling for upgrades, Marshall confirmed that the first step
was to conduct a general study, then a risk assessment, and then do financial modeling. In reply to
Commissioner Smith’s request that staff explain the general study, Marshall explained that first staff must
identify what technology are available and then determine the number of system upgrades that are needed.
In answer to Commissioner Smith’s question regarding Advanced Metering Infrastructure’s (AMI) role,
Marshall confirmed it would be easier to assess if AMI was implemented because the City would know time
of use. Commissioner Smith remarked that the aging infrastructure was putting the City’s Sustainability and
Climate Action Plan (S/CAP) goals in jeopardy. Marshall concurred that the grid has to be upgraded but when
to upgrades was the question and that depended on how fast electrification rolled out. Commissioner Smith
acknowledged the Utilities Department’s concern regarding staff recruitment and felt that this problem
would require a new recruitment efforts. He noted this was his first-time hearing that the City was not
competitive with salary and compensation. Marshall agreed that the cost of living in Palo Alto outweighed
the salary levels and there was a huge demand for electrical engineers that have a focus on the power area.
In response to Commissioner Smith’s query regarding the Utilities Department having purview over
electrification, solar, battery storage, and microgrids, Marshall explained his concern was that the S/CAP was
moving forward but the City’s infrastructure problems were not being addressed.
Commissioner Scharff found the presentation very interesting and remarked that Option One did not seem
like a viable option. Marshall clarified that if the City does continue to move forward with Option One, there
will be consequences later. Commissioner Scharff agreed with Commissioner Smith that the S/CAP goals
cannot be met until the grid is modernized. He remarked that with Option One, there was no guarantee that
folks will electrify and this allowed the City not to spend funds upfront until there was interest. He supported
Option Two but wanted to understand the cost impacts. Marshall clarified that staff needed to do the studies
before they can present accurate funding figures for Option Two. Commissioner Scharff summarized that the
City may not be able to match the timeframe of what it will take to modernize the grid and identify funding
concurrently with the goals in the S/CAP. Dean Batchelor, Director of Utilities, acknowledged that costs will
remain high, but customers are ready to electrify. The Utilities Department will not be able to facilitate
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Utilities Advisory Commission Minutes Approved on: Page 6 of 9
electrification instantly unless infrastructure in individual areas can accommodate it. Commissioner Scharff
supported upgrading the system if folks are ready to move to electrification but was concerned about one
home depleting the load for other homes. In answer to his inquiry regarding state law and streamlining,
Marshall clarified that there are more internal processes than state laws that hinder streamlining. In answer
to Commissioner Scharff’s request for further clarification about setting up a separate governing structure,
Marshall explained that the Utilities Department could set up a separate division to handle solely
modernization of the grid. He noted that it is fairly common for smaller utilities to have separate boards that
are devoted to one subject.
Vice Chair Segal appreciated the discussion, questions, and comments. She remarked that moving to fund
the grid away from an energy consumption model was a large topic that many Utilities Departments will be
discussing. She suggested that staff provide more information to the UAC regarding consumption models and
agendize a discussion on it. In answer to her queries regarding rooftop solar, Marshall noted that solar does
not provide benefits when there is no battery storage combined with it. Vice Chair Segal commented that
the City needs a bridge solution as well as a long-term solution. Encouraging battery storage could be a piece
of the bridge solution to help differ one-off transformer upgrades. Marshall commented that one system
design point that must be explored was how to handle an influx in load demand after the system comes
online after an outage. Vice Chair Segal wanted to better understand how staff compensation was reflected
on customers’ bills and if the City should begin to expand what unions it negotiates with. In answer to her
question about how many transformers were in Palo Alto, Tikan Singh, Manager of Electric Engineering,
answered there are 3,000 transformers in the City. Vice Chair Segal predicted it would take several years to
establish a plan and then another 2- to 3-years to upgrade all of the transformers. Marshall emphasized that
the issue was the acceleration of electrification and the need to install additional equipment to handle
electrification. Vice Chair Segal commented that additional staff should be hired because the department is
already understaffed for everyday maintenance. Marshall clarified that the staff that the department needed
was to handle consulting contracts and to review work for the contractors. Batchelor added that three
additional engineering positions have been requested through the mid-year budget process because of the
S/CAP. He agreed that the cost of living compared to living wages was the real driver as to why recruitment
was slow.
Commissioner Metz agreed that it was essential to modernizing the grid to facilitate the advancement of the
S/CAP. He wanted to see a plan on how to address staffing constraints, what barriers can the UAC help
remove, what the high-level roadmap was for the next 10- to 15-years, and how the problem and the S/CAP
tie together. He predicted that UAC can add more value if those items are available. In answer to his request
for clarification regarding changing the funding model, Marshall explained that the rates were set up to
encourage energy conservation. That was accomplished by taking the cost of the grid and putting those
charges into cost per kW hour. One way to change the model was to charge residential customers a demand
charge. Commissioner Metz summarized that the City has to determine how to work out the financial math
as well as determine how to use the energy constructively. Jonathan Abendschein, Assistant Director of
Utilities, noted that several years ago the second iteration of Net Energy Metering addressed several issues
regarding solar making energy contribution to the grid. Other issues regarding solar storage were discussed
with the UAC during the policy objectives for the Electric Cost Service Study. Staff will be bringing more
information regarding the topic to the UAC soon.
Commissioner Johnston stated that the discussion was one of the most important discussions that the UAC
has had in a long time. He agreed that Option One would set the City up for failure and that the City should
have a plan in place. He seconded Commissioner Metz’s recommendation to see a more detailed plan. He
remarked that he was struck by the comment that folks may have to postpone their electrification efforts
because the City does not have adequate capacity. He encouraged staff and the UAC to move the discussion
forward so that the City does not come into a position where folks have to delay their projects.
Chair Forssell echoed the other Commissioner’s comments and questions. She agreed that the presentation
put into perspective what problems will arise if the City implements all of its S/CAP programs. In reply to her
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Utilities Advisory Commission Minutes Approved on: Page 7 of 9
request for clarification regarding governance, Marshall restated that when the S/CAP goals were
established, they did not strongly consider what was needed for the infrastructure to support those goals.
Chair Forssell understood that Option One was the current path that the City was on and will remain on until
changes are made. In answer to her question regarding customer’s complaining about delays, Marshall
confirmed that customers will see delays in their ability to electrify their homes but also regular services will
be delayed as well.
In response to Commissioner Bowie’s suggestion to augment Option One with combined neighborhood
projects, Marshall agreed that was an option and staff was exploring additional options on how to aggregate
folks and find demonstration projects.
Chair Forssell supported the comment to draft a road map as well as explore a neighborhood plan. She noted
that nothing is free and that the City will have to provide competitive compensation to obtain and retain
qualified staff members.
In answer to Council Member Cormack’s query regarding when the presentation will be presented to the
S/CAP working group, Marshall confirmed that it will be coming to the S/CAP working group at their next
meeting. Abendschein noted that the item will be a separate public meeting workshop as well as be
presented to the working group. Council Member Cormack shared polling data that was related to the
Business License Tax and noted that 26 percent of participants indicated that they do not think climate
change is a problem. She concurred that it is frustrating for staff and applicants that the existing
infrastructure cannot handle electrification. She mentioned that a small-scaled pilot program may be one
way to collect more data.
ACTION: None
The UAC took a break at 6:47 p.m. and resumed at 6:55 p.m.
ITEM 4: ACTION: Staff Recommends the Utilities Advisory Commission Review and Approve the Utilities
Advisory Commission’s 2021-2022 Annual Work Plan, and Recommend the City Council Review the Work
Plan and Provide Feedback
Chair Forssell announced that Vice Chair Segal and herself reorganized the Work Plan and incorporated
additional topics.
Greg Hood wanted to understand the constraints that the utility infrastructure has for electrification and how
that will be impacted by Senate Bill 9 and accessory dwelling units (ADU). Dean Batchelor, Director of Utilities,
declared that he does not have an answer to that question. Staff will have to discuss it further and then will
be able to provide a more accurate answer soon.
Batchelor explained that the Chair and Vice Chair discussed breaking down standard topics and projects in
order to be able to track what has been accomplished.
Commissioner Metz suggested under reliability and resiliency to incorporate energy preparedness and
response. Also, under Section B for Renewable Energy Credits (RECs), he suggested adding “explore replacing
RECs with actual renewable energy”.
Chair Forssell recommended that staff share the work plan on the screen and add bullet points at the bottom
of the document and then the UAC can discuss the proposed changes before incorporating them in to the
document.
Commissioner Bowie thanked the Chair and Vice Chair for breaking down the Work Plan.
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Utilities Advisory Commission Minutes Approved on: Page 8 of 9
In answer to Commissioner Smith’s query regarding if Section B and Section C becomes Section A, Chair
Forssell explained that standing items are items that are within the UAC’s Charter. Section B were topics that
were to be discussed throughout year 2022. In answer to Commissioner Smith’s inquiry regarding if
modernizing the grid was included in electric supply, Chair Forssell understood modernizing the grid was
covered under many topics within the Work Plan. Commissioner Smith supported the Work Plan and thanked
the Chair and Vice Chair for their work.
Commissioner Scharff appreciated the draft Work Plan and found it to be comprehensive. He supported
adding emergency preparedness under the resiliency and reliability section. He remarked that the suggestion
to explore replacing RECs with actual renewable energy was already covered because the City’s goal is to buy
renewable energy when needed. He requested that the maker of the suggestion explain why that should be
called out separately. Commissioner Metz explained that the City should continually reassess whether more
local renewable energy can be incorporated into the system. Commissioner Scharff supported adding to
explore replacing RECs with actual local renewable energy.
Commissioner Johnston found the list to be very comprehensive and was a good combination of specific and
general topics. He had no objections to adding Commissioner Metz’s suggested topics but felt that the UAC
would not be precluded from covering those topics under the proposed Work Plan.
Vice Chair Segal suggested changing the language to read “discuss local renewable energy” to allow for a
broader discussion. She supported adding emergency preparedness to the Work Plan but wanted to
understand what items in emergency preparedness would be under the UAC’s purview.
Chair Forssell did not support adding explore replacing RECs into the Work Plan. The UAC has held very in-
depth discussions regarding the Electric Supply Portfolio and in-state and out-of-state renewables. She felt
that RECs were covered under the electric supply topic and should not be called out as a specific topic.
Regarding emergency preparedness, she could not see what the connection was to the UAC’s work but
supported adding it if it was the will of the UAC.
Commissioner Metz agreed that local renewable generation was just one aspect of the electricity supply.
Regarding emergency preparedness, the Office of Emergency Services (OES) highlighted there must be
emergency preparedness for the Water Utility.
Batchelor understood Commissioner Metz’s thoughts regarding emergency preparedness and acknowledged
that there have been many conversations between the Utilities Department and OES. He explained that utility
crews will be focused on restoring utilities within the community if there is an emergency and that is the goal
of the department. He noted that the City’s response will be different than OES’s.
Commissioner Scharff shared that after listening to the discussion, he agreed that both of Commissioner
Metz’s items were covered within the Work Plan as proposed.
ACTION: Commissioner Scharff moved Staff Recommendation as changed that the Utilities Advisory
Commission (UAC) Review and Approve the Utilities Advisory Commission’s 2021-2022 Annual Work Plan,
and Recommend the City Council Review the Work Plan and Provide Feedback.
Seconded by Commissioner Smith.
Motion carries 7-0 with Chair Forssell and Vice Chair Segal, Commissioners Bowie, Johnston, Metz, Scharff
and Smith voting yes.
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
Commissioner Scharff reported that the conference that was to be put on by the Northern California Power
Agency (NCPA) was canceled due to Covid-19.
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FUTURE TOPICS FOR UPCOMING MEETINGS: March 02, 2022
Commissioner Scharff noted that he will be attending a speaker series called “The Potential Future for the
Diablo Canyon Nuclear Power Plant”.
In answer to Vice Chair Segal’s query regarding if the series is open to the public, Commissioner Scharff
answered that it is not open to the public but predicted he could provide invitations to the UAC.
NEXT SCHEDULED MEETING: March 02, 2022
Vice Chair Segal moved to adjourn. Commissioner Johnston seconded the motion. The motion carried 7-0
with Chair Forssell, Vice Chair Segal, and Commissioners Bowie, Johnston, Metz, Scharff, and Smith voting
yes.
Meeting adjourned at 7:26 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
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Utilities Advisory Commission Minutes Approved on: Page 1 of 5
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF FEBRUARY 8, 2022 SPECIAL MEETING
CALL TO ORDER
Chair Forssell called the meeting of the Utilities Advisory Commission (UAC) to order at 5:02 p.m.
Present: Chair Forssell, Vice Chair Segal, Commissioners Bowie, Johnston, Metz, Scharff and Smith
(arrived at 5:07 p.m.)
Absent:
AGENDA REVIEW AND REVISIONS
None.
ORAL COMMUNICATIONS
Lindsay Joye mentioned that the Zoom link on the agenda did not work. Tabatha Boatwright, Utilities
Administrative Assistant announced that the error has been corrected.
APPROVAL OF THE MINUTES
None.
UNFINISHED BUSINESS
None.
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Director's Report.
Scheduled Power Outages: 700 customers were affected by a scheduled power outage. Utility staff was able
to repair a broken cable and restore power in an hour and 15 minutes. There was a scheduled power out for
22 to 24 customers on Walnut Street and staff was able to restore power quickly after repairs were
completed.
NEW BUSINESS
ITEM 1: DISCUSSION: Discussion and Update on Palo Alto Fiber Communications and Community
Engagement
Dean Batchelor, Director of Utilities, introduced Meghan Horrigan-Taylor and Amanda de Jesus who
presented the item to the UAC.
Meghan Horrigan-Taylor, Chief Communications Manager, reported that between October 2021 and April
2022, staff has been raising community awareness for the Fiber project. Between January 2022 and May
2022, staff planned to continue to build community excitement through project milestones, impacts and
methods to inform and gain feedback. In May through June of 2022, staff will be presenting and seeking
direction from the City Council and the UAC.
DRAFT
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Utilities Advisory Commission Minutes Approved on: Page 2 of 5
Amanda de Jesus, Communications Manager, shared that the community education plan included direct
correspondence, websites and social media posts. These efforts were to ensure that the community was
aware of the conversations that were taking place around the Fiber project. Included in the fiber hub was an
interactive map that allowed folks to understand the project, provide their feedback on the project, interact
with staff, and other community engagement items. To date, the Fiber Hub had been viewed by over 4,000
and 210 residents and businesses have pinned their support on the interactive map. Regarding the fiber blog,
880 people had viewed it. The FIBERLink eBlast has been subscribed to by 552 community members and
social media posts continued to reach thousands community members.
Horrigan-Taylor mentioned that staff has seen a steady increase in email correspondences between staff and
community members about the project.
de Jesus explained that the Fiber Ambassador Toolkit shared tools and resources about ways to host
neighborhood meet-ups to discuss fiber and build neighborhood networks. Regarding frequently asked
questions (FAQ), the FAQs were located on the Fiber Hub and staff responded directly to all questions.
Horrigan-Taylor requested that the UAC provide any feedback on the FAQs that may be helpful for the public.
de Jesus continued the presentation and shared that upcoming events included the Fiber Community
Information Session on February 24, 2022, the Fiber Neighbor Meetup Week of February 28, 2022, through
March 4, 2022, and a market research survey that will be launched in mid-March 2022.
Horrigan-Taylor concluded that staff has been receiving good feedback from the community about the Fiber
Project and the effort underway.
Commissioner Smith joined the meeting.
Commissioner Smith shared that he has worked with staff and provided them feedback on the Fiber
Ambassador Toolkit. One of the five major points that was passed in the UAC motion was education and
engagement with the public. He expressed strong concern about the ambassador program and stated that
relying on ambassadors who are not sponsored by the City reduced the credibility of the ambassador program
as well as reduced the opportunity to deliver congruent messages Citywide. He expressed that the Fiber
Project is a joint effort between the City and the community. He found it unfair that the City has now pushed
the project onto the community to move the project forward through the ambassador program. He
encouraged the City to take a more ownership and leadership role in coordinating and organizing the
ambassadors. Having a more structured ambassador program was the better approach and holding monthly
managed meetings would be best. Batchelor acknowledged that the City is not at the level of community
outreach that Commissioner Smith had hoped for. The history of the project included 20-years of outreach
to the community regarding fiber and then the City not moving forward with any implementation. The project
now has the City’s full support and that dedication has proven to the community that the project is moving
forward. He stated that staff will be presenting the community engagement process to Council to allow them
weigh in on it. Then staff can take their input and address any concerns about the ambassador program.
Commissioner Smith appreciated staff’s response and appreciated the considerations. He mentioned that at
some point the City will have to ask the community to help fund the project. That most likely will occur when
Magellan has completed the design which was roughly 12-months away. He strongly encouraged staff to
begin funding discussions with Council and the City Manager now. Batchelor agreed but explained that staff
wants to provide the most accurate full build-out assumption to Council.
In answer to Horrigan-Taylor’s query regarding when will the next discussion with Council and the UAC be,
Batchelor answered in May 2022. Horrigan-Taylor explained that engagement with the community began in
October 2021 and will continue through May of 2022. After staff hears feedback from Council and the UAC,
then staff will develop additional conversations with the community around the next steps.
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Utilities Advisory Commission Minutes Approved on: Page 3 of 5
In answer to Vice Chair Segal’s inquiry regarding milestones for community engagement, Horrigan-Taylor
shared that one goal was to build excitement and build successful awareness. Folks who have stamped their
home on the interactive map have indicated to staff that they are interested in having fiber at their home or
business. Vice Chair Segal clarified that she wanted to see more quantitative milestones to measure the
success so far. Horrigan-Taylor clarified that the market survey will provide a more quantitative outlook. Vice
Chair Segal stated that having actual number goals that can be measured would be helpful.
Commissioner Johnston appreciated staff’s work but agreed that the City has a long way to go to reach
substantial community outreach by May 2022. In answer to his inquiry regarding the community meeting on
February 24, 2022, Horrigan-Taylor confirmed that 75 community members have signed up for the meeting.
Staff has been promoting the meeting through the website calendar, social media calendars, a business letter,
advertisement through the utility bill inserts and online portal, direct emails to utility customers and other
outreach efforts. In answer to Commissioner Johnston’s query regarding written article promotions,
Horrigan-Taylor answered there have been no written articles drafted about the workshop. Commissioner
Johnston agreed that to have the project be successful, the City has to have more support from the
community than just the folks who are already interested. Two key questions he believed where important
were how having its own fiber system will change Palo Alto residents lives and how much it will cost
customers. He mentioned that he has not been able to find an answer to either of those questions on any of
the community outreach sites. In reply to his question regarding how UAC Commissioners can help promote
the February 24, 2022 meeting, Horrigan-Taylor requested that the UAC provide the event flyer to their
network as well as host focus groups. In response to Commissioner Johnston’s request regarding the content
of the February 24, 2022 meeting, Horrigan-Taylor shared that staff and Magellan will host a presentation,
answer FAQ, and allow for the community to ask questions.
Commissioner Metz agreed that marketing for the project has been moving forward. Regarding inbound
market research, he suggested that staff explore the key market risks that are associated with the project
such as the take rate and pricing. In reply to his questions regarding key market risks, Batchelor confirmed
that staff will be discussing with Council take rates, the overall business plan, and the cost of the project.
Horrigan-Taylor concurred that there are market and cost questions in the market survey. Commissioner
Metz wanted to understand what folks will be paying for the service and what type of revenue the City will
receive.
Commissioner Bowie shared that he enjoyed the geographic dashboard. Regarding the cost comparison in
the market survey, he shared that one of the benefits of local control was the internet policy that the City
can enact. In answer to his query regarding if that aspect was being portrayed to the community, de Jesus
stated that the market survey focuses on the consumer market and does not ask technical questions.
Horrigan-Taylor noted that those questions could be included in a survey that can be conducted later in the
process. Commissioner Bowie noted that the community may be interested in those components and how
data is handled by an internet service provider (ISP). Batchelor agreed that the City will have greater capacity
than competitors.
Vice Chair Segal echoed Commissioner Johnston’s concern that some of the information on the website was
not focused on the right audience. She noted that the Fiber Hub was not private.
Chair Forssell appreciated that the market survey will ask folks what service they have now and what they
pay for it. She suggested that staff create a map from the data collected from the survey if possible. In answer
to her question regarding the Fiber Hub map, de Jesus confirmed that the Fiber Hub only asks folks what their
current service is. Chair Forssell expressed that knowing who their service provider is was not helpful in
understanding if that person would change to Palo Alto Fiber. She clarified that if the market survey can
obtain folks' addresses as well as the Fiber Hub collect addresses. Then a map can be created and provide
data regarding speed and pricing from a wide variety of community members. She echoed Commissioner
Bowie’s comments regarding other properties of municipal fiber and she announced that she would be happy
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Utilities Advisory Commission Minutes Approved on: Page 4 of 5
to host a focus group discussion. In answer to her query regarding what the approved $2.5 million paid for,
Dave Yuan, Strategic Business Manager, explained that $500,000 was for the fiber backbone and then $2
million for fiber-to-the-home (FTTH). The network will be supporting Automated Metering Infrastructure
(AMI) as well but the backbone was to support the City’s facilities mainly. Chair Forssell summarized that the
City had $2 million invested in a project that the City may or may not do and that decision will be made in
May/June 2022.
Council Member Cormack recalled that Council requested a business case to come back and staff nodded
that was correct. She worried that more people did not understand fiber compared to the number of folks
who did understand it. Horrigan-Taylor confirmed that the first document folks come across is a benefits page
and those are also outlined in the FAQ section. The fiber hub was to connect the community around the
project and then technical aspects of the project were listed on the project page. Council Member Cormack
encouraged staff to have a tagline and Horrigan-Taylor pointed out that there are a lot of visual graphics on
how fiber works. Council Member Cormack acknowledged the amount of community engagement staff was
doing for the fiber project and supported that level of deep engagement for the Sustainability Climate Action
Plan (S/CAP). In reply to her query regarding the libraries and emergency service volunteers hosting
workshops, Horrigan-Taylor mentioned that staff had not thought about hosting at the libraries but will
explore it further. Batchelor noted that staff has not reached out to the emergency service volunteers.
Commissioner Bowie left the meeting at 6:10 p.m.
ACTION: None
COMMISSIONER COMMENTS and REPORTS from MEETINGS/EVENTS
None.
FUTURE TOPICS FOR UPCOMING MEETINGS: March 02, 2022
Commissioner Smith appreciated the special session that allowed the UAC to focus on one topic. In answer
to his question regarding regular updates for community engagement for fiber, Dave Yuan, Strategic Business
Manager, confirmed that Magellan will come back to the UAC at their April 2022 and the subcommittee will
receive an update on the business model as well.
Chair Forssell wanted an informational report on the number of pins, the number of views and how many
folks are reading the blog for the fiber project. Meghan Morrigan-Taylor, Chief Communications Manager,
confirmed that staff can provide those details to the UAC in their Packets.
Commissioner Metz welcomed monthly updates before the April 2022 UAC meeting.
Commissioner Smith shared that he was shocked to hear at the last meeting that the City’s infrastructure
may not be able to support the S/CAP goals of electrification. Commissioner Scharff interjected that the
Commission should not discuss topics that were heard at the last meeting. Commissioner Smith agreed but
stated that the UAC should agendize a discussion regarding modernization of the City’s infrastructure.
Chair Forssell supported Commissioner Smith’s suggested topic regarding infrastructure.
NEXT SCHEDULED MEETING: March 2, 2022
Commissioner Metz moved to adjourn. Commissioner Johnston seconded the motion. The motion carried
6-0 with Chair Forssell, Vice Chair Segal, and Commissioners Johnston, Metz, Scharff, and Smith voting yes.
Commissioner Bowie absent
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Utilities Advisory Commission Minutes Approved on: Page 5 of 5
Meeting adjourned at 6:21 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
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City of Palo Alto (ID # 14067)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Adoption of a Resolution Authorizing Use of Teleconferencing for
Utilities Advisory Commission Meetings During Covid -19 State of Emergency
From: Director of Utilities
Lead Department: Utilities
Recommendation
Adopt a Resolution (Attachment A) authorizing the use of teleconferencing under Government
Code Section 54953(e) for meetings of the Utilities Advisory Commission (UAC) and its
committees due to the Covid-19 declared state of emergency.
Background
In February and March 2020, the state and the County declared a state of emergency due to
the Covid-19 pandemic. Both emergency declarations remain in effect.
On September 16, 2021, the Governor signed AB 361, a bill that amends the Brown Act,
effective October 1, 2021, to allow local policy bodies to continue to meet by
teleconferencing during a state of emergency without complying with restrictions in State
law that would otherwise apply, provided that the policy bodies make certain findings at
least once every 30 days.
AB 361, codified at California Government Code Section 54953(e), empowers local policy bodies
to convene by teleconferencing technology during a proclaimed state of emergency under the
State Emergency Services Act in any of the following circumstances:
(A) The legislative body holds a meeting during a proclaimed state of emergency, and
state or local officials have imposed or recommended measures to promote social
distancing.
(B) The legislative body holds a meeting during a proclaimed state of emergency for the
purpose of determining, by majority vote, whether as a result of the emergency,
meeting in person would present imminent risks to the health or safety of
attendees.
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City of Palo Alto Page 2
(C) The legislative body holds a meeting during a proclaimed state of emergency and has
determined, by majority vote, pursuant to subparagraph (B) (B), that, as a result of
the emergency, meeting in person would present imminent risks to the health or
safety of attendees. (Gov. Code § 54953(e)(1).)
In addition, Section 54953(e)(3) requires that policy bodies using teleconferencing reconsider
the state of emergency within 30 days of the first teleconferenced meeting after October 1,
2021, and at least every 30 days thereafter, and find that one of the following circumstances
exists:
1. The state of emergency continues to directly impact the ability of the
members to meet safely in person.
2. State or local officials continue to impose or recommend measures to
promote social distancing.
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Discussion
At this time, the circumstances in Section 54953(e)( 1)(A) exist. The Santa Clara County Health
Officer continues to recommend measures to promote outdoor activ ity, physical distancing and
other social distancing measures, such as masking, in certain contexts. (See August 2, 2021
Order.) In addition, the California Department of Industrial Relations Division of Occupational
Safety and Health (Cal/OSHA) has promulgated Section 3205 of Title 8 of the California Code of
Regulations, which requires most employers in California, including in the City, t o train and
instruct employees about measures that can decrease the spread of COVID -19, including
physical distancing and other social distancing measures.
Accordingly, Section 54953(e)(1)(A) authorizes the City to continue using teleconferencing for
public meetings of its policy bodies, provided that any and all members of the public who wish
to address the body or its committees have an opportunity to do so, and that the statutory and
constitutional rights of parties and the members of the public attend ing the meeting via
teleconferencing are protected.
To comply with public health directives and promote public safety, Palo Alto policy bodies
have been meeting via teleconference since March 2020. On September 27, 2021, the City
Council considered the format for future Council, committee, and Board and Commission
meetings. Council determined that beginning November 1, 2021, Council meetings would be
conducted using a hybrid format that allows Council Members and the public to decide
whether to attend in person, following masking and distancing protocols, or participate via
teleconference. Council directed that Council standing and ad-hoc committees and Boards
and Commissions would continue meeting via teleconference through March 2022.
Adoption of the Resolution at Attachment A will make the findings required by Section
54953(e)(3) to allow the continued use of teleconferencing for meetings of the Utilities
Advisory Commission (UAC) and its committees.
Attachments:
• Attachment A: Resolution
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NOT YET APPROVED
Resolution No. ____
Resolution Making Findings to Allow Teleconferenced Meetings Under California Government
Code Section 54953(e)
R E C I T A L S
A. California Government Code Section 54953(e) empowers local policy bodies to convene by
teleconferencing technology during a proclaimed state of emergency under the State Emergency
Services Act so long as certain conditions are met; and
B. In March 2020, the Governor of the State of California proclaimed a state of emergency
in California in connection with the Coronavirus Disease 2019 (“COVID-19”) pandemic, and that state
of emergency remains in effect; and
C. In February 2020, the Santa Clara County Director of Emergency Services and the
Santa Clara County Health Officer declared a local emergency, which declarations were
subsequently ratified and extended by the Santa Clara County Board of Supervisors, and those
declarations also remain in effect; and
D. On September 16, 2021, the Governor signed AB 361, a bill that amends the Brown Act
to allow local policy bodies to continue to meet by teleconferencing during a state of emergency
without complying with restrictions in State law that would otherwise apply, provided that the
policy bodies make certain findings at least once every 30 days; and
E. While federal, State, and local health officials emphasize the critical importance of
vaccination and consistent mask-wearing to prevent the spread of COVID-19, the Santa Clara County
Health Officer has issued at least one order, on August 2, 2021 (available online at here), that continues
to recommend measures to promote outdoor activity, physical distancing and other social distancing
measures, such as masking, in certain contexts; and
F. The California Department of Industrial Relations Division of Occupational Safety and
Health (“Cal/OSHA”) has promulgated Section 3205 of Title 8 of the California Code of Regulations,
which requires most employers in California, including in the City, to train and instruct employees
about measures that can decrease the spread of COVID-19, including physical distancing and other
social distancing measures; and
G. The Utilities Advisory Commission has met remotely during the COVID-19 pandemic and
can continue to do so in a manner that allows public participation and transparency while minimizing
health risks to members, staff, and the public that would be present with in-person meetings while
this emergency continues; now, therefore,
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NOT YET APPROVED
The Utilities Advisory Commission RESOLVES as follows:
1. As described above, the State of California remains in a state of emergency due to the
COVID-19 pandemic. At this meeting, the Utilities Advisory Commission has considered the
circumstances of the state of emergency.
2. As described above, State and County officials continue to recommend measures
to promote physical distancing and other social distancing measures, in some
settings.
AND BE IT FURTHER RESOLVED, That for at least the next 30 days, meetings of the Utilities Advisory
Commission and its committees will occur using teleconferencing technology. Such meetings of the
Utilities Advisory Commission and its committees that occur using teleconferencing technology will
provide an opportunity for any and all members of the public who wish to address the body and its
committees and will otherwise occur in a manner that protects the statutory and constitutional rights
of parties and the members of the public attending the meeting via teleconferencing; and, be it
FURTHER RESOLVED, That the Utilities Advisory Commission staff liaison is directed to place a resolution
substantially similar to this resolution on the agenda of a future meeting of the Utilities Advisory
Commission within the next 30 days. If the Utilities Advisory Commission does not meet within the next
30 days, the staff liaison is directed to place a such resolution on the agenda of the immediately following
meeting of the Utilities Advisory Commission.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
Staff Liaison Chair of Utilities Advisory Commission
APPROVED AS TO FORM: APPROVED:
City Attorney Department Head
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City of Palo Alto (ID # 14065)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Discussion and Update on Palo Alto Fiber Community Engagement
From: Director of Utilities
Lead Department: Utilities
This item is for discussion and no action is requested.
Staff seeks input from the Utilities Advisory Commission (UAC) on the Pal o Alto Fiber effort
including communications, education and engagement. The verbal update will include notable
items completed to date, upcoming opportunities for community input and engagement
planned, and available tools and resources to reach and engage residents and businesses about
Palo Alto Fiber.
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City of Palo Alto (ID # 13974)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Discussion and Update on REC Exchange Program Results for 2021 and
Projections for 2022 -2027
From: Director of Utilities
Lead Department: Utilities
Executive Summary
In August 2020, the City Council approved amendments to the electric utility’s Car bon Neutral
Plan that clarified and modified policies regarding the sales and exchanges of renewable energy
credits (RECs) (Staff Report #11556). The amendments permitted the exchange of Bucket 1
(primarily in-state) RECs for Bucket 3 (primarily out-of-state) RECs, provided the City maintains
compliance with State Renewable Portfolio Standard (RPS) regulations. A portion of the
earnings from the program would be used to mitigate the economic impacts of the coronavirus
pandemic, and the remainder would be reserved for local decarbonization programs. The
amendments also adopted an hourly accounting methodology for managing the City’s electric
portfolio and permitted the use of Bucket 3 RECs for managing any emissions impacts identified
by the use of the hourly accounting methodology.
Since then, staff has purchased and sold RECs for Calendar Years (CYs) 2020 and 2021 in
accordance with the Carbon Neutral Plan amendments, resulting in net earnings of $5.1 million.
And at the time of writing this report, staff was in the process of planning to sell RECs for CY
2022. The attached presentation presents the program’s actual net earnings for CY 2021 and
staff’s projections for the program’s net earnings and its impacts on the City’s Power Content
Label for CYs 2022-2027.
For CY 2022, staff projects $0.77 million in net earnings from the program. This projection is
lower than the amount the City generated through the program in CYs 2020 and 2021 due to a
number of factors, including: (a) the extended drought leading to low hydroelectric projections
and thus large Bucket 3 REC purchase volumes, (b) the continued narrowing of the Bucket 1 vs
Bucket 3 price spread, and (c) lower Bucket 1 REC supplies in 2022 due to expiration of the
Shiloh wind contract.
In CY 2023 and CY 2024, staff projects that REC Exchange Program net revenue will rebound to
about $1.95 million annually, due to: (a) hydro projections gradually returning to lon g-term
average levels, and (b) the start of the Rosamond Solar contract adding to the City’s supply of
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Bucket 1 RECs. Beyond 2024, REC Exchange program net revenue is projected to gradually
decline, due to: (a) the gradual ramping up of RPS requirement levels, which reduces the
volume of supplies the City is able to sell, and (b) some of the City’s older renewable energy
contracts expiring.
This is a discussion item, and no Utilities Advisory Commission action is requested.
Attachments:
• Attachment A: Presentation
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March 2, 2022 www.cityofpaloalto.org
REC EXCHANGE: CYs 2021 & 2022 UPDATE
Staff: Jim Stack •
CITY OF
PALO ALTO
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PART 1: CY 2021 REC EXCHANGE SUMMARY
March 2, 2022 www.cityofpaloalto.org
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REC EXCHANGE SUMMARY FOR CY 2021
Baseline
(No Sales)
REC Exchange
Projections
(May 2021)
REC Exchange
Actuals
Bucket 1 REC Sales Volume (MWh)--274,600 287,210
Bucket 3 REC Purchase Volume (MWh)--276,380 383,408
Bucket 1 REC Sales Revenue ($M)--$3.71 $4.01
Bucket 3 REC Purchase Cost ($M)--$1.24 $1.97
Net Revenue ($M)--$2.46 $2.04
Bucket 1 RPS Level 67%33%32%
Projected REC Prices: $13.50 for Bucket 1, $5.00 for Bucket 3
Actual REC Prices: $13.97 for Bucket 1, $5.13 for Bucket 3
~CITY OF
~PALO ALTO
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ELECTRIC SUPPLY PORTFOLIO IMPACT (CY 2021)
• .
CITY OF
PALO
ALTO
1,000,000
900,000
800,000
700,000 -..c
3: ~ 600,000
"'C
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_g 500,000
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:::I
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E 300,000 u a,
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Total Load
-;-----------------------(823,000MWh)
Solar
Wind
✓ ---------------~4-
~~nspecified ~.--
t------~ Power" ~ ~ (Market Power+ ~
t---------~ Unbundled RECs)~----
Solar
200,000 -;-----
100,000
CY 2021 Baseline CY 2021 w/ REC Exchanges
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POWER CONTENT LABEL IMPACT (CY 2021)
Base Portfolio With REC Exchange
RPS Level: 67%
Emissions Intensity: 26 kg CO2/MWh
RPS Level: 32%
Emissions Intensity: 155 kg CO2/MWh
• .
CITY OF
PALO
ALTO
39%
32"
32%
~
12% 22%
■ Large Hydro ■ Landfill Gas ■ Wind ■ Solar ~ Unspeci f ied Power
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POWER CONTENT LABEL IMPACT (CY 2021)
Base
Portfolio
After REC
Exchange
Eligible Renewable 67%32%
Biomass 13%6%
Geothermal 0%0%
Small Hydro 1%0%
Solar 39%21%
Wind 12%6%
Coal 0%0%
Large Hydro 32%32%
Natural Gas 0%0%
Nuclear 0%0%
Unspecified Sources 4%34%
Emissions Intensity
(kg CO2/MWh)26.0 155.0 • .
CITY OF
PALO
ALTO
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PART 2: CY 2022 REC EXCHANGE PROJECTIONS
March 2, 2022 www.cityofpaloalto.org
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REC EXCHANGE PROJECTIONS FOR CY 2022
Projected REC Prices: $12.25 for Bucket 1, $6.25 for Bucket 3
Baseline
(No Sales)
REC Exchange
Projections
(Jan 2022)
Bucket 1 REC Sales Volume (MWh)--182,533
Bucket 3 REC Purchase Volume (MWh)--234,923
Bucket 1 REC Sales Revenue ($M)--$2.24
Bucket 3 REC Purchase Cost ($M)--$1.47
Net Revenue ($M)--$0.77
Bucket 1 RPS Level 57%35%
~CITY OF
~PALO ALTO
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ELECTRIC SUPPLY PORTFOLIO IMPACT (CY 2022)
• .
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ALTO
1,000,000
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~ ~ 600,000
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:J
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Total Load
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+----------------------✓/ ---
--y~;~;cifi~~~~;;0---------------~~-· --
~:'
1 Unspecified ~
Solar
Wind
CY 2022 Baseline
~ Power" ~
t-----~(Market Power+~.--
~ Unbundled RECs) ~
Solar
CY 2022 w/ REC Exchanges
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POWER CONTENT LABEL IMPACT (CY 2022)
Base Portfolio With REC Exchange
RPS Level: 61%
Emissions Intensity: 34 kg CO2/MWh
RPS Level: 34%
Emissions Intensity: 153 kg CO2/MWh
• .
CITY OF
PALO
ALTO
37%
24%
■ Landfill Gas ■ Wind ■ Solar
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POWER CONTENT LABEL IMPACT (CY 2022)
Base
Portfolio
After REC
Exchange
Eligible Renewable 55%33%
Biomass 12%6%
Geothermal 0%0%
Small Hydro 1%1%
Solar 37%24%
Wind 5%2%
Coal 0%0%
Large Hydro 40%40%
Natural Gas 0%0%
Nuclear 0%0%
Unspecified Sources 6%28%
Emissions Intensity
(kg CO2/MWh)34.0 153.0• .
CITY OF
PALO
ALTO
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PART 3: CY 2022-2027 REC EXCHANGE PROJECTIONS
March 2, 2022 www.cityofpaloalto.org
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REC EXCHANGE PROJECTIONS FOR CYs 2022-2027
2022 2023 2024 2025 2026 2027
Bucket 1 REC Sales Volume (MWh)182,533 232,503 197,640 183,674 147,939 133,448
Bucket 3 REC Purchase Volume (MWh)234,923 136,024 67,059 53,785 19,139 ---
Bucket 1 REC Sales Revenue ($M)$2.24 $2.79 $2.37 $2.20 $1.78 $1.60
Bucket 3 REC Purchase Cost ($M)$1.47 $0.85 $0.42 $0.34 $0.12 $---
Net Revenue ($M)$0.77 $1.94 $1.95 $1.87 $1.66 $1.60
Bucket 1 RPS Level 34.7%37.1%39.6%41.4%45.0%46.8%
~CITY OF
~PALO ALTO
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Jim Stack, Ph.D.
Senior Resource Planner
james.stack@cityofpaloalto.org
(650) 329-2314
CITY OF
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City of Palo Alto (ID # 13420)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Staff Recommends the Utilities Advisory Commission Recommend the
City Council Adopt Two Resolutions: 1) Approving an Amendment to the
Amended and Restated Water Supply Agreement Between the City and
County of San Francisco and Wholesale Customers in Alameda County, San
Mateo County, and Santa Clara County, and Authorizing the City Manager to
Execute the Amended Agreement; and 2) Approving a Minimum Purchase
Transfer From the City of Mountain View to the City of East Palo Alto
From: Director of Utilit ies
Lead Department: Utilities
Recommendation
Staff recommends the UAC recommend the City Council adopt two resolutions (Attachment A
and Attachment B) as follows:
1) Approving the attached “2021 Amended and Restated Water Supply Agreement
Between the City and County of San Francisco Wholesale Customers in Alameda County,
San Mateo County, and Santa Clara County” (Attachment C) and authorizing the City
Manager to execute such Agreement when final execution copies are prepared and
distributed by the Bay Area Water Supply and Conservation Agency (BAWSCA);
2) Approving a Minimum Purchase Transfer from the City of Mountain View to the City of
East Palo Alto.
Executive Summary
The City purchases water from the San Francisco Regional Water System (System or RWS) and is
one of twenty-six BAWSCA members, also known as “Wholesale Customers.” In June 2009, the
City entered into a Water Supply Agreement with the City and County of San Francisco (San
Francisco) and Wholesale Customers in Alameda County, San Mateo County and Santa Clara
County (WSA). There are two proposed WSA amendments for Palo Alto City Council’s
consideration.
The primary amendment to the WSA allows for the paired transfer of a portion of an agency’s
Minimum Purchase Quantity and Individual Supply Guarantee (ISG) through an expedited
procedure. Four Wholesale Customers (Alameda County Water District and the Cities of
Milpitas, Mountain View, and Sunnyvale) may purchase water from sources other than San
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Francisco Public Utilities Commission (SFPUC), such as State Water Project, local groundwater,
or treated water from Valley Water, but they are each obligated to purchase a specific
minimum annual quantity of water from the SFPUC (Minimum Purchase Quantity). The
amendment safeguards the financial and water supply interests of Wholesale Customers,
including Palo Alto, who are not participating in such transfers.
The second proposed amendment to the WSA is a separate proposed minimum purchase
obligation transfer between two Wholesale Customers. In 2017, the City of Mountain View
(Mountain View) transferred 1 MGD of ISG to the City of East Palo Alto (East Palo Alto). Now,
Mountain View and East Palo Alto request a parallel action to the proposed WSA Amendment
described above. This separate amendment would apply the expedited process in the proposed
WSA Amendment to approve a paired transfer of Minimum Purchase Quantity together with
the ISG that Mountain View already transferred to East Palo Alto in 2017. Details of this
conversion are outlined in an agreement between Mountain View and East Palo Alto that is
available for information purposes in Attachment E. This amendment includes the same
safeguards to protect the financial and water supply interests of Palo Alto and other Wholesale
Customers who are not participating in the transfer.1
In addition to the two amendments described above, the proposed WSA Amendment language
expands the waiver of minimum purchase obligations during certain declared emergencies.
Specifically, the WSA Amendment allows the SFPUC to issue a waiver of minimum purchase
obligations if there is a state of emergency declared by the Governor of California that impacts
water supply use or deliveries from the System.
Background
The WSA establishes the terms by which the twenty-six Wholesale Customers purchase water
from the System. The WSA builds upon the 1984 "Settlement Agreement and Master Water
Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers
in San Mateo County, Santa Clara County and Alameda County."
In September 2017, BAWSCA and the Water Management Representatives (WMRs) of the
BAWSCA member agencies began reviewing the issue of Minimum Purchase Quantities, as
described in Section 3.07.C of the WSA, and discussing the creation of a process to transfer
Minimum Purchase Quantities. Throughout 2017 and 2018, the WMRs held multiple meetings
during which the agencies currently subject to Minimum Purchase Quantity requirements and
the other Wholesale Customers shared their interests and concerns regarding changes to the
Minimum Purchase Quantity requirements and allowing transfers of Minimum Purchase
Quantities.
1 In 2017, Palo Alto transferred 0.5 MGD of ISG to East Palo Alto. Palo Alto does not have a minimum purchase
obligation, so a similar arrangement would not be applicable.
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Pursuant to Section 2.03 of the WSA, the WSA may be amended by a minimum of two -thirds of
the Wholesale Customers representing at least 75 percent of the qu antity of water delivered by
San Francisco to all the Wholesale Customers during the fiscal year immediately preceding the
amendment.
On March 4, 2019, the Palo Alto City Council passed Resolution No. 9821 to approve the
Amended and Restated WSA, at which time the Wholesale Customers expressed a collective
interest in working together to develop a process for the expedited and permanent transfe r of
Minimum Purchase Quantities.
Under Article 3 of the Amended and Restated WSA, the SFPUC agrees to deliver water to the
Wholesale Customers up to the amount of 184 million gallons per day (MGD), referred to as the
“Supply Assurance,” and the Wholesale Customers have allocated shares of the Supply
Assurance among themselves, referred to as ISG. Section 3.04 of the Amended and Restated
WSA enables a Wholesale Customer that has an ISG to transfer a portion of its ISG to one or
more other Wholesale Customers, subject to several conditions.
Paired transfer of a portion of an agency’s Minimum Purchase Quantity and ISG
Section 3.07 of the Amended and Restated WSA provides that four Wholesale Customers
(Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale,
collectively, the “Minimum Purchase Customers”) may purchase water from sources other than
the SFPUC, but they are each obligated to purchase a specific minimum annual quantity of
water from the SFPUC, referred to as a “Minim um Purchase requirement." If a Minimum
Purchase Customer does not meet its minimum purchase requirement in a particular fiscal
year, it must pay the SFPUC for the difference between its metered water purchases during the
fiscal year and its minimum annual purchase quantity set forth in Attachment E of the Amended
and Restated WSA. The Amended and Restated WSA does not currently allow a Minimum
Purchase Customer to transfer a portion of its minimum purchase requirement and the
associated financial obligation to another Wholesale Customer.
In 2019, the Wholesale Customers directed BAWSCA to draft a proposed amendment to the
Amended and Restated WSA to provide a procedure for expedited and permanent transfers of
Minimum Purchase Quantities that safeguards the financial and water supply interests of
Wholesale Customers not participating in such transfers.
Minimum Purchase Transfer from the City of Mountain View to the City of East Palo Alto
In 2017, Mountain View and East Palo Alto were interested in transferring 1.0 MGD of
Mountain View's Minimum Purchase Quantity to East Palo Alto, however, at the time, there
was no procedure in the WSA to effectuate such a transfer without amending the WSA.
Therefore, the parties elected to execute a water rights transfer agreement by which East Palo
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Alto agreed to pay Mountain View $5 Million for the permanent transfer of all rights, title,
interest to 1.0 MGD of Mountain View’s ISG to East Palo Alto.
In 2020, Mountain View and East Palo Alto began discussing a possible future transfer of a
portion of Mountain View's Minimum Purchase Quantity to East Palo Alto.
In April 2021 and June 2021 the Councils of East Palo Alto and Mountain View, respectively,
each approved the conversion of the 1.0 MGD of Mountain View's ISG sold to East Palo Alto in
2017 into a paired transfer of ISG and up to 1.0 MGD of Mountain View's Minimum Purchase
Quantity to East Palo Alto, in increments of 0.25 MGD, subject to the City Councils' approval of
an agreement for each incremental transfer and the approval of the Wholesale Customers and
San Francisco. East Palo Alto and Mountain View are authorized and prepared to execute a
negotiated agreement memorializing a 0.25 MGD transfer of Mountain View's Minimum
Purchase Quantity to East Palo Alto.
In conjunction with the larger amendment to allow Wholes ale Customers with ISGs to
permanently transfer a portion of Minimum Purchase Quantity through an expedited
procedure, East Palo Alto and Mountain View propose the Wholesale Customers and San
Francisco approve, in advance, the terms and conditions for conv erting up to 1.0 MGD of
Mountain View's ISG purchased by East Palo Alto in 2017 into a paired transfer of 1.0 MGD of
ISG together with 1.0 MGD of Mountain View's Minimum Purchase Quantity to East Palo Alto,
in 0.25 MGD increments, if Mountain View and East Palo Alto mutually agree to such
incremental transfers in the future and provided the conditions outlined below are met.
Because the 2017 Mountain View/East Palo Alto ISG transfer predates the Minimum Purchase
Amendment, the Mountain View/East Palo Alto Minimum Purchase Transfer must be
accomplished separately from the adoption of the Minimum Purchase Amendment.2
Discussion
Main Amendment: Paired Transfer of a Portion of an Agency’s Minimum Purchase Quantity and
ISG
The proposed amendment, shown with redline changes to Sections 3.04, 3.07, and 2.03 of the
Amended and Restated Water Supply Agreement in Attachment D, allows Wholesale
Customers with ISGs and Minimum Purchase obligations to permanently transfer a portion of
Minimum Purchase Quantity through an expedited procedure. The proposed amendment
offers the following benefits:
1. Procedural safeguards built into the process by which a Wholesale Customer transfers a
portion of its Minimum Purchase Quantity and ISG ensure that such transfers will not
2 Palo Alto’s 2017 transfer of 0.5 MGD of ISG to East Palo Alto did not require Wholesale Customer approval
because Palo Alto does not have a minimum purchase obligation.
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result in new or different risks to the water supply and financial interests of Wholesale
Customers not participating in a transfer.
2. A Minimum Purchase Customer may transfer a portion of its Minimum Purchase
Quantity within its respective ISG to reduce its financial obligation to pay for imputed
sales for Minimum Purchase water that it did not use.
3. Intra-system water transfers are one potential solution to long term water reliability
needs among the Wholesale Customers. This expedited, permanent transfer procedure
will allow intra-system water transfers of Minimum Purchase Quantity to occur without
a contract amendment approved by the Wholesale Customers, thus removing
administrative obstacles to such transfers.
4. Expedited permanent intra-system transfers of portions of Minimum Purchase Quantity
and ISG will facilitate the development of new water supplies by the SFPUC that are
necessary to support the Cities of San Jose and Santa Clara becoming permanent
Wholesale Customers.
5. The Wholesale Customers may increase the 6 MGD cap on the total aggregate amount
of Minimum Purchase Quantity that may be transferred by all of the Minimum Purchase
Customers over the course of one or multiple transfers if demand for Minimum
Purchase Quantity transfers exceeds 6 MGD in the future.
San Francisco, acting by and through the SFPUC, approved the 2021 Amended and Restated
Water Supply Agreement, as negotiated by BAWSCA, on January 26, 2021, pending approval by
the requisite number of the Wholesale Customers.
Second Proposed Amendment: Minimum Purchase Transfer from the City of Mountain View to
the City of East Palo Alto
The proposed amendment would provide advance approval for the conversion of up to 1.0
MGD of Mountain View's ISG sold to East Palo Alto in 2017 , into a transfer of up to 1.0 MGD of
Mountain View's ISG plus up to 1.0 MGD of Mountain View’s Minimum Purchase Quantity to
East Palo Alto, in 0.25 MGD increments, if all of the following terms and conditions are satisfied:
a. Mountain View will transfer up to 1.0 MGD of its Minimum Purchase Quantity to East
Palo Alto, in increments of 0.25 MGD, subject to the Mountain View City Council's and
the East Palo Alto City Council's approval of an agreement f or each incremental transfer.
b. For each incremental transfer, a Temporary Modified Minimum Annual Purchase
Quantity will be calculated for East Palo Alto that is equal to East Palo Alto’s five-year
average water use from the SFPUC for the most recent non-drought years prior to the
2017 ISG purchase, plus the incremental transfer amount(s).
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c. For each incremental transfer, Mountain View will maintain, and be responsible for
paying any imputed sales for, its current Minimum Purchase requirement in effect at
that time, as set forth in Attachment E of the WSA, including up to 1.0 MGD ISG transfer
to East Palo Alto, until East Palo Alto's water use meets the Temporary Modified
Minimum Annual Purchase Quantity for three consecutive years.
d. East Palo Alto will not be required to pay imputed sales associated with the Temporary
Modified Minimum Annual Purchase Quantity for any incremental transfer of the 1.0
MGD of Mountain View's Minimum Purchase requirement.
e. For each incremental transfer, once East Palo Alto has met the Temporary Modified
Minimum Annual Purchase Quantity for three consecutive years, the incremental
portion of Mountain View's Minimum Purchase Quantity transferred to East Palo Alto
will become East Palo Alto's Minimum Purchase Quantity, and Mountain View's
Minimum Purchase Quantity will be reduced by an equivalent amount. East Palo Alto's
new Minimum Purchase Quantity will be included in Attachment E of the WSA and both
cities' Individual Water Sales Contracts will be updated to reflect this transfer.
f. With exception of the incremental transfers that are the subject of this resolution and
the agreement between East Palo Alto and Mountain View described herein, any
additional transfers of Minimum Purchase Quantity, either from another Wholesale
Customer or from Mountain View in excess of the 1.0 MGD, are subject to Section 3.04
of the 2021 WSA.
Additional Language Changes and Annual Reporting
In addition to the two amendments described above, this package incorporates two additional
language changes:
1) New language in Section 3.04 H to clarify that a transfer of Minimum Purchase and/or
ISG that does not satisfy the requirements of Section 3.04 may be implemented via a
separate amendment to the WSA.
2) New language in Section 3.07 C to expand the waiver of minimum purchase obligations
during certain declared emergencies. Based on experience from the previous drought
when the State led the call for water use reductions, water use restrictions, and
eventual water rationing obligations, SFPUC issued a waiver of Minimum Purchase
Requirements “at risk”. The proposed WSA Amendment allows SFPUC to issue a waiver
“during a state of emergency declared by the Governor of California that impacts water
supply use or deliveries from the Regional Water System”.
The proposed amendment codifies existing reporting and imposes a new reporting requirement
inSection 3.07.C that states:
“ . . . After the end of each fiscal year, the SFPUC will send a
written notice to each Wholesale Customer that is subject to the
minimum annual purchase requirements of this section with a
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copy to BAWSCA. The notice will include: (1) the quantity of water
delivered to the Wholesale Customer during the previous fiscal
year; (2) whether or not the Wholesale Customer met its minimum
annual purchase requirement under this section; (3) any Imputed
Sales charged to the Wholesale Customer; and (4) the status of
any Temporary Modified Minimum Annual Purchase Quantity of
the Wholesale Customer, if applicable.” (new)
In addition, BAWSCA will prepare a new annual report that includes a summary of the SFPUC’s
annual reports to each Wholesale Customer as well as additional RWS purchase trend
information, as available.
Resource Impact
Palo Alto is not a participant in a current or future transfer of ISG under this amendment
because Palo Alto is not subject to a Minimum Purchase and Palo Alto has sufficient ISG t o
meet its current and future water demand. This amendment avoids shifting or transferring
participating agencies’ contractual costs, or obligations, to Palo Alto and will not result in any
new or different financial risks to Palo Alto.
Policy Implications
The execution and administration of the 2021 Amended and Restated WSA reaffirms the water
reliability and quality requirements in the WSA and is consistent with the spirit of the 2009
WSA.
Environmental Review
Prior to approval of the WSIP, San Francisco prepared a program environmental impact report
(PEIR) for the WSIP in compliance with the California Environmental Quality Act (CEQA) and the
San Francisco Planning Commission certified the WSIP Final PEIR in Planning Commission
Motion No. 17734 in 2008. The City reviewed the Final PEIR and CEQA findings and adopted
them to the extent the findings were relevant to its decision to approve the WSA.
At this time, the City need not take any further action to comply with the requirements of CEQA
as the amendments are not a "project" for the purposes of the CEQA. The amendments at issue
involve an administrative activity that does not result in a direct change to the environment
(see 14 CCR Section 15378(b)(5)), and would not result in a direct or reasonably fo reseeable
indirect physical change in the environment (see 14 CCR Section 15060(c)(2)).
Attachments:
• Attachment A: Resolution
• Attachment B: Draft Resolution
• Attachment F: Presentation
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* NOT YET APPROVED* Attachment A
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RESOLUTION NO. _____
Resolution Of The City Council Of The City Of Palo Alto Approving An
Amendment To The Amended And Restated Water Supply Agreement Between
The City And County Of San Francisco And Wholesale Customers In Alameda
County, San Mateo County, And Santa Clara County
R E C I T A L S
A. Water supply agencies in Alameda, San Mateo, and Santa Clara Counties have
purchased water from the City and County of San Francisco (San Francisco) for many years.
B. The San Francisco Public Utilities Commission (SFPUC or Commission) operates
the Regional Water System, which delivers water to communities in Alameda, San Mateo, and
Santa Clara Counties, as well as to customers within San Francisco (collectively, “the Parties”).
C. The Parties entered into the “Settlement Agreement and Master Water Sales
Contract between the City and County of San Francisco and Certain Suburban Purchasers in
San Mateo County, Santa Clara County and Alameda County” in 1984 (1984 Settlement
Agreement and Master Water Sales Contract).
D. In April 2003, water supply agencies in Alameda, San Mateo and Santa Clara
Counties (collectively referred to as the "Wholesale Customers" or "BAWSCA member
agencies") established the Bay Area Water Supply and Conservation Agency (BAWSCA), as
authorized by Water Code Section 81300 et seq.
E. Upon expiration of the 1984 Settlement Agreement and Master Water Sales
Contract, the Parties entered into the “Water Supply Agreement between San Francisco and
Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County” (Water
Supply Agreement or WSA) on July 1, 2009, authorized by SFPUC Resolution No. 09-0069,
dated April 28, 2009.
F. In 2017, the Wholesale Customers directed BAWSCA to act as its authorized
representative in discussions and negotiations with San Francisco to amend the Water Supply
Agreement to address a number of substantive issues and these negotiations resulted in the
Parties' adoption of the Amended and Restated Water Supply Agreement (Amended and
Restated Water Supply Agreement) in 2018, authorized by SFPUC Resolution No. 18-0212,
dated December 11, 2018.
G. On March 4, 2019 this Council, by Resolution No. 9821 approved the Amended
and Restated Water Supply Agreement.
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H. Under Article 3 of the Amended and Restated Water Supply Agreement, the
SFPUC agrees to deliver water to the Wholesale Customers up to the amount of 184 million
gallons per day (MGD), referred to as the “Supply Assurance,” and the Wholesale Customers
have allocated shares of the Supply Assurance among themselves, referred to as Individual
Supply Guarantees (“ISG”).
I. Section 3.04 of the Amended and Restated Water Supply Agreement enables
a Wholesale Customer that has an ISG to transfer a portion of its ISG to one or more other
Wholesale Customers, subject to several conditions.
J. Under Section 3.07 of the Amended and Restated Water Supply Agreement,
four Wholesale Customers (Alameda County Water District and the Cities of Milpitas,
Mountain View, and Sunnyvale, collectively, the “Minimum Purchase Customers”) may
purchase water from sources other than the SFPUC, but they are each obligated to purchase
a specific minimum annual quantity of water from the SFPUC, referred to as a “Minimum
Purchase requirement”.
K. If a Minimum Purchase Customer does not meet its Minimum Purchase
requirement in a particular fiscal year, it must pay the SFPUC for the difference between its
metered water purchases during the fiscal year and its minimum annual purchase quantity
set forth in Attachment E of the Amended and Restated Water Supply Agreement.
L. The Amended and Restated Water Supply Agreement does not currently allow
a Minimum Purchase Customer to transfer a portion of its Minimum Purchase requirement
and the associated financial obligation to another Wholesale Customer.
M. In September 2017, BAWSCA and the Water Management Representatives
(WMRs) of the BAWSCA member agencies began reviewing the issue of Minimum Purchase
Quantities, as described in Section 3.07.C of the Water Supply Agreement, and discussing the
creation of a process to transfer Minimum Purchase Quantities.
N. Throughout 2017 and 2018, the WMRs held multiple meetings during which
the agencies currently subject to Minimum Purchase Quantity requirements and the other
Wholesale Customers shared their interests and concerns regarding changes to the Minimum
Purchase Quantity requirements and allowing transfers of Minimum Purchase Quantities.
O. At the time the Amended and Restated Water Supply Agreement was
approved, the Parties expressed a collective interest in working together to develop a process
for the expedited and permanent transfer of Minimum Purchase Quantities.
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P. In 2019, the Wholesale Customers directed BAWSCA to draft a proposed
amendment to the Amended and Restated Water Supply Agreement to provide a procedure
for expedited and permanent transfers of Minimum Purchase Quantities that safeguards the
financial and water supply interests of Wholesale Customers not participating in such
transfers.
Q. The Parties recognize that, both before and after the most recent statewide
drought, after meeting drought-related conservation mandates, several BAWSCA member
agencies were unable to meet their respective Minimum Purchase requirements described in
Article 3.07 of the Amended and Restated Water Supply Agreement, which requires payment
for water up to the required Minimum Purchase level even if such water is not delivered and
used.
R. Several of the Wholesale Customers with Minimum Purchase requirements
might be interested in transferring a portion of their Minimum Purchase Quantity within their
respective ISGs to reduce the financial obligation to pay for imputed sales for Minimum
Purchase water that is not used.
S. With its Alternative Water Supply Program, the SFPUC is in the early stages of
planning for fourteen projects to support the Wholesale and Retail Customers' ability to
respond to climate change and address future water supply challenges and vulnerabilities,
such as regulatory changes, earthquakes, disasters, emergencies, and increases in population
and employment.
T. The City of San Jose (San Jose) and the City of Santa Clara (Santa Clara) are
temporary, interruptible Wholesale Customers of the SFPUC Regional Water System and both
cities wish to become permanent Wholesale Customers.
U. Pursuant to Section 4.06 of the Amended and Restated Water Supply
Agreement, by December 31, 2028, San Francisco must complete any necessary California
Environmental Quality Act (CEQA) review and must decide whether or not to make San Jose
and Santa Clara permanent Wholesale Customers of the Regional Water System with a
combined Individual Supply Guarantee (ISG) of 9 million gallons per day (MGD) allocated
equally between the two cities, as well as how much water in excess of 9 MGD it will supply
to San Jose and Santa Clara.
V. Section 4.06 of the Amended and Restated Water Supply Agreement provides:
"San Francisco will make San Jose and Santa Clara permanent customers only if, and to the
extent that, San Francisco determines that Regional Water System long term water supplies
are available."
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W. According to SFPUC's December 2021 Alternative Water Supply Planning
Quarterly Update (Quarterly Update), "[f]or San Jose and Santa Clara to become permanent
customers of the SFPUC, an additional 9 MGD of new, year-round supplies would be needed
to meet historic demand levels and up to 15.5 MGD would be needed to meet planned
demand through 2045."
X. According to its December Quarterly Update, SFPUC is planning with the
“intention to be able to make San Jose and Santa Clara permanent customers,” but is
prioritizing instream flow obligations to meet existing permanent customer demands,
including drought supplies.
Y. SFPUC has budgeted $298.3 million over the next ten years to fund water
supply projects.
Z. SFPUC, San Jose, Santa Clara, and BAWSCA are actively working together to
consider water supply projects that may offer potential sources of supply to support San Jose
and Santa Clara as permanent Wholesale Customers.
AA. BAWSCA and SFPUC have identified intra-system water transfers as one
potential solution to long term water reliability needs among the Wholesale Customers.
BB. A Minimum Purchase Customer might be more inclined to transfer a portion
of its ISG to another Wholesale Customer under Section 3.04 of the Amended and Restated
Water Supply Agreement if it was able to include a simultaneous transfer of a portion of its
Minimum Purchase requirement and the associated financial obligation.
CC. Allowing simplified permanent intra-system transfers of portions of Minimum
Purchase Quantity and ISG will facilitate the development of new water supplies by SFPUC
that are necessary to support San Jose and Santa Clara as permanent Wholesale Customers.
DD. The Parties have developed a process to allow for the transfer of a Wholesale
Customer's Minimum Purchase Quantity in conjunction with an ISG transfer pursuant to
Section 3.04, which ensures that such transfers will not result in new or different risks to the
water supply and financial interests of Wholesale Customers not participating in a transfer.
EE. The Parties agree that the total aggregate amount of Minimum Purchase
Quantity that may be transferred by all of the Wholesale Customers subject to Minimum
Purchase requirements as first specified in Attachment E of the Amended and Restated Water
Supply Agreement, over the course of one or multiple transfers, is limited to 6 MGD.
FF. If demand for Minimum Purchase Quantity transfers exceeds 6 MGD in the
future, the Parties agree to consider further amending Section 3.04 of the Amended and
Restated Water Supply Agreement to increase the total aggregate cap on the amount of
Minimum Purchase Quantity that may be transferred.
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GG. A proposed transfer that does not meet the requirements of Section 3.04 of
the Amended and Restated Water Supply Agreement, as amended by this Resolution, may be
presented as an amendment to the Amended and Restated Water Supply Agreement
pursuant to Section 2.03 of the Amended and Restated Water Supply Agreement.
HH. The Parties agree to consider a proposal by the City of Mountain View
(Mountain View) and the City of East Palo Alto (East Palo Alto) to amend the Amended and
Restated Water Supply Agreement to allow for the conversion of Mountain View's 2017 sale
of 1 MGD of ISG to East Palo Alto into a transfer of 1 MGD of Mountain View's ISG that includes
Minimum Purchase Quantity to East Palo Alto, over a period of time, and in a manner that
protects the other Wholesale Customers' financial and water supply interests.
II. If such a conversion is approved by the Parties, the 1 MGD of Mountain View's
Minimum Purchase Quantity would be counted towards the total aggregate 6 MGD cap on
Minimum Purchase Quantity transfers.
JJ. The Parties now desire to adopt an amendment to the Amended and Restated
Water Supply Agreement to permit Wholesale Customers with an ISG to transfer, or accept a
transfer, of both a portion of a Wholesale Customer's ISG and its Minimum Purchase Quantity.
KK. An updated Amended and Restated Water Supply Agreement, reflecting this
amendment, in the form negotiated by BAWSCA (2021 Amended and Restated Water Supply
Agreement), was presented to and approved by SFPUC on January 26, 2021 pursuant to
SFPUC Resolution No. 21-0009.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council approves the modifications included in the attached "2021
Amended and Restated Water Supply Agreement Between the City and County of San
Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara
County" dated January 2021 (2021 Amended and Restated Water Supply Agreement).
SECTION 2. The City Manager is authorized and directed to sign the 2021
Amended and Restated Water Supply Agreement, in the form previously approved by the
San Francisco Public Utilities Commission and attached hereto.
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* NOT YET APPROVED* Attachment A
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SECTION 3. The Council finds that the amendment considered now is not a
"project" for the purposes of CEQA as it involves an administrative activity that does not
result in a direct change to the environment (see 14 CCR Section 15378(b)(5)), and would not
result in a direct or reasonably foreseeable indirect physical change in the environment (see
14 CCR Section 15060(c)(2)).
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services
5.a
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*NOT YET APPROVED* Attachment B
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6055601
RESOLUTION NO. _____
Resolution Of The Council Of The City Of Palo Alto Approving A
Minimum Purchase Transfer From
The City Of Mountain View To The City Of East Palo Alto
R E C I T A L S
A. The City and County of San Francisco ("San Francisco") Public Utilities
Commission ("SFPUC" or "Commission") operates the Regional Water System, which delivers
water to water supply agencies in Alameda, San Mateo, and Santa Clara Counties (collectively,
“the Parties”).
B. In April 2003, water supply agencies in Alameda, San Mateo and Santa Clara
Counties (collectively, the "Wholesale Customers") established the Bay Area Water Supply and
Conservation Agency ("BAWSCA"), as authorized by Water Code Section 81300 et seq.
C. In November of 2018, San Francisco and the Wholesale Customers (the
"Parties") entered into the Amended and Restated Water Supply Agreement ("WSA").
D. The Parties have identified intra-system water transfers as one potential
solution to long-term water reliability needs among the Wholesale Customers.
E. In 2017, the City of Mountain View ("Mountain View") and the City of East Palo
Alto ("East Palo Alto") were interested in transferring 1.0 million gallons per day ("MGD") of
Mountain View's Minimum Annual Purchase Quantity (“Minimum Purchase”) to East Palo Alto,
however, at the time, there was no procedure in the WSA to effectuate such a transfer without
amending the WSA.
F. In 2017, Mountain View and East Palo Alto executed a water rights transfer
agreement in which East Palo Alto agreed to pay Mountain View $5 Million for the permanent
transfer of all rights, title, interest to 1.0 MGD of Mountain View’s Individual Supply Guarantee
(ISG) to East Palo Alto.
G. In August 2018, BAWSCA and San Francisco provided the Wholesale Customers
a revised Attachment C to the Water Supply Agreement reflecting the updated ISG amounts
for Mountain View and East Palo Alto, as a result of the 1.0 MGD transfer of ISG from Mountain
View to East Palo Alto.
H. Mountain View continues to be subject to a Minimum Purchase of 8.93 MGD
and the financial obligation of paying for imputed sales for the portion of Minimum Purchase
that it does not use.
I. In 2020, Mountain View and East Palo Alto began discussing a possible future
transfer of a portion of Mountain View's Minimum Purchase to East Palo Alto.
5.b
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*NOT YET APPROVED* Attachment B
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J. On January 26, 2021, the SFPUC adopted the 2021 Amended and Restated
Water Supply Agreement ("2021 WSA"), which includes a new procedure by which Wholesale
Customers with ISGs may participate in permanent expedited transfers of a portion of
Minimum Purchase and ISG, without creating new or different risks to the water supply and
financial interests of Wholesale Customers not participating in such transfers.
K. The 2021 WSA has been or will be presented to the governing body of each
Wholesale Customer, and if approved, will permit Wholesale Customers with an ISG to transfer
and accept a portion of another Wholesale Customer’s Minimum Purchase, if certain
requirements are satisfied; and
L. On April 20, 2021, East Palo Alto approved the conversion of the 1.0 MGD of
Mountain View's ISG sold to East Palo Alto in 2017 into a paired transfer of 1.0 MGD of ISG
plus up to 1.0 MGD of Mountain View's Minimum Purchase to East Palo Alto, in increments of
0.25 MGD or other amount, subject to the City Council’s approval of an agreement for each
incremental transfer and the approval of the Wholesale Customers and San Francisco.
M. On June 8, 2021, Mountain View approved the conversion of the 1.0 MGD of
Mountain View's ISG sold to East Palo Alto in 2017 into a paired transfer of 1.0 MGD of ISG
plus up to 1.0 MGD of Mountain View's Minimum Purchase to East Palo Alto, in increments of
0.25 MGD, subject to the City Council’s approval of an agreement for each incremental transfer
and the approval of the Wholesale Customers and San Francisco.
N. East Palo Alto and Mountain View are authorized and prepared to execute a
negotiated agreement memorializing the terms and conditions of a 0.25 MGD transfer of
Mountain View's Minimum Purchase to East Palo Alto.
O. As noted below, one of the conditions of the negotiated agreement between
Mountain View and East Palo Alto is that, in exchange for the 0.25 MGD of Minimum Purchase
transfer, Mountain View will provide East Palo Alto with an immediate Right-of-First Refusal
for drought water transfers at the same volume as the Minimum Purchase transfer, pursuant
to Appendix H of the 2021 WSA.
P. In conjunction with consideration of the 2021 WSA, East Palo Alto and
Mountain View propose the Wholesale Customers and San Francisco approve, in advance, the
terms and conditions for converting up to 1.0 MGD of Mountain View's ISG purchased by East
Palo Alto in 2017 into a transfer of 1.0 MGD of Mountain View's Minimum Purchase to East
Palo Alto, in 0.25 MGD increments, if Mountain View and East Palo Alto mutually agree to such
incremental transfers in the future and provided the conditions outlined below are met.
5.b
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*NOT YET APPROVED* Attachment B
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6055601
Q. If up to 1.0 MGD of Mountain View's ISG purchased by East Palo Alto in 2017 is
converted into a transfer of up to 1.0 MGD of Mountain View's Minimum Purchase to East Palo
Alto, up to 1.0 MGD of Minimum Purchase, in 0.25 MGD increments, will be counted towards
the total Minimum Purchase that may be transferred pursuant to Section 3.04.C.1 of the 2021
WSA.
R. This parallel action continues to require the calculation of a Temporary
Modified Minimum Annual Purchase Quantity, set out in Attachment E-1 in the 2021 WSA;
however, the transferor, Mountain View, is responsible for the imputed sales associated with
transfers to East Palo Alto up to 1.0 MGD, until the terms and conditions outlined below are
satisfied.
S. In accordance with the water transfer provisions of the 2021 WSA, Mountain
View and East Palo Alto will coordinate with San Francisco and BAWSCA to document
Temporary Modified Minimum Annual Purchase Quantities to be included on Attachment E-1,
transferred Minimum Annual Purchase Quantities to be included on Attachment E, when
timely, and amendments to each cities' Individual Water Sales Contract with San Francisco.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council approves, in advance, the conversion of up to 1.0 MGD of
Mountain View's ISG, sold to East Palo Alto in 2017 into a transfer of 1.0 MGD of Mountain
View's ISG, plus up to 1.0 MGD of Mountain View’s Minimum Purchase, to East Palo Alto, in
0.25 MGD increments, if all of the following terms and conditions are satisfied:
a. Mountain View will transfer up to 1.0 MGD of its Minimum Purchase to
East Palo Alto, in increments of 0.25 MGD, subject to the Mountain View
City Council's and the East Palo Alto City Council's approval of an
agreement for each incremental transfer.
b. For each incremental transfer, a Temporary Modified Minimum Annual
Purchase Quantity will be calculated for East Palo Alto that is equal to
the City's five-year average water use from the SFPUC for the most
recent non-drought years prior to the 2017 ISG purchase, plus the
incremental transfer amount(s).
c. For each incremental transfer, Mountain View will maintain, and be
responsible for paying any imputed sales for, its Minimum Purchase
requirement in effect at that time, as set forth in Attachment E of the
WSA, including up to 1.0 MGD ISG transfer to East Palo Alto, until East
Palo Alto's water use meets the Temporary Modified Minimum Annual
Purchase Quantity for three consecutive years.
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*NOT YET APPROVED* Attachment B
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6055601
d. East Palo Alto will not be required to pay imputed sales associated with
the Temporary Modified Minimum Annual Purchase Quantity for any
incremental transfer of the 1.0 MGD of Mountain View's Minimum
Purchase requirement.
e. For each incremental transfer, once East Palo Alto has met the
Temporary Modified Minimum Annual Purchase Quantity for three
consecutive years, the incremental portion of Mountain View's
Minimum Purchase transferred to East Palo Alto will become East Palo
Alto's Minimum Purchase, and Mountain View's Minimum Purchase will
be reduced by an equivalent amount. East Palo Alto's new Minimum
Purchase will be included in Attachment E and both cities' Individual
Water Sales Contracts will be updated to reflect this transfer.
f. With exception of the incremental transfers that are the subject of this
resolution and the agreement between East Palo Alto and Mountain
View described herein, any additional transfers of Minimum Purchase,
either from another Wholesale Customer or from Mountain View in
excess of the 1.0 MGD, are subject to Section 3.04 of the 2021 WSA.
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*NOT YET APPROVED* Attachment B
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SECTION 2. The Council finds that approval of a Minimum Purchase transfer from
the City of Mountain View to the City to East Palo Alto is not a "project" for the purposes of
CEQA as it involves an administrative activity that does not result in a direct change to the
environment (see 14 CCR Section 15378(b)(5)), and would not result in a direct or reasonably
foreseeable indirect physical change in the environment (see 14 CCR Section 15060(c)(2)).
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services
5.b
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March 02, 2022 www.cityofpaloalto.org
MINIMUM PURCHASE AMENDMENT AND MOUNTAIN VIEW –EAST PALO ALTO MINIMUM PURCHASE TRANSFER
Staff: Karla Dailey and Lisa Bilir
.CITY OF
-PALO ALTO
5.c
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AGENDA
•Overview of amendments to Water Supply Agreement with
San Francisco
•#1 Paired Transfer of Minimum Purchase and Individual
Supply Guarantee
•#2 Separate Proposed Minimum Purchase Obligation
Transfer Between Two Wholesale Customers
•Adoption Process
~CITY OF
~PALO ALTO
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KEY PARAMETERS OF WSA AMENDMENT #1
•Allows for the paired transfer of Minimum Purchase and
Individual Supply Guarantee (ISG)
•Minimum Purchases can be transferred to Wholesale
Customers that have an ISG
•Transfers limited to 6 mgd total and 50% of original
Minimum Purchase for each Minimum Purchase Agency
•Palo Alto’s Financial Interests Protected:
•Transferee subject to a Temporary Modified Minimum Purchase Quantity
(TMMPQ) based on most-recent 5 non-drought year purchases from RWS
•Transferee will secure a new Permanent Minimum Purchase after
purchasing TMMPQ for 3 consecutive years
•MV/EPA agreement requires WSA amendment approval by Wholesale
Customers and SFPUC
~CITY OF
~PALO ALTO
5.c
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FINANCIAL AND WATER SUPPLY PROTECTIONS
•Palo Alto is not a participant in a current or future paired
transfer of ISG and Minimum Purchase
•This amendment will not result in any new or different
financial risks to Palo Alto
•Water Supply Protections
•Supply Assurance remains unchanged at 184 mgd
•Minimum Purchase transfers must be permanent
•Transfers limited to 6 mgd cumulative and 50% of original Minimum
Purchase for each Minimum Purchase Agency
•Not applicable to the 2017 Palo Alto/East Palo Alto ISG
transfer
~CITY OF
~PALO ALTO
5.c
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BENEFITS OF PROPOSED WSA AMENDMENT
•Removes existing barrier to water transfers among the
BAWSCA agencies
•Water transfers between BAWSCA agencies offer potential cost-effective
water supply to meet needs for new development within service area
•Transferring water to promote efficient use is consistent with State law
•State and environmental agencies support this concept
•SFPUC has indicated that removing this barrier to potential transfers will
make it easier for them to develop other new supplies as necessary
•Removes existing barrier for a Minimum Purchase Agency to
reduce its Minimum Purchase obligation with a transfer
•Protects existing rights and obligations for all, including non-
participating agencies
•Other benefit: Increased purchases from RWS reduce unit
costs for all BAWSCA agencies
~CITY OF
~PALO ALTO
5.c
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SEPARATE MIN. PURCHASE OBLIGATION TRANSFER
•In 2017, MV transferred 1.0 mgd of ISG to EPA
•MV and EPA request a parallel action to the Proposed WSA
Amendment
•Allow the parties to convert the 1.0 mgd ISG sold to EPA
into a transfer of up to 1.0 mgd of MV’s Minimum
Purchase plus ISG, in 0.25 mgd increments
•Proposal mimics expedited process to protect others’
interest
•MV and EPA ask that this separate amendment be acted on
in parallel with larger Proposed WSA Amendment
~CITY OF
~PALO ALTO
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WSA Amendment Adoption Process
•On January 26, 2021, SFPUC approved the Amended and Restated WSA,
pending approval by the requisite number of Wholesale Customers
•MV/EPA agreement requires WSA amendment approval by Wholesale
Customers and SFPUC
•BAWSCA is recommending adoption by all member agencies by June 2022
•Individual member agencies considering action at this time
~CITY OF
~PALO ALTO
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Recommended Motion
Staff recommends the UAC recommend that the City Council adopt two
resolutions:
1) Approving the attached “2021 Amended and Restated Water Supply
Agreement Between the City and County of San Francisco Wholesale
Customers in Alameda County, San Mateo County, and Santa Clara County”
and authorizing the City Manager to execute such Agreement when final
execution copies are prepared and distributed by the Bay Area Water Supply
and Conservation Agency (BAWSCA);
2) Approving a Minimum Purchase Transfer from the City of Mountain View to
the City of East Palo Alto.
~CITY OF
~PALO ALTO
5.c
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City of Palo Alto (ID # 13660)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend the City Council Adopt a Resolution Approving the Fiscal Year
2023 Water Utility Financial Plan, Including Reserve Transfers, and Increasing
Water Rates by Amending Rate Schedules W-1 (General Residential Water
Service), W-2 (Water Service From Fire Hydrants), W-3 (Fire Service
Connections), W-4 (Residential Master-Metered and General Non -Residential
Water Service), and W-7 (Non-Residential Irrigation Water Service)
From: Director of Utilities
Lead Department: Utilities
RECOMMENDATION
Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council:
1. Adopt a resolution (Attachment A):
a. Approving the Fiscal Year (FY) 2023 Water Utility Financial Plan (Linked Document);
b. Approving a transfer of up to $13.964 million from the Capital Improvement
Program (CIP) Reserve to the Operations Reserve in FY 2022; and
c. Increasing Water Utility Rates Via the Amendment of Rate Schedules W-1 (General
Residential Water service), W-2 (Water Service from Fire Hydrants), W-3 (Fire
Service Connections), W-4 (Residential Master-Metered and General Non-
Residential Water Service), and W-7 (Non-Residential Irrigation Water Service)
EXECUTIVE SUMMARY
The FY 2023 Water Utility Financial Plan includes projections of the utility’s costs and revenues
for FY 2022 through FY 2027. Costs are projected to rise by about 4% per year over the next
several years. Some capital projects were deferred in FY 2017 through FY 2021 leading to lower
capital costs than budgeted. Many of these deferred capital projects are anticipated to be
completed in FY 2022 and FY 2023, and a combination of funds from the Operations, CIP, CIP
Reappropriations and Commitments reserve balances are available to provide funding.
Additionally, the effects of the COVID-19 pandemic tended to increase overall water use in Palo
Alto, primarily from the residential sector. This, together with h igher temperatures, led to
higher revenues than forecasted in FY 2020 and FY 2021. During the first half of FY 2022, water
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City of Palo Alto Page 2
use in Palo Alto declined approximately 8% overall relative to FY 2020 levels as customers have
responded to state, regional and local calls for water conservation during the ongoing drought.
However, Water Utility reserve levels remain healthy at year end FY 2021: the CIP Reserve is at
the maximum guideline level of $10.7 million and the Operations Reserve is also at the
maximum guideline level of approximately $14 million with an additional $7 million above the
maximum that is considered unassigned. There is also $9 million available in the Rate
Stabilization Reserve at year end FY 2021. These reserve levels not only have allowed the W ater
Utility to hold rates flat for two years (FY 2021 and FY 2022), but also now allow the Water
Utility to use these reserves to mitigate distribution rate increases (rates that cover the cost to
deliver water within the City) to under 5% annually from FY 2023 through FY 2027 despite the
ongoing drought conditions and the expected impact to water sales and revenue while still
funding essential capital investments.
Customers have a separate commodity rate for purchased water from the San Francisco Public
Utilities Commission (SFPUC) relative to the rest of the distribution-related portion of the
volumetric rates. This commodity charge passes-through SFPUC rate increases to customers
(Resolution 9844). The pass-through commodity rate is currently $4.10 per hundred cubic feet
(CCF), and it has remained at $4.10 since FY 2017. On November 23, 2021, the SFPUC declared a
local water shortage emergency by Resolution No. 21-0177 calling for voluntary system-wide
10% water use reductions. SFPUC serves retail customers in San Francisco as well as Palo Alto
and 25 other Wholesale Customers in the Bay Area. Wholesale Customers’ collective voluntary
water purchase cutback level is 13.7% from FY 2020 levels while Palo Alto’s voluntary water
purchase cutback level is 8% from FY 2020 levels. (Staff plans to request approva l from Council
for specific measures to implement these cutbacks in Palo Alto via a separate staff report).
As a result of these expected drought-related water purchase cutbacks, SFPUC provided a
preliminary estimated range of wholesale rate increases from 15.1% to 25.1% for FY 2023 for
the W-25 wholesale rate for agencies with long-term contracts; SFPUC could impose one or the
other of the two rates at the end of the range, or potentially a rate in between . The current rate
of $4.10/CCF would increase on or around July 1, 2022 to between $4.72/CCF and $5.13/CCF.
The SFPUC will not determine its final wholesale customer rate for FY 2023 until May or June,
2022. If SFPUC’s final rate for FY 2023 does increase, Palo Alto will notify customers 30 days in
advance of the pass-through rate increase via their billing statements. This commodity rate
estimate is higher than SFPUC’s previous estimates, and SFPUC reports that the reason for the
change is the ongoing drought conditions and expected reductions in wholes ale customer
water use collectively. The total water rate increase range for Palo Alto customers is between
9% to 13% at the SFPUC commodity increase levels of 15.1% and 25.1%, respectively. This is
equivalent to a monthly water bill increase of between $7.77 and $11.46 for residential
customers with annual median water usage at the SFPUC commodity increase levels of 15.1%
and 25.1%, respectively.
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BACKGROUND
Every year staff presents the UAC with Financial Plans for the Electric, Gas, Water, and
Wastewater Collection Utilities. The Financial Plans recommend rate adjustments required to
maintain the financial health of these enterprises. These Financial Plans include a
comprehensive overview of the operations of each enterprise, both retrospective and
prospective, and are intended to be a reference for UAC and Council members as they review
the budget and staff’s rate recommendations. Each Financial Plan also contains a set of Reserve
Management Practices describing the reserves for each utility and the man agement practices
for those reserves.
All of the City’s potable water comes from the SFPUC’s Hetch Hetchy Regional Water System.
This same system serves San Francisco and other Bay Area cities. San Francisco operates the
system, but as much as two thirds of the water is used outside of San Francisco by 26 cities,
water districts, and private utilities. These agencies, including the City, are frequently referred
to as the “wholesale customers” (as compared to the SFPUC’s “retail customers” in San
Francisco). The Bay Area Water Supply and Conservation Agency (BAWSCA) represents the
wholesale customers and negotiates with the SFPUC on their behalf. BAWSCA also ensures
contract compliance through regular review of the SFPUC’s accounting and capital
expenditures.1
The Water Utility has two main costs: water supply costs (primarily the cost of water delivered
to Palo Alto from the Hetch Hetchy Regional Water System) and the costs of operating the
distribution system (the system of pipes, pumps, reservoirs, and other infrastructure that
carries water to Palo Alto customers). Both cost components have been increasing and are
expected to continue to increase.
For many years, the largest cost increases have been on the water supply side. This is due
primarily to major capital investments the SFPUC has made since 2010, partly due to pressure
from wholesale customers. The Water System Improvement Program (WSIP) is a $4.8 billion
capital improvement program, one of the largest in the country, to rehabilitate and seismic ally
strengthen the lower portions of the Hetch Hetchy Regional Water System. One of the goals is
to achieve the capability to return to service within 24 hours after a major earthquake.
Although much of the work is complete (the program was 98.9% complete as of September
2021), some of the projects are still under construction and bond financing of WSIP projects
over the next several years will continue to drive wholesale rates up. The program has greatly
improved the resiliency of the Hetch Hetchy Regiona l Water System but has also led water
supply costs to approximately double.
CPAU’s operational costs for the water utility have increased by approximately 6.2% per year
over the last five years; operations and maintenance costs and resource management co sts
were the main reasons for the increase, driven primarily by increases in salaries and benefits.
1 For a video summary of BAWSCA’s activities, see https://vimeo.com/283596665/5619ce2c11
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Capital costs have fluctuated from year to year. This Financial Plan projects increases in capital
and operational costs that align as much as possible with the City’s Budget and Long-Range
Financial Forecast and average approximately 3% per year over the next five years.
The UAC reviewed the preliminary financial forecasts at its December 1, 2021 meeting (UAC
Report #13659). The Finance Committee reviewed the preliminary financial forecast s at its
February 1, 2022 meeting (Staff Report 13839).
DISCUSSION
Staff’s annual assessment of the financial position of the City’s water utility is completed to plan
for adequate revenue to fund operations, in compliance with the cost of service requirements
set forth in the California Constitution (Proposition 218). This includes making long-term
projections of market conditions, the physical condition of the system, and other factors that
could affect utility costs, and setting rates adequate to recover these costs. The current rate
proposals are also based on the cost of service (COS) methodology described in the 2012 Palo
Alto Water Cost of Service & Rate Study, which was updated in 2015, and the 2015 Drought
Rate memorandum completed by Raftelis Financial Consultants, and the 2019 update titled
“Proposed FY 2020 Water Rates,” (see Attachment Q to staff report 10295.2)
Proposed Actions
1. Increase rates by 4% for Rate Schedules W-1 (General Residential Water service), W-2
(Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential
Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential
Irrigation Water Service); and
2. Transfer up to $13.964 million from the CIP Reserve to the Operations Reserve in FY
2022.
The FY 2023 Water Utility Financial Plan describes these proposed actions in detail. Tables 1
through 3 below illustrate the current and proposed rates under this Financial Plan. The rates
shown below are in addition to the pass-through commodity rate that is charged to customers
based on SFPUC supply charges. The pass-through commodity rate is currently $4.10 per CCF.
However, with SFPUC’s proposed rate increase range of 15.1% to 25.1%, the current rate would
increase on or around July 1, 2022 to between $4.72/CCF and $5.13/CCF, with no additional
increase projected in the SFPUC meter charge.
2 A cost of service study (COS) is a study using industry-standard techniques to determine how the costs of running
the utility should be recovered from its customers; charges to each customer are set in proportion to the cost of
serving that customer.
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Table 1: Current and Proposed Water Consumption Charges
Current
(7/1/2019)
Proposed
(7/1/2022)
Change
($/CCF)
Change (%)
W-1 (Residential) Volumetric Rates ($/CCF)
Tier 1 Rates 2.56 2.67 0.11 4%
Tier 2 Rates 5.97 6.21 0.24 4%
W-2 (Construction) Volumetric Rates ($/CCF)
Uniform Rate 3.61 3.76 0.15 4%
W-4 (Commercial) Volumetric Rates ($/CCF)
Uniform Rate 3.61 3.76 0.15 4%
W-7 (Irrigation) Volumetric Rates ($/CCF)
Uniform Rate 5.50 5.72 0.22 4%
Table 2 and Table 3 show the current monthly service charges for rate schedules W-1, W-4 and
W-7.
Table 2: Current and Proposed Monthly Service Charges for Residential W-1
Meter
Size
Monthly Service Charge ($/month
based on meter size)
Change
Current
(7/1/2019)
Proposed
(7/1/2022)
$ %
5/8” 20.25 21.06 0.81 4%
3/4” 20.25 21.06 0.81 4%
1” 20.25 21.06 0.81 4%
1 ½” 65.40 68.02 2.62 4%
2” 101.17 105.22 4.05 4%
3” 214.44 223.02 8.58 4%
4” 381.37 396.63 15.26 4%
6” 780.79 812.03 31.24 4%
8” 1,436.57 1,494.04 57.47 4%
10” 2,271.20 2,362.05 90.85 4%
12” 2,986.60 3,106.07 119.47 4%
Table 3: Current and Proposed Monthly Service Charges for W -4 and W-7
Meter
Size
Monthly Service Charge ($/month
based on meter size)
Change
Current
(7/1/2019)
Proposed
(7/1/2022)
$ %
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5/8” 17.71 18.42 0.71 4%
3/4” 23.67 24.62 0.95 4%
1” 35.59 37.02 1.43 4%
1 ½” 65.40 68.02 2.62 4%
2” 101.17 105.22 4.05 4%
3” 214.44 223.02 8.58 4%
4” 381.37 396.63 15.26 4%
6” 780.79 812.03 31.24 4%
8” 1,436.57 1,494.04 57.47 4%
10” 2,271.20 2,362.05 90.85 4%
12” 2,986.60 3,106.07 119.47 4%
Table 4 shows the current and proposed monthly service charges for rate schedule W -3.
Table 4: Current and Proposed Monthly Service Charges for Fire Services (W -3)
Meter
Size
Monthly Service Charge ($/month
based on meter size)
Change
Current
(7/1/2019)
Proposed
(7/1/2022)
$ %
2” $4.17 $4.34 0.17 4%
4” $25.81 $26.85 1.04 4%
6” $74.96 $77.96 3.00 4%
8” $159.74 $166.13 6.39 4%
10” $287.27 $298.77 11.50 4%
12” $464.02 $482.59 18.57 4%
Bill Impact of Proposal
Table 5 and Table 6 show the impact of the proposed July 1, 2022 rate changes on the median
residential, commercial and irrigation bills including the SFPUC commodity pass-through rate
increase of 15.1% and 25.1%.
Table 5: Impact of Proposed Water Rate Changes on Residential Bills
Usage
(CCF/mo.)
Bill under
Current
Rates
(7/1/2019)
Bill under
Proposed
Rates SFPUC
15.1% Rate
Increase
(7/1/2022)
Change Bill under
Proposed
Rates SFPUC
25.1% Rate
Increase
(7/1/2022)
Change
$/mo. % $/mo. %
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4 $46.89 $50.62 $3.73 8% $52.26 $5.37 11%
(Winter
median) 7 $70.28 $76.33 $6.05 9% $79.20 $8.92 13%
(Annual
median) 9 $90.42 $98.19 $7.77 9% $101.88 $11.46 13%
(Summer
median)
14 $140.77 $152.84 $12.07 9% $158.58 $17.81 13%
25 $251.54 $273.07 $21.53 9% $283.32 $31.78 13%
Table 6: Impact of Proposed Water Rate Changes on Commercial Bills
Usage
(CCF/mo.)
Bill under
Current
Rates
(7/1/2019)
Bill under
Proposed
Rates SFPUC
15.1% Rate
Increase
(7/1/2022)
Change Bill under
Proposed
Rates SFPUC
25.1% Rate
Increase
(7/1/2022)
Change
$/mo.
%
$/mo. %
Commercial (W-4) (5/8” meters)
(Annual
median)
12 $110.23 $120.18 $9.95 9% $125.10 $14.87 13%
(Annual
average)
64 $511.15 $561.14 $49.99 10% $587.38 $76.23 15%
Irrigation (W-7) (1 ½” meters)
(Winter
median) 9 $151.80 $161.98 $10.18 7% $165.67 $13.87 9%
(Summer
median)
37 $420.60 $454.30 $33.7 8% $469.47 $48.87 12%
(Winter
average)
56 $603.00 $652.66 $49.66 8% $675.62 $72.62 12%
(Summer
average)
199 $1,975.80 $2,145.58 $169.78 9% $2,227.17 $251.37 13%
Median quantities of water use are expected to decrease from pre-drought levels, however, as
calls for water conservation continue. Customers who conserve will experience less of a bill
increase than those customers who are not reducing water consumption.
FY 2023 Financial Plan’s Projected Rate Adjustments for the Next Five Fiscal Years
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Table 4 shows the projected rate adjustments over the next five years and their impact on the
annual median residential water bill for 5/8” customers. These projected rate adjustments
include the impact of the range of projected changes to the pass -through commodity rate.
Given the uncertainty surrounding drought water demand forecasts these projections are
highly uncertain beyond FY 2024.
Table 7: Projected Rate Adjustments, FY 2023 to FY 2027 (5/8” meter)
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Water Utility (SFPUC 15.1% rate
increase in FY 2023) 9% 9% 3% 2% 0%
Estimated Monthly Bill $98.19 $107.03 $110.25 $112.46 $112.46
Estimated Bill Impact ($/mo)1 $7.77 $8.84 $3.22 $2.21 $0
Water Utility (SFPUC 25.1% rate
increase in FY 2023) 13% 4% 0% 5% 0%
Estimated Monthly Bill $101.88 $105.96 $105.96 $111.26 $111.26
Estimated Bill Impact ($/mo)1 $11.46 $4.08 $0 $5.30 $0
1) estimated impact on median residential water bill for customers with 5/8” meter, which is
currently $90.42.
Figures 1 and 2 below illustrate the projected increases in the Water Utility’s costs between FY
2022 and FY 2027.
Figure 1: Projected FY 2022 and FY 2027 costs
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Figure 2: Percentage of Total Cost Increase From FY 2022 to FY 2027
Attributed to Supply, Capital, and Operations Costs
The “Capital” bars on Figure 1 reflect the capital program contributions to the CIP Reserve.
Additionally, this Financial Plan includes one-time transfers to the CIP Reserve to fund seismic
reservoir replacement work. There are CIP funds available for projects that were budgeted in FY
2021 and prior years that are carried forward or reappropriated to FY 2022 and will be used to
offset the new CIP funding needs.
The cost of water is a major driver for the increase in the water utility’s costs (and therefore
rates) over the next several years. Wholesale water costs are adopted by the SFPUC, and
generally have changed on an annual basis. Wholesale rates are projected to increase annually
on average by 6% per year from FY 2023 to FY 2027. The SFPUC is currently engaged in a $4.8
billion Water System Improvement Program (WSIP) for regional projects. As of September 30,
2021, 45 of the 52 regional projects were complete or in close-out while 5 of the regional
projects were under construction.3 This has resulted and will continue to result in large
increases in the annual debt service costs assigned to wholesale customers like Palo Alto. After
3 First Quarter FY 2021 - 2022 WSIP Regional Quarterly Report,
https://sfpuc.org/sites/default/files/documents/Q1FY22_WSIP_Regional_Qtrly_Report.pdf; two projects do not
include construction: Long-Term Mitigation Endowment and Watershed and Environmental Improvement
Program.
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each WSIP project is completed, wholesale customers must start paying the debt service costs
within 3 to 4 years. For most of those costs, funded with bond financing, the costs will be paid
off over approximately 30 years. The currently estimated WSIP completion date is June 30,
2023, as adopted by the SFPUC in April of 2020.
As WSIP projects are completed, SFPUC is pursuing a suite of other capital improvement work;
dam safety improvements and Mountain Tunnel repairs are rate increase drivers during the
next 10-year timeframe. Future and in-progress construction work will require bond funding,
and the SFPUC’s financial plans show debt service cost for the water enterprise growing by 32%
between FY 2021 and FY 2026, and by 40% by FY 2028.4 Initial wholesale rate increase
projections are 6% per year on average through FY 2027 to cover increasing costs, primarily
debt service from ongoing capital investments.
Changes in usage due to drought, or recovery from drought, can make the magnitude of future
increases difficult to predict. The SFPUC’s costs to operate the Regional Water System are
primarily fixed costs, so the water rate charged to wholesale customers like the City of Palo Alto
is highly dependent on water usage by all users of the Regional Water System. The FY 2023
financial plan calculates rate impacts based upon the January 2022 rate range provided by
SFPUC. However, the forecast is highly uncertain beyond FY 2024 because of the uncertainty
surrounding drought assumptions.
The SFPUC has been accumulating funds in its Wholesale Customer Balancing Account due to a
variety of factors, including: SFPUC sold more wholesale water than the sales projection it used
for rate setting, there were cost savings in the wholesale revenue requirement due to the
SFPUC’s debt refinancing, and BAWSCA’s annual review of the wholesale revenue requirement
resulted in credits applied to the balancing account . The SFPUC has been returning these funds
to wholesale customers by using them to offset the required revenues from wholesale
customers and holding rates constant since FY 2017. Because of the water use reductions
expected during the ongoing drought conditions and calls for voluntary conservation (10%
system-wide and 13.7% for the wholesale customers collectively), all of the available funding in
the balancing account (approximately $86 million at year end FY 2021) is expected to be
returned to wholesale customers in FY 2022 and FY 2023 ($43 million during the curr ent fiscal
year and an additional $43 million in FY 2023). Without the use of the balancing account,
SFPUC’s rate range would be higher.
There remains some uncertainty in the forecasts of capital costs for the water utility in coming
years. Water main replacement costs have risen substantially in recent years. The regional and
even national focus on infrastructure improvement has created labor shortages, leading to
higher bid prices than were seen in the past. Several factors go into main replacement cost,
such as location as well as the length of main segments. Consistent with the FY 2022 Financial
Plan, this plan includes larger main replacement construction projects every other year instead
4 FY 2018-19 & FY 2019-20 Adopted SFPUC Budget,
https://sfwater.org/modules/showdocument.aspx?documentid=13147
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of smaller projects annually. This main replacement schedule will allow CPAU to meet its main
replacement needs and addresses challenges in the current construction market while
optimizing current staffing resources. Larger main replacement construction projects every
other year are anticipated to attract more contractors to bid on the larger projects.
Capital Projects & Reserves
Higher bid cost and delays in project schedules resulted in a deferment of main replacement
projects in FY 2017 through FY 2021, temporarily lowering CIP expenditures. This resulted in the
Operations Reserve being filled to the maximum guideline level. For example, at year end FY
2021, an estimated $7 million was above the maximum guideline level in the Operations
Reserve, and was assigned to the Operations Reserve. The funds will be used to cover water
utility operational and capital costs in FY 2022 and FY 2023. The capital budget includes one-
time seismic water system upgrades and/or replacements for the Corte Madera, Park and Dahl
reservoirs to improve earthquake resistance. This work will improve protection from water loss
at these reservoirs in a seismic event.
This Plan updates the transfer proposals due to project cost increases and available reserve
balances. Specifically, the proposed transfer from the Operations Reserve to the CIP Reserve is
$3.5 million in FY 2023 (see lines 6 and 8 in Table 8). $4 million is projected to be transferred in
FY 2026 from the Operations and Rate Stabilization Reserves to the CIP Reserve (see lines 6, 7
and 8 in Table 8). FY 2024 and FY 2026 transfers from the Rate Stabilization Reserve to the
Operations Reserve will manage the trajectory of future year rate increases and provide
sufficient funding for the seismic reservoir retrofits/replacements (see line 7 in Table 8).
Staff will request Council approval for the transfers in future Financial Plans , if needed, once the
year-end FY 2022 reserve balances are known. The Operations Reserve levels are projected to
be sufficient to support these transfers, together with the FY 2024 and FY 2026 transfers from
the Rate Stabilization Reserve to the Operations Reserve described above.
Line 12 of Table 8 shows the anticipated CIP Reserve transfers in FY 2022 through FY 2027 from
the CIP Reserve to the Operations/Unassigned Reserve. Line 10 of Table 8 shows the
anticipated CIP Reserve transfers, or capital program contributions, in FY 2022 through FY 2027
from the Operations/Unassigned Reserve to the CIP Reserve. There is also approximately $10.4
million in CIP that was budgeted in FY 2021 or prior years that is reappropriated or carried
forward from previous years and is currently in the CIP Reappropriations and CIP Commitments
Reserves. See Appendix B of the Water Utility Financial Plan for detailed information.
The CIP Reserve aims to stabilize uneven annual funding associated with ongoing CIP projects
including water main replacements that are scheduled to occur every other year, and is a
source for one-time or immediately needed projects. In June 2020 Council approved consistent
annual funding from the Operations to the CIP Reserves (Resolution 9904) and in June 2021
approved a transfer of up to $13.24 million from the Operations Reserve to the CIP Reserve in
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FY 2022 (Resolution 9974); $5 million of this was for one-time costs associated with reservoir
replacements/rehabilitations. This Financial Plan projects that a capital program contribution of
$8.24 million in FY 2022 (see line 9 of Table 8) from the Operations Reserve to t he CIP Reserve
will be sufficient based upon actual and projected revenue and expenses as well as FY 2021
year-end reserve balances.
Withdrawals from the CIP Reserve for use on capital projects require Council action.5 This
Financial Plan therefore requests Council approval to transfer up to $13.964 million from the
CIP Reserve to the Operations Reserve to pay for estimated CIP in FY 2022. This figure is the
portion of planned CIP that will not be paid for through funds collected in prior years
(essentially the FY 2022 Capital budget, less funds available in the Reappropriations and
Commitments Reserves), shown in line 12 of Table 8 . The need for each of the transfers will be
re-evaluated once the year end reserve balances for FY 2022 are known. Figure 3 shows the CIP
Reserve year end balances.
Rate Stabilization Reserve
The Rate Stabilization Reserve is projected to be used to buffer distribution rate increases as
SFPUC initiates a series of large wholesale supply rate increases beginning in July 2022. In June
2020, Council approved a transfer of $5 million from the Operations Reserve to the Rate
Stabilization Reserve, bringing the balance in the reserve to $9.07 million. CPAU expects to
transfer $6 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2024
and an additional $3 million in FY 2026. The use of the Rate Stabilization Reserve balances in
this way, together with the cost and revenue projections in this Financial Plan , is expected to
hold CPAU water rate increases to 5% or less annually over the next five years, while continuing
to fund essential capital work. This Financial Plan projects that the Rate Stabilization Reserve
will be exhausted by the end of FY 2026. Figure 4 illustrates the year end reserve balances for
FY 2021 (actual) and projected through FY 2027.
5 See Section 5(b) of the Water Utility Reserves Management Practices; Appendix C to the attached Water Financial
Plan.
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Figure 3: Actual FY 2021 and Projected Capital Reserve Balances FY 2022 to FY 2027
Figure 4: Actual Reserve Levels for FY 2021 and Projections through FY 2027
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Table 8: Operations & Unassigned, Rate Stabilization and CIP Reserves Starting and Ending
Balances, Revenues, Transfers To/(From) Reserves and Capital Program Contribution
To/(From) Reserves Projected for FY 2022 to FY 2027 ($000)
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Starting Balance
(1) Operations/Unassigned 20,774 17,926 10,981 11,179 10,102 9,747
(2) Rate Stabilization 9,069 9,069 9,069 3,000 3,000 -
(3) CIP 10,707 4,983 2,961 2,741 7,635 1,916
Revenues
(4) Total Revenue 45,917 50,538 56,639 58,912 60,627 60,972
(5) Transfers In 568 580 591 603 615 628
Transfers
(6) Operations/Unassigned - (3,500) 2,569 - (1,000) -
(7) Rate Stabilization - - (6,069) - (3,000) -
(8) CIP - 3,500 3,500 - 4,000 -
Capital Program
Contribution
(9) Operations/Unassigned (8,240) (8,487) (8,742) (9,004) (9,004) (9,004)
(10) CIP 8,240 8,487 8,742 9,004 9,004 9,004
Expenses
(11) Total Expenses other than
CIP (40,820) (45,797) (49,966) (50,689) (50,688) (49,926
)
(12) Planned CIP (13,964) (14,010) (12,462) (4,109) (18,723) (3,980)
(13) Transfers Out (273) (278) (894) (900) (906) (911)
Ending Balance
(1)+(4)+(5)+(6)
+(9)+(11)+(13) Operations/Unassigned 17,926 10,981 11,179 10,102 9,747 11,505
(2)+(7) Rate Stabilization 9,069 9,069 3,000 3,000 - -
(3)+(8)+(10)+
(12)* CIP 4,983 2,961 2,741 7,635 1,916 6,940
Operations Reserve
Guideline Levels
(14) Minimum 6,755 7,574 8,361 8,480 8,481 8,357
(15) Maximum 13,510 15,148 16,721 16,961 16,962 16,714
* Planned CIP (item 12) is reflected as an expense in the CIP Reserve and does not include CIP
funded through Reappropriations or Commitments reserves. This Financial Plan requests
Council approval to transfer the Planned CIP of $13.964 million from the CIP Reserve to the
Operations Reserve.
Water Bill Comparison with Surrounding Cities
Table 9 compares water bills for residential customers to those in surrounding communities as
of October 2021 (under current the City’s current water rates). Palo Al to customers have some
of the highest monthly bills of the group, although bills for smaller water users are lower than
in some surrounding communities. It is unclear at this time what water rate changes may be
implemented in surrounding communities for FY 2023 The average community rate calculated
in the following table is the mean of the six surrounding communities listed. These communities
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are the same six that Palo Alto compares itself to in the annual budget across Water,
Wastewater, Gas and Electric industries.
Table 9: Residential Monthly Water Bill Comparison
Usage
(CCF/month)
Residential monthly bill comparison ($/month)*
As of January, 2021
Palo
Alto
Menlo
Park
Mountain
View Hayward Redwood
City
Santa
Clara Los Altos
Average of
Surrounding
Communities
4 $46.89 $50.83 $38.80 $39.80 $54.04 $26.76 $44.03 $42.38
(Winter
median) 7 $70.28 $73.43 $60.07 $61.34 $76.09 $46.83 $61.87 $63.27
(Annual
median) 9 $90.42 $88.49 $74.25 $75.70 $90.79 $60.21 $73.77 $77.20
(Summer
median) 14 $140.77 $129.34 $109.70 $119.80 $138.94 $93.66 $106.07 $116.25
25 $251.54 $229.75 $230.19 $216.82 $267.39 $167.25 $192.06 $217.24
*Based on the FY 2013 BAWSCA survey, the percentage of SFPUC as the source of
potable water supply was 100% for Palo Alto, 95% for Menlo Park, 100% for Redwood
City, 87% for Mountain View, 10% for Santa Clara and 100% for Hayward. Los Altos
does not receive water supply from SFPUC.
Changes from Last Year’s Financial Plan
Table 10 shows rate projections from the last two Financial Plans for FY 2021 and FY 2022 as
well as the expected impact of SFPUC’s range of rate increases for wholesale rates when
combined with Palo Alto’s distribution rate increase. If SFPUC’s rate increase is 25.1% in FY
2023, the rate forecast is more variable with an overall rate increase for Palo Alto customers
that is higher in FY 2023, and similar in FY 2026 to last year’s projection, but lower in FY 2024
and FY 2025. Given the magnitude and range of the SFPUC wholesale rate increase a s well as
the uncertainty regarding drought conditions, the water rate forecast is highly uncertain in FY
2024 and beyond.
Table 10: Proposed and Projected Water Revenue Changes for FY 2023 to FY 2027
Projection FY
2023
FY
2024
FY
2025
FY
2026
FY
2027
Current low range (SFPUC Rate
Increase 15.1% in FY 2023)
9% 9% 3% 2% 0%
Current high range (SFPUC Rate
Increase 25.1% in FY 2023)
13% 4% 0% 5% 0%
FY 2022 Plan 5% 5% 5% 5% -
FY 2021 Plan 5% 5% 5% - -
Table 11 and Table 12 show the proposed water rate increases broken out into the needed
increases to commodity revenues, to cover the costs of purchasing water from SFPUC at both
ends of its preliminary estimated range and separately the distribution revenue incre ases to
pay for the upkeep of Palo Alto’s water distribution system.
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Table 11: Proposed Commodity and Distribution Water Rate Changes FY 2023 to FY 2027 if
SFPUC Wholesale Rate Increase is 15.1% in FY 2023
Projection FY
2023
FY
2024
FY
2025
FY
2026
FY
2027
Commodity Rate (SFPUC Wholesale Rate) 15% 15% 2% 0% 0%
Distribution Rate 4% 4% 4% 4% 0%
Total Rate 9% 9% 3% 2% 0%
Table 12: Proposed Commodity and Distribution Water Rate Changes FY 2023 to FY 2027 if
SFPUC Wholesale Rate Increase is 25.1% in FY 2023
Projection FY
2023
FY
2024
FY
2025
FY
2026
FY
2027
Commodity Rate (SFPUC Wholesale Rate) 25% 5% -4% 5% 0%
Distribution Rate 4% 4% 4% 4% 0%
Total Rate 13% 4% 0% 5% 0%
This plan uses the Rate Stabilization Reserve and CIP Reserve to stabilize rates while
anticipating a series of large wholesale water rate increases and funding needed for water CIP
budgets.
NEXT STEPS
The Finance Committee will consider the recommended water rate changes in March or April.
Assuming the Finance Committee supports the proposed rate adjustments, staff will send
notification of the potential rate increases to customers as required by Article XIIID of the State
Constitution (added by Proposition 218) expected in April 2022. The City Council will consider
the proposed Financial Plans and amended rate schedules with the FY 2023 budget, expected in
June, at which time the public hearing required by Article XIIID of the State Constitution will be
held.
RESOURCE IMPACT
Staff projects estimated revenue for the Water Utility in FY 2023 to increase within the range of
approximately 9% ($3.9 million), if the SFPUC wholesale rate increase is 15.1%, to 13% ($5.6
million), if the SFPUC wholesale rate increase is 25.1%, as a result of the proposed rate changes.
The City is also a water customer, and staff projects required general fund cost for water
service to increase in FY 2023 by approximately $0.21 million if the SFPUC wholesale rate
increase is 15.1%, up to approximately $0.26 million if the SFPUC wholesale rate increase is
25.1% as a result of the proposed rate changes. See the FY 2023 Water Utility Financial Plan for
a more comprehensive overview of the projected cost and revenue changes for the next five
years.
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POLICY IMPLICATIONS
The proposed water rate adjustments are consistent with Council -adopted Reserve
Management Practices that are part of the Financial Plans. Staff developed the water rate
adjustments using a cost-of-service study and methodology consistent with the cost of service
requirements of Proposition 218.
ENVIRONMENTAL REVIEW
The UAC’s review and recommendation to Council on the FY 2023 Water Financial Plan and rate
adjustments does not meet the definition of a project requiring California Environmental
Quality Act (CEQA) review under Public Resources Code Section 21065 thus no environmental
review is required.
Attachments:
• Attachment A: Resolution
• Attachment B: Water Rate Schedules
• Attachment C: Presentation
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Attachment A
6056604
* NOT YET APPROVED *
Resolution No.__________
Resolution of the Council of the City of Palo Alto Approving the
FY 2023 Water Utility Financial Plan and Reserve Transfer, and
Increasing Water Rates by Amending Rate Schedules W-1
(General Residential Water Service), W-2 (Water Service from
Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential
Master-Metered and General Non- Residential Water Service),
and W-7 (Non-Residential Irrigation Water Service)
R E C I T A L S
A. Each year the City of Palo Alto (“City”) regularly assesses the financial position of its
utilities with the goal of ensuring adequate revenue to fund operations. This includes making
long-term projections of market conditions, the physical condition of the system, and other
factors that could affect utility costs, and setting rates adequate to recover these costs. The
City does this with the goal of providing safe, reliable, and sustainable utility services at
competitive rates. The City adopts Financial Plans to summarize these projections.
B. The City uses reserves to protect against contingencies and to manage other aspects of
its operations, and regularly assesses the adequacy of these reserves and the management
practices governing their operation. The status of utility reserves and their management
practices are included in Reserves Management Practices attached to and made part of the
Financial Plans.
C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City
of Palo Alto may by resolution adopt rules and regulations governing utility services,
fees and charges.
D. On , 2022, the City Council held a full and fair public hearing regarding the
proposed rate increase and considered all protests against the proposals.
E. As required by Article XIII D, Section 6 of the California Constitution and applicable law,
notice of the 2022 public hearing was mailed to all City of Palo
Alto Utilities water customers by ____, 2022.
F. The City Clerk has tabulated the total number of written protests presented by the
close of the public hearing, and determined that it was less than fifty percent (50%) of
the total number of customers and property owners subject to the proposed water
rate amendments, therefore a majority protest does not exist against the proposal.
The Council of the City of Palo Alto does hereby RESOLVE, as follows:
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Attachment A
6056604
SECTION 1. The Council hereby adopts the FY 2023 Water Utility Financial Plan.
SECTION 2. The Council hereby approves a transfer from the Capital Improvement Program
Reserve to the Operations Reserve of up to $13,964,000 in FY 2022 as described in the FY 2023
Water Utility Financial Plan.
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule W-1 (General Residential Water Service) is hereby amended to read as attached
and incorporated. Utility Rate Schedule W-1, as amended, shall become effective July 1,
2022.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule W-2 (Water Service from Fire Hydrants) is hereby amended to read as attached
and incorporated. Utility Rate Schedule W-2, as amended, shall become effective July 1,
2022.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule W-3 (Fire Service Connections) is hereby amended to read as attached and
incorporated. Utility Rate Schedule W-3, as amended, shall become effective July 1, 2022.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule W-4 (Residential Master-Metered and General Non-Residential Water Service) is
hereby amended to read as attached and incorporated. Utility Rate Schedule W-4, as
amended, shall become effective July 1, 2022.
SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule W-7 (Non-Residential Irrigation Water Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule W-7, as amended, shall become effective
July 1, 2022.
SECTION 8. The City Council finds as follows:
a. Revenues derived from the water rates approved by this resolution do not exceed
the funds required to provide water service.
b. Revenues derived from the water rates approved by this resolution shall not be used
for any purpose other than providing water service, and the purposes set forth in
Article VII, Section 2, of the Charter of the City of Palo Alto.
c. The amount of the water rates imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the water service
attributable to the parcel.
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Attachment A
6056604
SECTION 9. The Council finds that the fees and charges adopted by this resolution are
charges imposed for a specific government service or product provided directly to the payor
that are not provided to those not charged, and do not exceed the reasonable costs to the City
of providing the service or product.
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Attachment A
6056604
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SECTION 10. The Council finds that the adoption of this resolution approving the Financial
Plan and Reserve transfers does not meet the California Environmental Quality Act’s
(CEQA) definition of a project under Public Resources Code Section 21065 and CEQA
Guidelines Section 15378(b)(5), because it is an administrative governmental activity which
will not cause a direct or indirect physical change in the environment, and therefore, no
environmental review is required. The Council finds that the adoption of this resolution
changing water rates to meet operating expenses, purchase supplies and materials, meet
financial reserve needs and obtain funds for capital improvements necessary to maintain
service is not subject to the California Environmental Quality Act (CEQA), pursuant to
California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of
Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented
to Council, the Council incorporates these documents herein and finds that sufficient
evidence has been presented setting forth with specificity the basis for this claim of CEQA
exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
________________________________ ________________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
________________________________ ________________________________
Assistant City Attorney City Manager
________________________________
Director of Utilities
________________________________
Director of Administrative Services
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GENERAL RESIDENTIAL WATER SERVICE
UTILITY RATE SCHEDULE W-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-1-1 Effective 7-1-202219
dated 7-1-20198 Sheet No W-1-1
A. APPLICABILITY:
This schedule applies to separately metered single-family residential dwellings receiving Water
Service from the City of Palo Alto Utilities.
B.TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Water Services.
C. RATES:
Per Meter
Monthly Service Charge: Per Month
For meters 5/8-inch to 1 inch ................................................................................... $ 20.2521.06
For 1 1/2 inch meter .................................................................................................. 65.4068.02
For 2-inch meter ........................................................................................................ 101.17105.22
For 3-inch meter ........................................................................................................ 214.44223.02
For 4-inch meter ........................................................................................................ 381.37396.63
For 6-inch meter ........................................................................................................ 780.79812.03
For 8-inch meter ........................................................................................................1,436.571,494.04
For 10-inch meter ......................................................................................................2,271.202,362.05
For 12-inch meter .......................................................................................................2,986.603,106.07
Per Hundred
Cubic Feet
Volumetric Rates: (To be added to Service Charge, applicable to all pressure zones.) Per Month
Commodity Rate:
Water Delivery Charge from SFPUC ....................................................................................$4.104.72
Distribution Rate:
Tier 1 usage ........................................................................................................................$2.562.67
Tier 2 usage (All usage over 100% of Tier 1) .......................................................................5.976.21
Attachment B
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GENERAL RESIDENTIAL WATER SERVICE
UTILITY RATE SCHEDULE W-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-1-2 Effective 7-1-202219
dated 7-1-20198 Sheet No W-1-2
Drought Surcharges (deactivated):
A drought surcharge will be added to the Customer’s applicable commodity rate for Tier 1 and Tier
2 Water usage when the City Council has determined that a Water reduction level is in effect for the
City as described in Section D.43. The drought surcharges in the table below are measured in dollars
per hundred cubic feet (ccf).
Water Usage
Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%)
Tier 1 0.20 0.43 0.64
Tier 2 0.58 1.21 1.85
Temporary Service – Developers
Temporary unmetered service to residential
subdivision developers, per connection ........................................................................ $6.00
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Commodity Rate
The Commodity Charge is based on the water delivery rate per the San Francisco Public
Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term
Contract. The Commodity Charge will be passed through automatically via periodic rate
adjustments to account for increases in wholesale water charges, as well as inflation. The
pass-through period will be effective for fiscal years 2020 through 2024, inclusive.
Customers will be provided notice of any adjustments via their billing statements.
3. Calculation of Usage Tiers
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GENERAL RESIDENTIAL WATER SERVICE
UTILITY RATE SCHEDULE W-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-1-3 Effective 7-1-202219
dated 7-1-20198 Sheet No W-1-3
Tier 1 Water usage shall be calculated and billed based upon a level of 0.2 ccf per day
rounded to the nearest whole ccf, based on Meter reading days of Service. As an
example, for a 30 day bill, the Tier 1 level would be 0 through 6 ccf. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
4. Drought Surcharge
During period of Water shortage or restrictions on local Water use, the City Council may,
by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or
25% level. While such a resolution is in effect, a drought surcharge will apply. The
purpose of the drought surcharge is to recover revenues lost as a result of reduced
consumption.
{End}
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WATER SERVICE FROM FIRE HYDRANTS
UTILITY RATE SCHEDULE W-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-2-1 Effective 7-1-202219
dated 7-1-20198 Sheet No W-2-1
A. APPLICABILITY:
This schedule applies to all Water taken from fire hydrants for construction, maintenance, and
other uses in conformance with provisions of a Hydrant Meter Permit.
B. TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Water Service.
C. RATES:
1. Monthly Service Charge.
METER SIZE
5/8 inch ........................................................................................................................... 50.00
3 inch ........................................................................................................................... 125.00
2. Volumetric Rate: (per hundred cubic feet)
Commodity Rate:
Water Delivery Charge from SFPUC ........................................................................$4.104.72
Distribution Rate: .................................................................................................................$3.613.76
4. Drought Surcharges (deactivated):
A drought surcharge will be added to the Customer’s applicable Commodity rate when the City
Council has determined that a Water reduction level is in effect for the City as described in
Section D.65. The drought surcharges in the table below are measured in dollars per hundred
cubic feet (ccf).
Water Usage
Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%)
Surcharge 0.26 0.53 0.77
D. SPECIAL NOTES:
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WATER SERVICE FROM FIRE HYDRANTS
UTILITY RATE SCHEDULE W-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-2-2 Effective 7-1-202219
dated 7-1-20198 Sheet No W-2-2
1. Monthly charges shall include the applicable monthly Service Charge in addition to usage billed at
the commodity rate.
2. The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility
Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The
Commodity Charge will be passed through automatically via periodic rate adjustments to account
for increases in wholesale water charges, as well as inflation. The pass-through period will be
effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any
adjustments via their billing statements.
3. Any person or company using a hydrant without first obtaining a valid Hydrant Meter Permit shall
pay a fee of $50.00 for each day of such use in addition to all other costs and fees provided in this
schedule. A hydrant permit may be denied or revoked for failure to pay such fee.
4. A Meter deposit of $750.00 may be charged any applicant for a Hydrant Meter Permit as a
prerequisite to the issuance of a permit and Meter(s). A charge of $50.00 per day will be added for
delinquent return of hydrant Meters. A fee will be charged for any Meter returned with missing or
damaged parts.
5. Any person or company using a fire hydrant improperly or without a permit, or who draws Water
from a hydrant without a Meter installed and properly recording usage shall, in addition to all other
applicable charges be subject to criminal prosecution pursuant to the Palo Alto Municipal Code.
6. During period of Water shortage or restrictions on local Water use, the City Council may, by
resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level.
While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought
surcharge is to recover revenues lost as a result of reduced consumption.
{End}
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FIRE SERVICE CONNECTIONS
UTILITY RATE SCHEDULE W-3
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-3-1 Effective 7-1-202219
dated 7-1-20198 Sheet No W-3-1
A. APPLICABILITY:
This schedule applies to all public fire hydrants and private fire Service connections.
B. TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Water Service.
C. RATES:
1. Monthly Service Charges
Public Fire Hydrant .................................................................................................... $5.00
Private Fire Service:
2-inch connection .......................................................................................................$4.174.34
4-inch connection .......................................................................................................25.8126.85
6-inch connection ....................................................................................................... 74.9677.96
8-inch connection .......................................................................................................159.74166.13
10-inch connection .....................................................................................................287.27298.77
12-inch connection .....................................................................................................464.02482.59
2. Commodity (To be added to Service Charge unless Water is used for fire extinguishing or
testing purposes.)
Per Hundred Cubic Feet
All water usage .......................................................................................................... $10.00
D. SPECIAL NOTES:
1. Service under this schedule may be discontinued if Water is used for any purpose other
than fire extinguishing or testing and repairing the fire extinguishing facilities. Using
hydrants and fire Services for other purposes is illegal and will be subject to the
commodity charge as noted above, fines, and criminal prosecution pursuant to the Palo
Alto Municipal Code.
2. For a combination Water and fire Service, the Water Service schedule shall apply.
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FIRE SERVICE CONNECTIONS
UTILITY RATE SCHEDULE W-3
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-3-2 Effective 7-1-202219
dated 7-1-20198 Sheet No W-3-2
3. Utilities Rule and Regulation No. 21 provides additional information on Automatic Fire
Services.
4. Repairs and testing of fire extinguishing facilities are not considered unauthorized use of
Water if records and documentation are supplied by the Customer.
{End}
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RESIDENTIAL MASTER-METERED AND
GENERAL NON-RESIDENTIAL WATER SERVICE
UTILITY RATE SCHEDULE W-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-4-1 Effective 7-1-202219
dated 7-1-20198 Sheet No W-4-1
A. APPLICABILITY:
This schedule applies to Water Services to non-residential buildings, and multi-family residential
dwellings served through a Master-Meter.
B. TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Water Service.
C. RATES:
Per Meter
Monthly Service Charge Per Month
For 5/8-inch meter .................................................................................... $ 17.7118.42
For 3/4-inch meter .................................................................................... 23.6724.62
For 1-inch meter .................................................................................... 35.5937.02
For 1 ½-inch meter .................................................................................... 65.4068.02
For 2-inch meter .................................................................................... 101.17105.22
For 3-inch meter .................................................................................... 214.44223.02
For 4-inch meter .................................................................................... 381.37396.63
For 6-inch meter .................................................................................... 780.79812.03
For 8-inch meter ....................................................................................1,436.571,494.04
For 10-inch meter ....................................................................................2,271.202,362.05
For 12-inch meter ....................................................................................2,986.603,106.07
Per Hundred
Cubic Feet
Volumetric Rates: (to be added to Service Charge, applicable to all pressure zones) Per Month
Commodity Rate:
Water Delivery Charge from SFPUC ...................................................... $ 4.104.72
Distribution Rate: ........................................................................................... 3.613.76
Drought Surcharges (deactivated):
6.b
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RESIDENTIAL MASTER-METERED AND
GENERAL NON-RESIDENTIAL WATER SERVICE
UTILITY RATE SCHEDULE W-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-4-2 Effective 7-1-202219
dated 7-1-20198 Sheet No W-4-2
A drought surcharge will be added to the Customer’s applicable commodity rate when the City
Council has determined that a Water reduction level is in effect for the City as described in Section
D.32. The drought surcharges in the table below are measured in dollars per hundred cubic feet
(ccf).
Water Usage
Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%)
Surcharge 0.26 0.53 0.77
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Commodity Rate
The Commodity Charge is based on the water delivery rate per the San Francisco Public
Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term
Contract. The Commodity Charge will be passed through automatically via periodic rate
adjustments to account for increases in wholesale water charges, as well as inflation. The
pass-through period will be effective for fiscal years 2020 through 2024, inclusive.
Customers will be provided notice of any adjustments via their billing statements.
3. Drought Surcharge
During period of Water shortage or restrictions on local Water use, the City Council may,
by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or
25% level. While such a resolution is in effect, a drought surcharge will apply. The
purpose of the drought surcharge is to recover revenues lost as a result of reduced
consumption.
6.b
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RESIDENTIAL MASTER-METERED AND
GENERAL NON-RESIDENTIAL WATER SERVICE
UTILITY RATE SCHEDULE W-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-4-3 Effective 7-1-202219
dated 7-1-20198 Sheet No W-4-3
{End}
6.b
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NON-RESIDENTIAL IRRIGATION WATER SERVICE
UTILITY RATE SCHEDULE W-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-7-1 Effective 7-1-202219
dated 7-1-20198 Sheet No W-7-1
A. APPLICABILITY:
This schedule applies to non-residential Water Service supplying dedicated irrigation Meters.
B. TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Water Services.
C. RATES:
Per Meter
Monthly Service Charge Per Month
For 5/8-inch meter .................................................................................... $ 17.7118.42
For 3/4-inch meter .................................................................................... 23.6724.62
For 1-inch meter .................................................................................... 35.5937.02
For 1 1/2 inch meter .................................................................................... 65.4068.02
For 2-inch meter .................................................................................... 101.17105.22
For 3-inch meter .................................................................................... 214.44223.02
For 4-inch meter .................................................................................... 381.37396.63
For 6-inch meter .................................................................................... 780.79812.03
For 8-inch meter ....................................................................................1,436.571,494.04
For 10-inch meter ....................................................................................2,271.202,362.05
For 12-inch meter ....................................................................................2,986.603,106.07
Per Hundred
Cubic Feet
Volumetric Rates: (to be added to Service Charge, applicable to all pressure zones) Per Month
Commodity Rate:
Water Delivery Charge from SFPUC ............................................... $ 4.104.72
Distribution Rate: ........................................................................................... 5.505.72
6.b
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NON-RESIDENTIAL IRRIGATION WATER SERVICE
UTILITY RATE SCHEDULE W-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No W-7-2 Effective 7-1-202219
dated 7-1-20198 Sheet No W-7-2
Drought Surcharges (deactivated):
A drought surcharge will be added to the Customer’s applicable commodity rate when the City
Council has determined that a Water reduction level is in effect for the City as described in Section
D.32. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf).
Water Usage
Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%)
Surcharge 0.53 1.25 2.02
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Commodity Rate
The Commodity Charge is based on the water delivery rate per the San Francisco Public
Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term
Contract. The Commodity Charge will be passed through automatically via periodic rate
adjustments to account for increases in wholesale water charges, as well as inflation. The
pass-through period will be effective for fiscal years 2020 through 2024, inclusive.
Customers will be provided notice of any adjustments via their billing statements.
3. Drought Surcharge
During period of Water shortage or restrictions on local Water use, the City Council may,
by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or
25% level. While such a resolution is in effect, a drought surcharge will apply. The
purpose of the drought surcharge is to recover revenues lost as a result of reduced
consumption. {End}
6.b
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March 2, 2022 www.cityofpaloalto.org
WATER UTILITY FINANCIAL PLAN AND PROPOSED RATE CHANGES FOR FY 2023
Attachment D •
CITY OF
PALO ALTO
6.c
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2
AGENDA
•Cost structure and drivers
•Overview and bill impacts of rate proposal
•Projections of costs, revenue, and reserves
•Main Scenario
•Alternate Scenario (Drought Worsens)
•Bill comparisons to neighboring utilities
•Recommendation
~CITY OF
~PALO ALTO
6.c
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3
WATER UTILITY COST STRUCTURE
Cost to distribute water within
Palo Alto, including:maintaining
and replacing water
infrastructure, customer service,
billing, administration, etc.
Cost to bring
water to
Palo Alto
Supply
$21.6 million
43%
~CITY OF
~PALO ALTO
■ Debt Service
■ Capital Investment
□ Operations
~ Water Supply
Distribution
$28.4 million
57%
6.c
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WATER OPERATIONS & CAPITAL COST DRIVERS
Operating
•Health, retirement, and associated overhead costs
continue to increase
•Planned increase in costs for rental of generator backup
at pumping stations and for emergencies
•Drought water sales reductions
Capital
•Construction costs have not declined
•Large one-time costs for reservoir rehabilitation
~CITY OF
~PA ILO ALTO
6.c
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5
WATER SUPPLY COST DRIVERS
•Projected Range for Water Supply Rate Increase:
•15% to 25% in FY 2023
•Primary Driver is Drought Reductions in Water Use
•Water System Improvement Program (WSIP)
•2002: advocacy by wholesale customers results in AB 1823
requiring SFPUC to adopt and implement the WSIP
•In 2010 construction began -$4.8B, one of the largest water
projects in the nation
•Level of service goal: return to service in 24 hours after an
earthquake
~CITY OF
~PA ILO ALTO
6.c
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WATER SUPPLY COST DRIVERS
•WSIP spending 96% complete as of Jan 2019
•“Upcountry” system in the Sierras still needs work.
•Wholesale customers (via BAWSCA) advocating for
improvements in long-term capital planning
•Necessary and improves reliability, but supply costs will
increase in the future as a result
~CITY OF
~PA ILO ALTO
6.c
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7
WATER RATE PROPOSAL
FY 2023: 8.6% -12.7% Overall Rate Increase
•FY 2023 4% distribution rate increase & 15% -25%
SFPUC commodity rate increase
•FY 2021 year-end Operations Reserve at maximum
guideline levels FY 2022 10% voluntary rationing, FY
2023 recovery year
•Future rate projections 4% annually FY 2024-2026, 0% in
FY 2027 for distribution rate increases, pass-through
SFPUC increases
•Use of CIP Reserve, Rate Stabilization Reserve to mitigate
increases
~CITY OF
~PALO ALTO
6.c
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8
ALTERNATE SCENARIO –DROUGHT WORSENS
FY 2023: 9.0% -13.0% Overall Rate Increase
•FY 2023 5% distribution rate increase & 15% -25%
SFPUC commodity rate increase
•FY 2022 10% voluntary rationing, FY 2023 20%
mandatory rationing FY 2024 recovery year
•Future rate projections 5% annually FY 2024 –FY 2026,
0% in FY 2027
•Rate Stabilization Reserve funding earlier
~CITY OF
~PALO ALTO
6.c
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9
ESTIMATED RESIDENTIAL BILL CHANGES
Usage
(CCF/mo.)
Bill under
Current
Rates
(7/1/2019)
Bill under
Proposed
Rates SFPUC
15.1% Rate
Increase
(7/1/2022)
Change Bill under
Proposed
Rates SFPUC
25.1% Rate
Increase
(7/1/2022)
Change
$/mo. % $/mo. %
4 $46.89 $50.62 $3.73 8% $52.26 $5.37 11%
(Winter
median) 7 $70.28 $76.33 $6.05 9% $79.20 $8.92 13%
(Annual
median) 9 $90.42 $98.19 $7.77 9% $101.88 $11.46 13%
(Summer
median)
14 $140.77 $152.84 $12.07 9% $158.58 $17.81 13%
25 $251.54 $273.07 $21.53 9% $283.32 $31.78 13%
• C ITV 01
PALO
ALTO
6.c
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10
ESTIMATED COMMERCIAL BILL CHANGES
Usage
(CCF/mo.)
Bill under
Current
Rates
(7/1/2019)
Bill under
Proposed
Rates SFPUC
15.1% Rate
Increase
(7/1/2022)
Change Bill under
Proposed
Rates SFPUC
25.1% Rate
Increase
(7/1/2022)
Change
$/mo.
%
$/mo. %
Commercial (W-4) (5/8” meters)
(Annual
median)
12 $110.23 $120.18 $9.95 9% $125.10 $14.87 13%
(Annual
average)
64 $511.15 $561.14 $49.99 10% $587.38 $76.23 15%
Irrigation (W-7) (1 ½” meters)
(Winter
median) 9 $151.80 $161.98 $10.18 7% $165.67 $13.87 9%
(Summer
median)
37 $420.60 $454.30 $33.7 8% $469.47 $48.87 12%
(Winter
average)
56 $603.00 $652.66 $49.66 8% $675.62 $72.62 12%
(Summer
average)
199 $1,975.80 $2,145.58 $169.78 9% $2,227.17 $251.37 13%
• C ITV 01
PALO
ALTO
6.c
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11
WATER COST AND REVENUE PROJECTIONS
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12
WATER OPERATIONS RESERVE PROJECTIONS
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WATER CIP RESERVE PROJECTIONS
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ALTERNATE: WATER COST AND REVENUE PROJECTIONS
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ALTERNATE: WATER OPERATIONS RESERVE PROJECTIONS
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16
MONTHLY WATER BILL COMPARISON
Single-Family Residential
Palo Alto is 14% above
comparison city average
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MONTHLY WATER BILL COMPARISON
Commercial Palo Alto is 2% above
comparison city average
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18
RECOMMENDATION
Staff requests that the Utilities Advisory Commission (UAC)
recommend that the Council:
1. Adopt a resolution approving:
a. FY 2023 Water Utility Financial Plan
b. Up to a $13.964 million transfer from the Capital
Improvement Projects Reserve to the Operations Reserve
in FY 2022
c. Increasing Water Utility Rates Via the Amendment of
Rate Schedules W-1, W-2, W-3, W-4, and W-7
~CITY OF
~PALO ALTO
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City of Palo Alto (ID # 13962)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend the City Council Adopt a Resolution Approving the FY 2023
Wastewater Collection Utility Financial Plan Including Reserve Transfers and
Increasing Wastewater Rates by Amending Rate Schedules S-1 (Residential
Wastewater Collection and Disposal), S -2 (Commercial Wastewater Collection
and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S -7
(Commercial Wastewater Collection and Disposal – Industrial Discharger)
From: Director of Utilities
Lead Department: Utilities
RECOMMENDATION
Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council:
1. Adopt a resolution (Attachment A) approving:
a. The Fiscal Year (FY) 2023 Wastewater Collection Financial Plan (Linked
Document); and
b. Transfer amount of up to $5.33 million from the Capital Improvement Projects
Reserve to the Operations Reserve in FY 2022; and
c. Increases to Wastewater Collection Utility Rates Via the Amendment of Rate
Schedules S-1 (Residential Wastewater Collection and Disposal), S-2
(Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater
Collection and Disposal) and S-7 (Commercial Wastewater Collection and
Disposal – Industrial Discharger) (Attachment B)
EXECUTIVE SUMMARY
The FY 2023 Wastewater Collection Utility Financial Plan (Linked Document) includes
projections of the utility’s costs and revenues through FY 2027. The Financial Plan projects costs
to rise over the forecast horizon due primarily to increasing treatment costs related to capital
improvements and increasing operational costs at the Regional Water Quality Control Plant
(RWQCP), as well as increasing collection system and Capital Improvement Program (CIP) costs.
A 3% overall revenue increase is needed in FY 2023, and staff projects overall revenue increases
of approximately 5% annually through FY 2027 to cover current and projected costs.
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BACKGROUND
Every year staff presents the UAC with Financial Plans for the Electric, Gas, Water, and
Wastewater Collection Utilities. The Financial Plans recommend rate adjustments if necessary
to maintain the financial health of these enterprises. These Financial Plans include a
comprehensive overview of the operations of each enterprise, both retrospective and
prospective, and are intended to be a reference for UAC and Council members as they review
the budget and staff’s rate recommendations. Each Financial Plan also contains a set of
Reserves Management Practices describing the reserves for each utility and the management
practices for those reserves.
The City’s sewer system collects wastewater from Palo Alto residents and delivers it to the
RWQCP for treatment. The City of Palo Alto runs the RWQCP, which also treats wastewater for
five other partner agencies (Stanford, East Palo Alto Sanitary District, Los Altos Hills, Los Altos,
and Mountain View). Some of the wastewater for certain partner agencies is also transported
across the City’s wastewater collection system.
The Wastewater Collection Utility has two main costs: the costs of operating the collection
system and Palo Alto’s share of the cost of running the RWQCP.1 Both cost components have
been increasing and are expected to continue to increase. The RWQCP has been in operation
since 1934. Aging equipment, new regulatory requirements, and the movement to full
sustainability will require rehabilitation, replacement and new processes. Palo Alto has seen
increases in operational costs in recent years, and debt service for the plant is expected to
increase substantially in coming years as a major rehabilitation and replacement plan adopted
in 2012 (Long Range Facilities Plan) is implemented. Rehabilitation and replacement of plant
equipment that has been in use for over 40 years is necessary to ensure the city can provide
wastewater treatment safely and in compliance with regulatory requirements for the discharge
of treated wastewater 24 hours a day. Collection system costs are also increasing, though not
as much as treatment costs. This is primarily driven by in creases in collection system capital
costs. The cost of underground construction to replace aging sewer mains has nearly doubled
since 2008. Other operational costs have also increased (e.g., salaries and benefits and
administrative overhead), but more slowly than treatment and collection infrastructure-related
costs.
This Financial Plan projects revenue reductions due to COVID-19 primarily from the Restaurant
and Commercial customer classes. Staff expects annual revenue reductions related to COVID-19
to be highest during FY 2022 at approximately $1 million and projects a linear recovery through
FY 2025. Total revenue reductions included in the estimate is $2.4 million from FY 2022 through
FY 2025 for the Wastewater Collection utility.
1 The costs associated with the RWQCP are shared among Palo Alto and the partner agencies based primarily on
wastewater flows and the composition of the wastewater each agency sends to the treatment plant. Palo Alto’s
share varies from year to year, but is roughly one third of the total cost.
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City of Palo Alto Page 3
The UAC reviewed the preliminary financial forecasts at its December 1, 2021 meeting (UAC
Report #13659) and the Finance Committee reviewed the preliminary financial forecasts at its
February 1, 2022 meeting (Staff Report 13839).
DISCUSSION
Staff completes an annual assessment of the financial position of the City’s wastewater
collection utility to ensure adequate revenue to fund operations, in compliance with the cost of
service requirements set forth in the California Constitution (Proposition 218). This includes
making long-term projections of market conditions, the physical condition of the system, and
other factors that could affect utility costs, and setting rates adequate to recover these costs.
The rates proposed in this Financial Plan were developed based on the Cost of Service and Rate
Study completed by Raftelis Financial Consultants, Inc., the “City of Palo Alto 2021 Wastewater
COS Report.”2
Proposed Actions
1. Increase rates by 3% for Rate Schedules S-1 (Residential Wastewater Collection and
Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant
Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and
Disposal – Industrial Discharger); and
2. Transfer up to $5.33 million from the CIP Reserve to the Operations Reserve in FY 2022.
The FY 2023 Wastewater Collection Financial Plan (Linked Document) describes these proposed
actions in detail. Staff proposes to adjust wastewater rates as shown in Table 1 below, effective
July 1, 2022. The adjustments increase the system average rate by 3%. These proposed rate
changes are included in the amended rate schedules (Attachment B). Residential customers pay
a monthly fixed service charge while commercial customers are charged based on average
winter water usage for the months of January, February and March, and applied in the
following July to minimize the effects of irrigation. Restaurant customers are charged based on
monthly water usage as they generally lack irrigation, but are charged higher rates due to
higher grease and oil discharges necessitating additional treatment costs. Currently there are
no customers on the S-7 (Industrial) rate schedule; however, CPAU continues to maintain the S-
7 rate schedule in case of future need.
Table 1: Current and Proposed Wastewater Collection Charges
Current
(9/1/2021)
Proposed
(7/1/2022)
Change
$/mo. %
2 A cost of service study is a study using industry-standard techniques to determine how the costs of running the
utility should be recovered from its customers. Charges to each customer are set in proportion to the cost of
serving that customer.
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Monthly Service Charges ($/month)
S-1 (Residential) Service
charge
$43.32 $44.62 $1.30 3%
Quantity Rates
S-2 (Commercial) $/CCF 8.09 8.33 0.24 3%
S-6 (Restaurant) $/CCF 12.07 12.43 0.36 3%
FY 2023 Financial Plan’s Projected Rate Adjustments for the Next Five Fiscal Years
Table 3 shows the projected rate adjustments included in the Wastewater Collection Utility
Financial Plans and their impact on a residential wastewater bill.
Table 3: Projected Rate Adjustments and Residential Bill Impact, FY 2023 to FY 2027
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Wastewater Collection Utility 3% 5% 5% 5% 5%
Estimated Bill Impact for
Residential Customers ($/mo) $1.30 $2.24 $2.35 $2.47 $2.59
As noted above, one of the main drivers for the increase in the Wastewater Collection Utility’s
costs (and therefore rates) over the next several years is the cost for wastewater treatment,
which is projected to increase by about 7.7% per year from FY 2021 to FY 2027 as the City
makes several upgrades to the RWQCP. A major project at the RWQCP, the Sludge Dewatering
and Truck Loadout Facility, was completed in 2019 which allowed the retirement of the Plant’s
two sewage sludge incinerators in operation since 1972. Future projects include secondary
treatment upgrades as well as replacement of the headworks facility. Beyond FY 2027 some of
the upward pressure on treatment costs is expected to be relieved, as the projected growth in
treatment costs decreases to approximately 2.3% on average annually between FY 2027 and FY
2032.
Wastewater Collection operations and CIP costs (excluding costs associated with treatment) are
projected to increase by approximately 4.2% annually from FY 2021 to FY 2027; operations
costs are expected to grow an average of 2.9% annually over the same time period. This plan
reflects the same budget reductions for sanitary sewer main replacements that Council
adopted in FY 2022. However, this budget does not continue with the deferrals of the next two
upcoming sewer main replacement projects in order to maintain the City’s sewer main
replacement program. The Wastewater Collection Utility undertakes a larger main replacement
project every other year. A project is occurring in the current year and the next project is
scheduled for FY 2024. Undertaking a larger main replacement project every other year allows
staff to continue replacing wastewater mains that are in poor condition, while easing
scheduling difficulties for inspection coverage due to shared staffing across water, wastewater,
gas and large development services projects. Over the last few years, main replacement costs
have been increasing for utilities due to economic activity in the Bay Area causing construction
cost inflation. It is likely that this trend will continue in the short term. Staff has not observed
any dip in construction costs although more information will b e known once the Utilities
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City of Palo Alto Page 5
Department issues more construction bids. Additionally, the California Construction Cost index
increased from 2.8% in December 2020 to 13.4% in December 2021.3
Figure 1 and 2 below illustrate the increase in the Wastewater Coll ection Utility’s costs. The
figures use FY 2016 as a comparison year because FY 2017 and FY 2018 are atypical years, due
to one-time cost savings related to delayed main replacement projects. Note that Figure 1
reflects the capital funded by rate revenue in FY 2016, while the FY 2027 bar shows the capital
program contribution to the CIP Reserve. In the following figure, all RWQCP costs for the
Wastewater Collection Utility are included in “Treatment,” while “Capital” and “Operations”
include only collection system costs.
Figure 1: FY 2016 and FY 2027 Costs ($ Millions)
3 https://www.dgs.ca.gov/RESD/Resources/Page-Content/Real-Estate-Services-Division-Resources-List-
Folder/DGS-California-Construction-Cost-Index-CCCI
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Figure 2: Percentage of Cost Increase From FY 2016 to FY 2027 Attributed to Treatment, and
Operations Costs
Figure 1 and 2 show that 70% of the increase from FY 2016 to FY 2027 is due to treatment cost
increases, 30% is due to increases in operations costs; 13% of this is from distribution
operations, 10% is from allocated charges, and 5% is from customer service, each of these are
driven by increases in salaries and benefits. Collection capital costs are not expected to increase
on average over this time period due to the reductions in size of sewer main replacement
projects to keep rate increases to a minimum.
To promote rate stability and provide continuity in collection system CIP expenditure levels, this
plan continues the steady annual capital program contribution to the CIP Reserve. The CIP
Reserve will then absorb annual spending fluctuations, reducing or eliminating the impact o n
rates. Figure 3 below shows the projected CIP Reserve balances and Figure 4 below shows year -
end reserve balance levels for each reserve from FY 2022 and projected through FY 2027.
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Figure 3: Projected Capital Reserve Balances, FY 2022 to FY 2027
Figure 4: Wastewater Collection Utility Year -End Reserve Levels, FY 2021 to FY 2027
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Table 4: Operations, Rate Stabilization and CIP Reserves Starting and Ending Balances,
Revenues, Transfers To/(From) Reserves, Expenses, Capital Program Contribution To/(From)
Reserves, and Operations Reserve Guideline Levels for FY 2022 to FY 2027 ($000)
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Starting Balance
(1) Operations
6,578
5,124
4,443
4,020
3,801
4,316
(2) Rate Stabilization
342
342
-
-
1,000
2,000
(3) CIP
3,178
1,598
2,161
1,351
2,228
1,373
Revenues
(4) Total Revenue 20,793 21,816 23,260 24,703 26,062 27,331
Transfers
(5) Operations - 342 - (1,000) (1,000) 2,000
(6) Rate Stabilization - (342) - 1,000 1,000 (2,000)
(7) CIP - - - - - -
Capital Program
Contribution
(8) Operations
(3,750)
(3,750)
(3,750)
(3,750)
(3,750)
(3,750)
(9) CIP
3,750
3,750
3,750
3,750
3,750
3,750
Expenses
(10) Total Expenses other than
CIP and Debt Service
(18,368) (18,961) (19,803) (20,172) (20,797) (24,296)
(11) Debt Service (129) (129) (129) - - -
(12)* Planned CIP
(5,330)
(3,188)
(4,560)
(2,873)
(4,605)
(2,919)
Ending Balance
(1)+(4)+(5)+(8)
+(10)+(11) Operations
5,124
4,443
4,020
3,801
4,316
5,601
(2)+(6) Rate Stabilization
342
-
-
1,000
2,000 -
(3)+(7)+(9)+
(12) CIP
1,598
2,161
1,351
2,228
1,373
2,204
Operations Reserve
Guideline Levels
(13) Minimum
2,781
3,231
3,143
3,460
3,278
4,130
(14) Maximum
6,952
8,076
7,859
8,650
8,195
10,326
* Planned CIP (item 12) is reflected as an expense in the CIP Reserve and does not include CIP
funded through Reappropriations or Commitments reserves. This Financial Plan requests
Council approval to transfer the Planned CIP of $5.33 million from the CIP Reserve to the
Operations Reserve in FY 2022.
Capital Projects and Reserves
The CIP Reserve aims to stabilize uneven annual funding associated with ongoing CIP projects
including sanitary sewer main replacements that are scheduled to occur every other year, and
is a source for one-time or immediately needed projects. In June 2021 Council approved
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consistent annual funding from the Operations to the CIP Reserve and approved a transfer of
up to $4.35 million from the Operations Reserve to the CIP Reserve in FY 2022 (Resolution
9980). This Financial Plan projects that a capital program contribution of $3.75 million in FY
2022 (see line 9 of Table 8) from the Operations Reserve to the CIP Reserve will be sufficient
based upon actual and projected revenue and expenses as well as FY 2021 year -end reserve
balances.
Withdrawals from the CIP Reserve for use on capital projects require Council ac tion.4 This
Financial Plan therefore requests Council approval to transfer up to $5.33 million from the CIP
Reserve to the Operations Reserve to pay for estimated CIP in FY 2022. This figure is the portion
of planned CIP that will not be paid for through funds collected in prior years (essentially the FY
2022 Capital budget, less funds available in the Reappropriations and Commitments Reserves),
shown in line 12 of Table 4. The need for each of the transfers will be re -evaluated once the
year end reserve balances for FY 2022 are known.
Wastewater Bill Comparison with Surrounding Cities
The annual sewer bill for a Palo Alto resident is $519.84 under current rates, 28% lower than the
average neighboring community. Table 5 shows the monthly sewer bills for residential
customers compared to what they would be in surrounding communities. These communities
are the same six cities that Palo Alto compares itself to in the annual budget across Water,
Wastewater, Gas, and Electric utilities.
Table 5: Residential Monthly Equivalent Sewer Bill Comparison ($)
Palo Alto
Neighboring Communities
Menlo
Park
Redwood
City
Santa
Clara
Mountain
View Los Altos Hayward
43.32 104.58 89.28 44.53 46.40 40.83 37.17
If Council adopts the proposed wastewater rate change, and assu ming other agencies do not
change their sewer rates, Palo Alto’s residential rates would remain 26% lower than the average
neighboring community. Furthermore, under the attached Financial Plan (Linked Document),
Palo Alto’s residential monthly bills would rise to $54.27 per month in FY 2027 which is still
under the current neighboring community average of $60.47 per month. Staff has no
information at this time as to whether or when the surrounding communities are planning
wastewater rate changes. However, as most agencies are also requiring renovations to their
respective treatment plants, increases at other agencies are likely. Note that as partners in the
RWQCP, Mountain View and Los Altos will be affected by the same treatment cost increases as
Palo Alto.
4 See Section 5(b) of the Wastewater Collection Utility Reserves Management Practices; Appendix C to the
attached Wastewater Collection Financial Plan.
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Table 6 shows the monthly sewer bills for Commercial and Restaurant customers. Palo Alto is
less competitive with surrounding cities with regards to commercial sewer rates , but is not the
most expensive jurisdiction. Palo Alto’s commercial bills are 7% higher than the neighboring
community average while Palo Alto’s restaurant bills are 14% below the neighboring community
average. Table 6 assumes 14 units of water for general commercial and 56 units of water for
restaurants.
Table 6: Non-Residential Monthly Equivalent Sewer Bill Comparison ($)
Palo Alto
Neighboring Communities
Menlo
Park
Redwood
City
Santa
Clara
Mountain
View Los Altos Hayward
General
Commercial
113.26 141.54 117.74 74.06 144.90 70.13 85.54
Restaurant 675.92 1,192.8 1,128.40 845.04 665.28 280.51 627.20
Changes from Prior Financial Forecasts
Staff projects the need for ongoing annual wastewater rate increases from FY 2023 through FY
2027. Table 7 compares current rate projections to those projected in the last two year’s
Financial Forecasts. The proposed revenue increases for FY 2023 in this Financial Plan are the
same compared with the rate projection from the FY 2022 Financial Plan but lower than
projected in FY 2021. This is in part because of the reduction in size of sanitary sewer
replacement projects to lower collection system costs. The FY 2023 project ions reflect current
information on capital improvement costs both in Palo Alto’s sewer system as well as at the
RWQCP.
Table 7: Proposed/Projected Wastewater Rate Changes for FY 2023 to FY 2027
Projection FY
2023
FY
2024
FY
2025
FY
2026
FY
2027
Current Plan (FY 2023) 3% 5% 5% 5% 5%
FY 2022 Financial Plan 3% 5% 5% 5% N/A
FY 2021 Financial Forecast5 5% 5% 5% N/A N/A
NEXT STEPS
The Finance Committee will consider the recommended wastewater rate changes in March or
April 2022. Assuming the Finance Committee supports the proposed rate adjustments, around
April staff will send notification of the potential rate increases to customers as required by
Article XIIID of the State Constitution (added by Proposition 218). The City Council will consider
the proposed Financial Plans and amended rate schedules with the FY 2023 budget , which is
5 Presented to the Finance Committee, April 21, 2020.
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expected to be in June 2022, at which time the public hearing required by Article XIIID of the
State Constitution will be held.
RESOURCE IMPACT
Staff projects normal year revenues for the Wastewater Collection Utility to increase by
approximately 3% ($600,000) annually beginning in FY 2023 as a result of the proposed rate
changes. The City is also a wastewater customer, and staff projects required general fund cost
for wastewater service to increase in FY 2023 by approximately $4,500 as a result of the
proposed rate changes. See the FY 2023 Wastewater Collection Utility Financial Plan for a more
comprehensive overview of projected cost and revenue changes for the next five years.
POLICY IMPLICATIONS
The proposed wastewater rate adjustments are consistent with Council-adopted Reserve
Management Practices that are part of the Financial Plans. Staff developed the wastewater rate
adjustments using a cost of service study and methodo logy that was completed in compliance
with the cost of service requirements of Proposition 218.
ENVIRONMENTAL REVIEW
The UAC’s review and recommendation to Council on the proposed FY 2023 Wastewater
Collection Financial Plan (Linked Document) and rate adjustments do not meet the definition of
a project, pursuant to Section 21065 of the California Environmental Quality Act, thus no
environmental review is required.
Attachments:
• Attachment A: Resolution
• Attachment B: FY 2023 Rate Schedules S-1, S-2, S-6, and S-7
• Attachment C: Presentation
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Attachment A
* NOT YET APPROVED *
6055605
Resolution No. ___
Resolution of the Council of the City of Palo Alto Approving the
FY 2023 Wastewater Collection Utility Financial Plan, Including Reserve
Transfers, and Adjusting Wastewater Rates by Amending Rate
Schedules S-1 (Residential Wastewater Collection and Disposal), S-2
(Commercial Wastewater Collection and Disposal), S-6 (Restaurant
Wastewater Collection and Disposal) and S-7 (Commercial Wastewater
Collection and Disposal – Industrial Discharger)
R E C I T A L S
A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities
with the goal of ensuring adequate revenue to fund operations. This includes making long-term
projections of market conditions, the physical condition of the system, and other factors that
could affect utility costs, and setting rates adequate to recover these costs. It does this with the
goal of providing safe, reliable, and sustainable utility services at competitive rates. The City
adopts Financial Plans to summarize these projections.
B. The City uses reserves to protect against contingencies and to manage other
aspects of its operations, and regularly assesses the adequacy of these reserves and the
management practices governing their operation. The status of utility reserves and their
management practices are included in Reserves Management Practices attached to and made a
part of the Financial Plans.
C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of
the City of Palo Alto may by resolution adopt rules and regulations governing utility services,
fees and charges.
D. On ____, 2022, the City Council held a full and fair public hearing regarding the
proposed rate increase and considered all protests against the proposals.
E. As required by Article XIII D, Section 6 of the California Constitution and
applicable law, notice of the ________ 2022 public hearing was mailed to all City of Palo Alto
Utilities wastewater customers by _______, 2022.
F. The City Clerk has tabulated the total number of written protests presented by
the close of the public hearing, and determined that it was less than fifty percent (50%) of the
total number of customers and property owners subject to the proposed wastewater rate
amendments, therefore a majority protest does not exist against the proposal.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby adopts the FY 2023 Wastewater Collection Utility
Financial Plan.
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Attachment A
* NOT YET APPROVED *
6055605
SECTION 2. The Council hereby approves the following transfer as described in the FY
2023 Wastewater Collection Utility Financial Plan:
a. Up to $5,330,000 in FY 2022 from the Capital Improvement Projects
Reserve to the Operations Reserve.
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule S-1 (Residential Wastewater Collection and Disposal) is hereby amended to read
as attached and incorporated. Utility Rate Schedule S-1, as amended, shall become effective
July 1, 2022.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule S-2 (Commercial Wastewater Collection and Disposal) is hereby amended to read as
attached and incorporated. Utility Rate Schedule S-2, as amended, shall become effective July 1,
2022.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule S-6 (Restaurant Wastewater Collection and Disposal) is hereby amended to read as
attached and incorporated. Utility Rate Schedule S-6, as amended, shall become effective July 1,
2022.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) is hereby
amended to read as attached and incorporated. Utility Rate Schedule S-7, as amended, shall
become effective July 1, 2022.
SECTION 7. The Council finds that the revenue derived from the wastewater rates
approved by this resolution do not exceed the funds required to provide wastewater service, and
the revenue derived from the adoption of this resolution shall be used only for the purposes set
forth in Article VII, Section 2, of the Charter of the City of Palo Alto.
SECTION 8. The Council finds that the fees and charges adopted by this resolution are
charges imposed for a specific government service or product provided directly to the payor that
are not provided to those not charged, and do not exceed the reasonable costs to the City of
providing the service or product.
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Attachment A
* NOT YET APPROVED *
6055605
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SECTION 9. The Council finds that the adoption of this resolution approving the FY 2023
Wastewater Financial Plan and Reserve transfers does not meet the California Environmental
Quality Act’s definition of a project under Public Resources Code Section 21065 and CEQA
Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will
not cause a direct or indirect physical change in the environment, and therefore, no
environmental review is required. The Council finds that the adoption of this resolution
changing Wastewater collection rates to meet operating expenses, purchase supplies and
materials, meet financial reserve needs and obtain funds for capital improvements necessary
to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant
to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of
Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to
Council, the Council incorporates these documents herein and finds that sufficient evidence
has been presented setting forth with specificity the basis for this claim of CEQA exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services
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RESIDENTIAL WASTEWATER COLLECTION AND DISPOSAL
UTILITY RATE SCHEDULE S-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No S-1-1 Effective 79-1-20221
dated 97-1-202119 Sheet No S-1-1
A. APPLICABILITY:
This schedule applies to each Occupied Domestic Dwelling unit.
B.TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Wastewater Service.
C. RATES:
Per Month
Each Occupied Domestic Dwelling unit ................................................................................
$44.6243.32
D.SPECIAL NOTES:
1. Any dwelling unit being individually served by a Water, Gas, or Electric Meter will be
considered continuously occupied.
2.For two or more Occupied Domestic Dwelling units served by one Water Meter, the monthly
Wastewater charge will be calculated by multiplying the current Wastewater rate by the
number of dwelling units.
3.Each developed separate lot shall have a separate service lateral to a sanitary main or
manhole.
{End}
Attachment B
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COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL
UTILITY RATE SCHEDULE S-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No S-2-1 Effective 79-1-202221
dated 97-1-202119 Sheet No S-2-1
A. APPLICABILITY:
This schedule applies to all commercial establishments other than those served under Utility Rate
Schedule S-1 (Residential Wastewater Collection and Disposal), Rate Schedule S-6 (Restaurant
Wastewater Collection and Disposal) or Rate Schedule S-7 (Commercial Establishments
Wastewater Disposal – Industrial Discharger). B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Services. C. RATES:
Quantity Rate, per 100 cubic feet (See Section D.1) .......................................................... $8.3309 D. SPECIAL NOTES: 1. The monthly charge for the quantity rate set forth in Section C of this rate schedule will be
based upon the average Water usage for the months of January, February and March, and
applied in the following July. If a Water Meter is identified as exclusively serving
irrigation landscaping, such Meter will be exempted from Wastewater charge calculations.
Customers without an applicable usage history will be rebuttably presumed to have usage
of 4.8 ccf per month until such time as such usage may reasonably be established by the
City of Palo Alto Utilities Department. 2. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in
which case Service will be governed by terms of a special agreement between the City and
the Customer.
{End}
:\\I/~ -.....;: :;.,.,,,"' PAI E CITY OF PALO ALTO
aaJ\" UTILITIES
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RESTAURANT WASTEWATER COLLECTION AND DISPOSAL
UTILITY RATE SCHEDULE S-6
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No S-6-1 Effective 79-1-20221
dated 97-1-202119 Sheet No S-6-1
A. APPLICABILITY:
This schedule applies to all restaurants.
B. TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Wastewater Services.
C. RATES:
Quantity Rates, per 100 cubic feet of monthly metered Water usage ...................................$ 12.4307
D. SPECIAL NOTES: 1. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in
which case Service will be governed by terms of a special agreement between the City and
the Customer.
{End}
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COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL
– INDUSTRIAL DISCHARGER
UTILITY RATE SCHEDULE S-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No S-7-1 Effective 79-1-20221
dated 97-1-202119 Sheet No S-7-1
A. APPLICABILITY:
This schedule applies to any establishment requiring sampling of industrial discharges in excess
of 25,000 gallons per day, or special discharge monitoring, as defined in Rule 23, Section C.
B. TERRITORY:
This schedule applies everywhere the City of Palo Alto provides Wastewater Services.
C. RATES:
1. Collection System Operation, Maintenance, and Infiltration Inflow:
$4.1402 per 100 cubic feet of metered water use.
2. Advanced Waste Treatment Operations and Maintenance Charge:
$1.650 per 100 cubic feet of metered water use
3. $202.23196.34 per 1000 pounds (lbs) of COD (Chemical Oxygen Demand)
4. $487.58473.38 per 1000 lbs of SS (Suspended Solids)
5. $3,369.05270.92 per 1000 lbs of NH 3 (Ammonia)
6. $ 14,781.25 per 1000 lbs of toxics (chromium, copper, cyanide, lead, nickel, silver, and zinc) D. SPECIAL NOTES: 1. Water usage will be determined as defined in Rule 23, Section C. If a Water Meter is
identified as exclusively serving irrigation landscaping, such Meter will be exempted
from Wastewater charge calculations. 2. The City of Palo Alto Utilities Department may require Wastewater Metering facilities,
in which case Service will be governed by terms of a special agreement between the City
of Palo Alto and the Customer. 3. Charges for large discharges will be determined on the basis of sampling as outlined in
Utilities Rule 23, Section C. However, for purposes of arriving at an accurate flow
estimate, discharge Meters, if installed, can be utilized to measure outflow for billing
purposes. Annual charges will be determined and allocated monthly for billing purposes.
{End}
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March 2, 2022 www.cityofpaloalto.org
WASTEWATER COLLECTION UTILITY FINANCIAL PROJECTIONS
Attachment D
•
CITY OF
PALO ALTO
UTILIT
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2
WASTEWATER PROJECTIONS
•FY 2023 proposal:
•3% overall revenue increase
•Transfer $5.33 million from the CIP Reserve to the
Operations Reserve in FY 2022
•Transfer $1 million from Operations Reserve to Rate
Stabilization Reserve FY 2025 -FY 2026 to prepare for
increasing treatment debt service costs in FY 2027
•COVID non-residential revenue impacts $1 million
decrease estimated in FY 2022 with recovery by FY 2026
•Future projections
•5% annually FY 2024 –FY 2027
~CITY OF
~PA ILO ALTO
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3
WASTEWATER OPERATIONS RESERVE PROJECTIONS
• CITY 01
PALO
ALTO
$ 10 -----------------------------------------------------------------------------------------------------------------------------
$9 _,,,,,_--........... --------------------
$8
s 7· -------------------------------------------------------------------------------------------------------------------------... _. .... ~
$6 ----~ --...----.... - -_. _,,,--~ --..... .,,. --0
C
~ $5
..... .,,,.
-------~--,--,___--
:E $4 -
$3
$2
$1
----------------------------------------------------=-----~-----~-----......__,__-----;.;;..,.,------..---~
-·· -·it
$0 -+-------r-----,--------r----r-----.----r------,
2021
Actual
2022 2U23,
Fiscal Yea 1r
2024 202.5 2026 2027
Proj ,ect,edl
-Reserve (Year-End)
-Reserve Min/Max
- -Reserve Target
-•Risk Assessment
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4
RESIDENTIAL AND NON-RESIDENTIAL RATE IMPACTS
(1) Monthly charges for S-1 (Residential) are fixed monthly charges.
(2) For S-2 (Commercial) customers, the quantity charges are based upon the average water
usage for the months of January, February and March and applied in the following July. For
Restaurant customers, the quantity charges are based on monthly metered water usage.
(3) Currently there are no customers on the S-7 (Industrial) rate schedule; however, CPAU
continues to maintain the S-7 rate schedule in case there is a need for the rate schedule in the
future.• .
CITY OF
PALO
ALTO
Mo ervice Cha $/month
Se rvice en a r ,e
Qua t · , .· Rates:
S-2 (Commercia l!) $/CCF
S -6 ··Resta uran · ·.CCF
Cur ent Proposed
as of effective $C ange %Cha ge
9/ /202 1) 7/1/2022)
$ 43 32 $ 44 6.2 $1.30 3.0%
8.09 8.33 0.24 3.0%
12.07 12.43 0 36 3.0%
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5
RESIDENTIAL AND NON-RESIDENTIAL BILL IMPACTS
Note: Non-residential bill impacts will vary due to each customer’s utilization of the
system.
• .
CITY OF
PALO
ALTO
S-1 { Re .s i d e nt1 a i)
S-2 { Co m 1m e rci a II) -:14. CCF
S-6 { Re .st aura n t ) -5 6 CCF
Cur ent
a s of
9 /1/202 1)
$ 43.32
113 . .26
675.92.
Propo se
[effective
C ange
7/1/2022) $/m o. %
$ 44.62. $1 . .30 3.0%
116.66 3.40 3.0%
696.20 20.28 3.0%
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6
WASTEWATER UTILITY COST STRUCTURE
Palo Alto’s share of
the cost to treat
sewage at Palo Alto’s
Regional Water
Quality Control Plant
Cost to collect sewage
within Palo Alto, including:
maintaining and replacing
sewer infrastructure,
customer service, billing,
administration, etc.
Treatment
$11.7 million
51%
Collections
$11.1 million
49%
• .
CITY OF
PALO
ALTO
111111 Treatment ■ Operations ■ Capital & !Debt Service
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7
WASTEWATER UTILITY BASICS
•Five partners: Stanford, East Palo Alto, Los Altos Hills, Los Altos, and
Mountain View
•Wastewater drains from partner systems through the City of Palo
Alto Collection System, and into the City of Palo Alto Regional Water
Quality Control Plant (RWQCP) for treatment
•City of Palo Alto Utilities Department manages collection system,
Public Works manages the RWQCP
ood c,-,y----,., ----------------~--~-----,
Atherton
Menk> P11tk
,-{sd it Palo Alto
Weat /.,..,_Un};:. ly,
Menlo Pork L/ y
Slanf ..
>lo Valley
ndy H II ( n Spect1
eserve
• .
CITY OF
PALO
ALTO
~·1-l OS Altot ►·til l s
foothill
College
Q roorh1lts P1rk
GB
@)
Mountain ., @)
View
Sunnyv1
Loyola ~
Rancho San
AnromoO~ ~
Space Preserve
Cupe~
Permanente
Stevens Crffk @
County Park
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8
TREATMENT COST DRIVERS
•Regional Water Quality Control Plant needs rehabilitation
•Long Range Facilities Plan completed in 2012
•Near Term Major Projects:
•Sedimentation Tank ($19.4M)
•New Outfall Pipeline ($17.4M)
•Secondary Treatment Upgrades ($148M)
•Advanced Water Purification System ($20M)
•Headworks Facility ($48.6M)
•Lab/Ops Building ($48.5M)
~CITY OF
~PA ILO ALTO
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9
OPERATIONS/CAPITAL COST DRIVERS
Operational Costs
•Salary and benefit costs for existing staff
•2-3% annual inflation for other operating costs
•One-time revenue loss due to COVID-19 $1 Million in FY
2022, with recovery by FY 2026
Capital Costs
•Underground construction cost increases
•Sanitary Sewer Replacements
•Includes cost reductions adopted in FY 2022 Financial
Plan
~CITY OF
~PA ILO ALTO
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10
WASTEWATER MEDIAN MONTHLY RESIDENTIAL BILL ($)
In FY 2022, Palo Alto is 28% below
comparison city average
• .
CITY OF
PALO
ALTO
-eirn l o
Pa~o A l ito Pa r k
43~32 104.58
Neigh b or in g Com1 irn iti es
Re d w ood Sant a 0 n t a i irn
Cit Cl ara ■ Los A itos a ··d 1e w
89.28 .5 .3 '0.83 37'.[7
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11
WASTEWATER MONTHLY NON-RESIDENTIAL BILL ($)
Commercial: Palo Alto is 7% higher than
comparison city average
Restaurant: Palo Alto is 14% below
comparison city average
• ,
CITY OF
PALO
ALTO
Ge ·e r al
C eirc i a l
Resta
Me I
Pao Alto Pank
113.26 1 ' .54
675~92 1.,192.8
Nei g ··bori r11g · i ties
Rechvoo , Sa a Mo
Ci Cl a r a 'V 'i e L · s Alltos Hay
117.74 74.06 144.90 70.13 85.54
1.,128.40 845.04 665.28 280 . .51 627.20
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12
WASTEWATER COST AND REVENUE PROJECTIONS
• C ITV 01
PALO
ALTO
$30
$25
-1,1)
C
.Q $20
~
-<I)-
~ $15
C
Q)
>
Q) t s10
1,1)
0 u
$5
$0
5%
7% 3%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Actual Pr ojected
Fi sca l Yea r
□Co ll ection Capita l & Debt
□Co ll ection Ope r ations
•Treatment Capita l & Debt
□Treatment Ope r ations
-Revenue
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13
WASTEWATER CIP RESERVE PROJECTIONS
• C ITV O,
PALO
ALTO
------------------------------------------------------------------------------5,000
4,500
4,000
---------------------------------------------=:::--------=----::----=-:::::::.:.: ---------------------·
--------------------------------------------------------------------------
3,500 -------------------------------------------------------------------------------·
(/) -g 3,000 --------------l"CI ----------------------------------(/) -------------------------------·
:::J 2,500 _g ---------------------------------------------------·
1-2,000 -------------~ ~ '-V.FfL,UL. -<.I). -------------------,:,
1,500
1,000 -
500 ----~
2
2022
-------' ~
~
~~
-i
2023
r. -------·~~------~~
~ --------------~ ~
r.
~ ~ ~ ~ ~
~ ~ ~ ¼
I -i I
2024 2025 2026
Fi sca l Vear
r.
-------
-------
~
I 7
2027
~CIP Reserve (Vear-End)
-Reserve M in/Max
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14
RECOMMENDATION
Staff requests that the UAC recommend that the Council:
•Adopt a resolution approving:
•The Fiscal Year 2023 Wastewater Collection Financial Plan, including
3% overall revenue increase
•Transfer up to a $5.33 million from the Capital Improvements
Projects Reserve to the Operations Reserve in FY 2022
•Increase Wastewater Collection Utility Rates Via the Amendment of
Wastewater Collection and Disposal Rate Schedules S-1
(Residential), S-2 (Commercial), S-6 (Restaurant) and S-7 (Industrial
Discharger)
~CITY OF
~PALO ALTO
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City of Palo Alto (ID # 13960)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend the City Council Adopt a Resolution Approving the Fiscal Year
2023 Gas Utility Financial Plan, Including Proposed Transfers, and Increasing
Gas Rates by Amending Rate Schedules G -1 (Residential Gas Service), G -2
(Residential Master-Metered and Commercial Gas Service), G -3 (Large
Commercial Gas Service), and G -10 (Compressed Natural Gas Service)
From: Director of Utilities
Lead Department: Utilities
Recommendation
Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council adopt
a resolution (Attachment A):
a. Approving the fiscal year (FY) 2023 Gas Utility Financial Plan (Linked Document); and
b. Transferring up to $3 million from the Operations Reserve to the CIP Reserve in FY 2022; and
c. Transferring up to $2.766 million from the Rate Stabilization Reserve to the Operations Reserve
in FY 2022; and
d. Increasing gas rates by amending Rate Schedules G-1 (Residential Gas Service), G-2 (Residential
Master-Metered and Commercial Gas Service), G-3 (Large Commercial Gas Service), and G-10
(Compressed Natural Gas Service) (Attachment B).
Executive Summary
The FY 2023 Gas Utility Financial Plan includes projections of the utility’s costs and revenues for
FY 2023 through FY 2027. Gas utility costs are made up of supply-related costs (30 percent of
costs in FY 2021), which are collected through a supply rate that varies monthly, and
distribution-related costs (70 percent of costs in FY 2021), which are collected through a
distribution rate that is typically adjusted not more than one time per year. Distribution rates
were last increased on July 1, 2021, which resulted in a roughly 3 percent increase in the total
system average gas rate (the supply rates plus the distribution rates). This Financial Plan
projects overall gas costs to increase from FY 2022 through FY 2027 at about 2% per year on
average. Commodity prices have increased markedly in the last few months and are projected
to increase by about 3% per year going forward, although weather and/or economic forces can
shift this course rapidly.
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City of Palo Alto Page 2
The proposed FY 2023 Gas Utility Financial Plan includes an increase in distribution rates
effective July 1, 2022 and will result in a 4 percent increase to the total sys tem average gas rate
if supply rates remain unchanged. Additional 4 percent increases to the total system average
gas rate are projected over the next three years. Capital Improvement Project (CIP)
expenditures for the last several years were lower than n ormal while the City was completing
the Upgrade Downtown project, and much of this increase is due to the Gas Utility resuming
ongoing main replacement projects and the cross-bore safety verification program.
The City’s natural gas rates are based on the 2019 Natural Gas Cost of Service and Rates Study,
updated with current and proposed operating costs. With the onset of the COVID -19
pandemic, usage amongst businesses dropped to reflect people working and staying at home
rather than going to the workplace, as well as restrictions to business operations. Businesses
have been operating at minimum staffing conditions or fully remote while the pandemic
continues. City of Palo Alto staff have endeavored to reduce cost increases, and some capital
project work has been moved out or restructured to keep costs from rising too much during
this time. However, costs related to the Gas Utility’s resumption of main replacement projects
and the cross-bore safety verification program are increasing. In order to move towards full
cost recovery while minimizing rate impacts in light of pandemic-related economic challenges,
staff recommends a distribution rate increase to all customer classes of 6%, which staff
estimates will result in a 4% system average rate increase, if supply rates remain unchanged. If,
after the pandemic, usage and/or spending looks to be moving in a different direction, staff will
suggest a re-balancing of rates at that time.
While staff is recommending that the distribution component of the rates be increased by 6%,
distribution rates comprise about 70% of the overall rate, which consists of commodity (supply)
and distribution components. Supply-related costs include the cost of the natural gas itself, gas
transmission, and gas environmental charges. It’s not possible to precisely predict commodity
rates, which make up approximately 30% of overall retail gas rates. Market prices are
monitored monthly and automatically incorporated into monthly supply rate adjustments,
which are passed directly to customers as a line item on their utility bills.
Because it is not possible to exactly predict what supply rates will be during the planning
horizon, the overall rate increases (commodity plus distribution) referenced in this report
assume that the commodity portion of the overall rate remains unchanged. The net effect is a
proposed 4% overall rate increase. Recent market indications have led staff to project supply
cost increases of about 3% per year for the forecast horizon, but these circumstances could
change based upon market conditions, as well as trends in the cost of environmental offsets
and PG&E’s revised projections for transmission costs.
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City of Palo Alto Page 3
Table 1: Revenue and Rate Increases by Customer Class
Cost of Service Analysis
FY 2023
Rate Increase
needed for
Distribution
Charges
Assumed
Commodity Rate
Changes
Net Rate Increase for
Combined Commodity
and Distribution
Charges
G1 - Residential 6% 0% 4%
G2 - Small Commercial 6% 0% 4%
G3 - Large Commercial 6% 0% 4%
TOTAL 6% 0% 4%
Figure 1 below shows the primary drivers for the proposed rate change, which are split about
60/40 between increasing operating and capital improvement expenses. The increases are
discussed in greater depth in the attached FY 2023 Gas Financial Plan .
Figure 1: Allocation of 6% Distribution Rate increase
Background
Every year staff presents the UAC with Financial Plans for its Electric, Water, Gas, and
Wastewater Collection Utilities and recommends any rate adjustments required to maintain
their financial health. These Financial Plans include a comprehensive overview of the utility’s
operations, both retrospective and prospective, and are intended to be a reference for UAC and
Council members as they review the budget and staff’s rate recommendations. Each Financial
Plan also contains a set of Reserves Management Practices describing the reserves for each
utility and the management practices for those reserves.
The City’s gas is purchased from a variety of marketers who source gas from throughout the
Western United States and Canada. The City pays Pacific Gas and Electric (PG&E) to transport
the gas across its gas transmission system to Palo Alto, which is then delivered to customers
through Palo Alto’s gas distribution system.
8
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City of Palo Alto Page 4
The Gas Utility’s costs are divided into two main categories: gas supply costs (which includes
the cost of the gas itself, the cost of transmitting the gas to Palo Alto, and environmental costs 1)
and the costs of running the business and operating the distribution system. As noted above,
gas supply costs vary with the market, and the costs are passed through to customers through a
gas supply rate component that varies monthly.
The UAC reviewed preliminary financial forecasts at its December 1, 2021 meeting.
Discussion
Staff’s annual assessment of the financial position of the City’s gas utility is completed to ensure
adequate revenue to fund operations, including reserves, and to ensure that the City’s rates
comply with cost-of-service requirements set forth in the California Constitution and ap plicable
statutory law. The assessment includes making long-term projections of market conditions, of
costs associated with the physical condition of infrastructure, and of other factors that could
affect utility costs. Rates are then proposed that will be adequate to recover projected costs.
Proposed Actions for FY2022 and FY 2023:
The FY 2023 Gas Utility Financial Plan includes the following proposed actions:
1. Amend gas rate schedules (Attachment B) to increase distribution rates by 6 percent,
resulting in an estimated 4 percent increase on overall rates, and increasing the cap on
the Transportation charge to $0.25/therm from $0.15/therm; and
2. Transfer up to $3 million from the Operations Reserve to the CIP Reserve in FY 2022;
and
3. Transfer up to $2.766 million from the Rate Stabilization Reserve to the Operations
Reserve in FY 2022.
These proposed actions are described in more detail below and in the FY 2023 Gas Financial
Plan (Linked Document).
Proposed Gas Rates
Staff proposes to adjust gas rates as shown in Table 2 and Table 3 below, effective July 1, 2022.
These changes are projected to increase the distribution rate by 6% resulting in a total system
average gas rate (total of supply and distribution) by roughly 4 percent for all classes. These
rate changes are included in the proposed amended rate schedules in (Attachment B).
1 These are the costs of complying with the State’s Cap and Trade system and procuring offsets u nder the City’s
Carbon Neutral Gas program.
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Table 2: Current and Proposed Monthly Service Charges
Rate Schedule
Monthly Service Charge
($/month) Change
Current (as of
7/1/21)
Proposed for
FY 2023 ($) (%)
G-1 (Residential) $10.89 $11.54 $0.65 6%
G-2 (Small Commercial) 100.85 106.90 6.05 6%
G-3 (Large Commercial) 461.43 489.12 27.69 6%
G-10 (CNG) 68.21 72.30 4.09 6%
Table 3: Current and Proposed Gas Distribution Charges
Change
Current (as of
7/1/21)
Proposed
for FY 2023 ($) (%)
G-1 (Residential)
Tier 1 Rates $0.5290 $0.5607 $0.0317 6%
Tier 2 Rates 1.3526 1.4338 0.0812 6%
G-2 (Residential Master-Metered and Small Commercial)
Uniform Rate 0.6948 0.7365 0.0417 6%
G-3 (Large Commercial)
Uniform Rate 0.6879 0.7292 0.0413 6%
G-10 (Compressed Natural Gas)
Uniform Rate 0.0113 0.0120 0.0007 6%
Another component of the City’s supply cost is the Transportation Charge, which is the cost that
PG&E charges CPAU for transporting gas to Palo Alto via P G&E’s pipelines. This charge applies
to Palo Alto and other cities and agencies who procure natural gas for resale. In October 2016
Council adopted a resolution listing this pass-through of PG&E’s Gas Transportation Rate
separately on the City’s gas rate schedules, and setting a cap of $0.15/therm on this rate.
Effective January 1, 2022, PG&E increased their G-WSL rate up to $0.15/therm. The
transportation charge continues to increase as PG&E collects costs related to improving storage
facilities, decommissioning older facilities, increased costs resulting from wildfire mitigation,
accounting for and greenhouse gas mitigation costs. Based on PG&E’s estimates, prices are
going to continue to escalate between 6 to 22% between 2023 and 2026, so staff is
recommending raising the cap on the Transportation Charge to $0.25/therm. Current and
historic per therm rates for the Transportation Charges are posted on the City Utilities website.
Bill Impact of Proposed Rate Changes
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Table 4 shows the impact of the proposed July 1, 2022, rate changes on residential bills for
various usage levels. The average increase for the residential class is roughly 4 percent based on
last year’s commodity prices. As the price of commodities changes monthly, the actual increase
may be higher or lower than the 4% average. Table 4 shows a representative Winter period
(November thru March) and Summer period (April through October) bill comparison:
Table 4: Impact of Proposed Gas Rate Changes on Residential Bills
Usage
(Therms/month)
Bill under
Current Rates
Bill under
Proposed Rates
Change
$/mo. %
Winter (Using November 2021 commodity prices)
30 $ 55.62 $ 57.22 $ 1.60 2.9%
54 (median) 91.40 93.76 2.36 2.6%
80 146.63 152.79 6.16 4.2%
150 308.64 320.48 11.84 3.8%
Summer (Using October 2021 commodity prices)
10 $ 25.47 $ 26.44 $ 0.97 3.8%
18 (median) 37.13 38.35 1.22 3.3%
30 62.31 64.41 2.10 3.4%
45 96.53 99.85 3.31 3.4%
Table 5 shows the impact of the proposed July 1, 2022 rate changes on various representative
commercial customer bills. The overall increases for the G-2 and G-3 classes are projected to be
about 4 percent on an annual basis assuming commodity prices stay flat.
Table 5: Impact of Proposed Gas Rate Changes on Commercial Bills
(Using December 2021 commodity prices)
Usage
(Therms/month)
Bill under
Current Rates
Bill under
Proposed Rates
Change
%
500 870 897 3.1%
5,000 7,792 8,007 2.8%
10,000 15,483 15,906 2.7%
50,000 77,029 79,121 2.7%
FY 2023 Financial Plan’s Projected Rate Adjustments for the Next Five Fiscal Years
Table 6 shows the projected rate adjustments over the next five years and their impact on the
annual median residential gas bill (54 therms per month in winter, 18 therms per month in
summer).
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Table 6: Projected Rate Adjustments, FY 2023 to FY 2027
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Gas Utility 4% 4% 4% 4% 3%
Estimated Bill Impact ($/mo)* $1.70 $2.09 $2.17 $2.26 $1.76
* estimated impact on median residential gas bill, which is currently $50.45 for CY 2021
One of the main drivers for the increase in the Gas Utility’s short -term costs (and therefore
rates) over the next several years are increases in CIP expenditures needed to maintain a safe
and reliable system. FY 2017 included replacements of gas mains on University Avenue, a
project that has evolved into the Upgrade Downtown project, involving a coordinated
replacement of several different types of infrastructure to avoid multiple disruptions to the
business district. This was a multi-year planning effort, completed in 2019, which did not allow
for design of other new projects. Also, as government agencies regionally and nationally spend
more on infrastructure improvement, contractor bids for underground construction have ri sen
greatly from where they were in years past.
This Financial Plan addresses these challenges in a way that will allow City of Palo Alto Utilities
(CPAU) to meet its gas main replacement (GMR) targets. The next phase of the GMR program
will be the replacement of all Polyvinyl Chloride (PVC) mains with Polyethylene (PE) mains.
CPAU installed PVC pipes from the early 1970s to mid -1980s. Some of the City’s PVC pipe is
approaching 50 years of service, and according to industry data, PVC pipes have a much higher
leakage rate than PE mains after 20 years of service due to potential disbandment of fittings
and joints. This Financial Plan includes approximately $7 to 9 million every other year for main
replacement construction instead of $5 to 6 million annually. This shift to larger main
replacement construction projects every other year will slightly lengthen the amount of time
needed to replace all PVC pipes in the system but will ideally attract more contractors and
better bid pricing on the larger projects. Ad ditionally, this gas main replacement project will be
staggered with water and wastewater (water and wastewater construction every even year and
gas construction every odd year), which will ease scheduling difficulties for staff coverage of
inspections. This arrangement is likely to be a short-term solution (3-5 years) until project
capacity can be increased and upward pressure on utility rates has eased.
Table 7 below shows the reserve balance changes for each reserve from FY 2022 and projected
through FY 2027.
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Table 7: Operations, Rate Stabilization and CIP Reserve Starting and Ending Balances,
Revenues, Transfers To/(From) Reserves, Capital Program Contribution To/(From) Reserves,
and Reserve Guideline Levels for FY 2022 to FY 2027 ($000)
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Starting Reserve Balances
1 Operations Reserve 11,981 11,569 8,017 8,842 8,653 10,436
2 CIP Reserve 3,820 6,820 3,820 4,820 1,820 4,320
3 Cap and Trade 5,905 7,427 9,660 12,260 15,165 18,353
4 Rate Stabilization 2,766 - - - - -
Revenues
5 Total Revenues 45,209 47,890 50,223 52,360 54,541 56,805
6 Cap and Trade 1,522 2,232 2,600 2,905 3,188 3,540
Transfers
7 Operations Reserve (234) 3,000 (1,000) 3,000 (2,500) 2,000
8 CIP Reserve 3,000 (3,000) 1,000 (3,000) 2,500 (2,000)
9 Cap and Trade
10 Rate Stabilization (2,766)
Expenses
11 Non-CIP Expenses (40,713) (44,225) (44,138) (45,252) (46,108) (47,221)
12 Planned CIP (4,674) (10,217) (4,261) (10,297) (4,150) (10,150)
Ending Reserve Balances
1+5+7+11+12 Operations Reserve 11,569 8,017 8,842 8,653 10,436 11,870
2+8 CIP Reserve 6,820 3,820 4,820 1,820 4,320 2,320
3+6+9 Cap and Trade 7,427 9,660 12,260 15,165 18,353 21,892
4+10 Rate Stabilization - - - - - -
Operations Reserve Guidelines
13 Minimum 7,016 7,270 7,255 7,439 7,651 7,762
14 Maximum 14,033 14,540 14,511 14,877 15,301 15,525
CIP Reserve Guidelines
15 Minimum 1,725 1,920 1,775 1,989 1,856 1,909
16 Maximum 8,627 9,601 8,874 9,946 9,280 9,547
Figures 2 below illustrates the projected long run changes in the Gas Utility’s costs. Cost
increases over the FY 2018 to FY 2027 time period are mainly from supply costs, followed by
operations and capital expenses.
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Figure 2: FY 2018, FY 2023 and FY 2027 costs
Over the longer term, gas commodity costs are the most variable factor in customer gas bills,
being subject to market forces. Prices have risen dramatically in the current winter months, and
are projected to increase by about 3% percent per year between FY 2023 and 2027.
Operations costs are projected to increase by about 2 percent annually, due to inflation and
salary and benefit increases. A large one-time increase in costs to pay for phase two of a cross-
bore safety verification program occurs in FY 2023. The cross-bore safety program ensures that
gas pipelines have not crossed through sewer laterals, which is rare but possible during
trenchless installation. This is referred to as a “cross-bore,” and while they are very rare, if they
exist, they pose a risk of gas leaks if a plumber uses a cutting tool to clear a sewer line and
accidentally cuts the gas line. The project will video inspect, determine, and repair any
unintended conflicts between gas service pipelines and sewer laterals. Phase two of this
program is estimated to require $1 million per year in FY’s 2022 and 2023, although the project
may require additional funding depending on what inspections show.
The COVID pandemic has resulted in gas usage decreasing by about 8 to 10%, similar as what
has been seen in electric. Declines have come mainly in the commercial sectors as a result of
many businesses operating with remote staffing. It is uncertain how long this trend will last.
Staff worked with Northern California Power Agency (NCPA), the City’s electric load forecaster,
to incorporate UCLA’s Anderson School GDP forecast into its electric load forecast for Palo Alto,
which estimates the economic trend impacts to last through December 2022. The same
recovery pattern was used in Figure 3 below to forecast various possible levels of gas usage
recovery. As seen with prior economic and drought gas usage declines, it is likely that
consumption will not return to pre-conservation/pandemic levels but will likely stabilize closer
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to the longer-run historical decline in gas usage. Further changes, such as the voluntary
replacement of gas appliances with electric appliances, building electrification of new
construction as mandated by the 2019 Reach Code, and customer behavior are also expected to
lower long run usage, and this forecast will be revised accordingly as more customers adopt
these measures.2 Staff has also done a preliminary analysis of the impacts of Sustainability and
Climate Action Plan (S/CAP) goals on gas use and presented it to the UAC in January of 2021.3
The usage scenario used to develop the proposed rates is shown in Figure 3. It is too early in the
winter heating season to draw conclusions regarding the trend. However, rapidly declining gas
consumption will put upward pressure on rates, as a generally increasing cost to operate and
distribute gas will be spread across fewer units of sale.
Figure 3: Forecast Gas Consumption
Gas Bill Comparison with Surrounding Cities
Table 8 presents winter and summer residential bills for Palo Alto and PG&E at several usage
levels for commodity rates in effect as of October 2021 (to illustrate a summer month bill) and
November 2021 (to illustrate a winter month bill). The annual gas bill for the median residential
customer for calendar year 2021 was $605, about 12% lower than the annual bill for a PG&E
customer with the same consumption. PG&E’s distribution rates for gas have increased
substantially to collect for needed system improvements for pipeline safety and maintenance.
The bill calculations for PG&E customers are based on PG&E Climate Zone X, an area which
includes the surrounding communities.
2 The City’s Sustainability and Climate Action Plan (S/CAP) is currently being updated. As building
electrification goals in the S/CAP are updated, they will be modeled in this load forecast.
3 January 6, 2021 UAC Meeting, Discussion of Projected Electrification Impacts on Gas Utility System Average
Rates: https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-
advisory-commission/archived-agenda-and-minutes/agendas-and-minutes-2021/01-06-2021-special/01-06-21-
uac-item-1.pdf
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Table 8: Residential Monthly Natural Gas Bill Comparison ($/month)
Season
Usage
(therms) Palo Alto PG&E Zone X
%
Difference
Winter
(November
2021)
30 $ 55.62 62.48 -11.0%
(Median) 54 91.40 116.08 -21.3%
80 146.63 182.76 -19.8%
150 308.64 362.30 -14.8%
Summer
(October 2021)
10 $ 25.47 19.52 30.5%
(Median) 18 37.13 36.48 1.8%
30 62.31 65.69 -5.1%
45 96.53 102.20 -5.5%
Table 99 shows the monthly gas bills for commercial customers for various usage levels for rates
in effect as of December 2021. Bills for CPAU customers at the usage levels shown can vary
from 11% lower to 8% higher for commercial customers than for PG&E customers. This is a
substantial improvement over the calendar year 2013 bill comparison, when commercial gas
bills for CPAU customers were 27% to 44% higher than for PG&E customers. This is primarily
attributable to PG&E’s higher distribution rates as the commodity rates for CPAU and PG&E are
very similar, both being based on spot market gas prices.
Table 9: Commercial Monthly Average Gas Bill Comparison
(for Rates in Effect December 2021)
Usage (therms/mo)
Gas Bill ($/month) %
Difference Palo Alto PG&E
500 870 938 (7%)
5,000 7,792 8,786 (11%)
10,000 15,483 16,008 (3%)
50,000 77,029 71,217 8%
Timeline
The Finance Committee is scheduled to review the FY 2023 Gas Financial Plan in April 2022. The
City Council will consider adopting the Financial Plan and rate adjustments as part of the FY
2023 budget review and adoption process. If Council approves the proposed rate changes, they
will become effective July 1, 2022.
Resource Impact
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Normal year sales revenues for the Gas Utility are projected to increase by roughly 4 percent or
$1.5 million as a result of the proposed rate increases, not including fluctuations in commodity
revenue/cost. The impact to the City’s General fund, based on prior sales trends, is estimated to
be about $17,000. The FY 2023 Budget is being developed concurrent with these rates and,
depending on the final rates, adjustments to the budget may be necessary at a later time. See
the attached FY 2023 Gas Financial Plan for a more comprehensive overview of projected cost
and revenue changes for the next five years.
Policy Implications
The proposed gas rate adjustments are consistent with Council -adopted Reserve Management
Practices that are part of the Financial Plan and were developed using a cost -of-service study
and methodology consistent with the California constitution and industry-accepted cost of
service principles.
Stakeholder Engagement
The UAC reviewed preliminary financial forecasts at its December 1, 2021 meeting, and the
Finance Committee reviewed the preliminary forecasts at its February 1, 2022 meeting. Staff
and the UAC’s recommendation on the FY 2023 gas rate increases will go to the Finance
Committee in April and be presented to City Council in June during the budget adoption
process.
Environmental Review
The Utility Advisory Commission’s review and recommendation to Council on the FY 2022 Gas
Financial Plan and rate adjustments does not meet the California Environmental Quality Act’s
definition of a project, pursuant to Public Resources Code Section 21065, thus no
environmental review is required.
Attachments:
• Attachment A: Resolution
• Attachment B: Gas Rate Schedules
• Attachment C: Presentation
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Attachment A
* NOT YET APPROVED *
6055597
Resolution No. _________
Resolution of the Council of the City of Palo Alto Approving the Fiscal
Year 2023 Gas Utility Financial Plan, Including Proposed Transfers,
and Increasing Gas Rates by Amending Rate Schedules G-1
(Residential Gas Service), G-2 (Residential Master-Metered and
Commercial Gas Service), G-3 (Large Commercial Gas Service), and G-
10 (Compressed Natural Gas Service)
R E C I T A L S
A. Each year the City of Palo Alto (“City”) regularly assesses the financial position of
its utilities with the goal of ensuring adequate revenue to fund operations, including reserves.
This includes making long-term projections of market conditions, the physical condition of the
system, and other factors that could affect utility costs, and setting rates adequate to recover
these costs. It does this with the goal of providing safe, reliable, and sustainable utility services
at competitive rates. The City adopts Financial Plans to summarize these projections.
B. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of
the City of Palo Alto may by resolution adopt rules and regulations governing utility services,
fees and charges.
C. On ____, 2022, the City Council heard and approved the proposed rate increase
at a noticed public hearing.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby adopts the FY 2023 Gas Utility Financial Plan.
SECTION 2. The Council hereby approves the transfer of up to $2.766 Million from
the Rate Stabilization Reserve to the Operations Reserve, and up $3 Million from the
Operations Reserve to the CIP Reserve, as described in the FY 2023 Gas Utility Financial Plan
approved via this resolution.
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-1 (Residential Gas Service) is hereby amended to read as attached and
incorporated. Utility Rate Schedule G-1, as amended, shall become effective July 1, 2022.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-2 (Residential Master-Metered and Commercial Gas Service) is hereby
amended to read as attached and incorporated. Utility Rate Schedule G-2, as amended, shall
become effective July 1, 2022.
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Attachment A
* NOT YET APPROVED *
6055597
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-3 (Large Commercial Gas Service) is hereby amended to read as attached and
incorporated. Utility Rate Schedule G-3, as amended, shall become effective July 1, 2022.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-10 (Compressed Natural Gas Service Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule G-10, as amended, shall become effective
July 1, 2022.
SECTION 7. The City Council finds as follows:
a. Revenues derived from the gas rates approved by this resolution do not exceed the
funds required to provide gas service.
b. Revenues derived from the gas rates approved by this resolution shall not be used
for any purpose other than providing gas service, and the purposes set forth in
Article VII, Section 2, of the Charter of the City of Palo Alto.
SECTION 8. The Council finds that the fees and charges adopted by this resolution are
charges imposed for a specific government service or product provided directly to the payor
that are not provided to those not charged, and do not exceed the reasonable costs to the City
of providing the service or product.
SECTION 9. The Council finds that approving the Financial Plan does not meet the
California Environmental Quality Act’s (CEQA) definition of a project under Public Resources
Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative
governmental activity which will not cause a direct or indirect physical change in the
environment, and therefore, no environmental assessment is required. The Council finds that
changing gas rates to meet operating expenses, purchase supplies and materials, meet financial
reserve needs and obtain funds for capital improvements necessary to maintain service is not
subject to the California Environmental Quality Act (CEQA), pursuant to California Public
Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec.
15273(a). After reviewing the staff report and all attachments presented to Council, the
Council incorporates these documents herein and finds that sufficient evidence has been
presented setting forth with specificity the basis for this claim of CEQA exemption.
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Attachment A
* NOT YET APPROVED *
6055597
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INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________
Assistant City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
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UTILITY RATE SCHEDULE G-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-1 Sheet No G-1-1
dated 7-1-20201 Effective 7-1-20212
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from City of Palo Alto
Utilities:
1. Separately-metered single-family residential Customers.
2.Separately-metered multi-family residential Customers in multi-family residential
facilities.
B.TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES:Per Service
Monthly Service Charge: ...............................................................................................$10.8911.54
Tier 1 Rates: Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2.Cap and Trade Compliance Charge ............................................ $0.00-$0.25
3. Transportation Charge ................................................................. $0.00-$0.
1525
4. Carbon Offset Charge .................................................................. $0.00-$0.10
Distribution Charge:....................................................................................... $0.52905607
Tier 2 Rates: (All usage over 100% of Tier 1)
Supply Charges:
1.Commodity (Monthly Market Based) .......................................... $0.10-2.00
2.Cap and Trade Compliance Charge ............................................. $0.00-$0.25
3. Transportation Charge ................................................................. $0.00-$0.1525
4. Carbon Offset Charge .................................................................. $0.00-$0.10
Distribution Charge:.............................................................................................
............................................................................................................$1.35261.4
338
O CITYOF
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UTILITIES
Attachment B
RESIDENTIAL GAS SERVICE
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RESIDENTIAL GAS SERVICE
UTILITY RATE SCHEDULE G-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-2 Sheet No G-1-2
dated 7-1-20201 Effective 7-1-20212
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Carbon Offset Charge reflects the City’s cost to purchase offsets for greenhouse
gases produced in the burning of natural gas. The Carbon Offset Charge will change in
response to changing market conditions, changing sales volumes and the quantity of
offsets purchased within the Council-approved per therm cap.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, Cap and Trade Compliance, Carbon Offset and Transportation Charges
will fall within the minimum/maximum ranges set forth in Section C.
2. Seasonal Rate Changes:
The Summer period is effective April 1 to October 31 and the Winter period is effective
from November 1 to March 31. When the billing period includes use in both the Summer
and the Winter periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates for each period. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
O CITYOF
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RESIDENTIAL GAS SERVICE
UTILITY RATE SCHEDULE G-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-3 Sheet No G-1-3
dated 7-1-20201 Effective 7-1-20212
3. Calculation of Usage Tiers
Tier 1 natural gas usage shall be calculated and billed based upon a level of 0.667 therms
per day during the Summer period and 2.0 therms per day during the Winter period,
rounded to the nearest whole therm, based on meter reading days of service. As an
example, for a 30 day bill, the Tier 1 level would be 20 therms during the Summer period
and 60 therms during the Winter period months. For further discussion of bill calculation
and proration, refer to Rule and Regulation 11.
{End}
O CITYOF
PALO ALTO
UTILITIES
8.b
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RESIDENTIAL MASTER-METERED AND COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-1 Effective 7-1-20212
dated 7-1-20201 Sheet No G-2-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo Alto
Utilities:
1. Commercial Customers who use less than 250,000 therms per year at one site.
2. Master-metered residential Customers in multi-family residential facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ...........................................................................................$100.85106.90
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Cap and Trade Compliance Charges ........................................... $0.00-0.25
3. Transportation Charge ................................................................. $0.00-$0.1525
4. Carbon Offset Charge .................................................................. $0.00-$0.10
Distribution Charge: .................................................................................................. $0.6948
7365
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap and
Trade Compliance Charge will change in response to changing market conditions, retail sales
volumes and the quantity of allowances required.
O CIT Y OF
PALO ALTO
UTILITIES
8.b
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RESIDENTIAL MASTER-METERED AND COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-2 Effective 7-1-20212
dated 7-1-20201 Sheet No G-2-2
The Carbon Offset Charge reflects the City’s cost to purchase offsets for greenhouse gases
produced in the burning of natural gas. The Carbon Offset Charge will change in response to
changing market conditions, changing sales volumes and the quantity of offsets purchased
within the Council-approved per therm cap.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, Cap and Trade Compliance, Carbon Offset and Transportation Charges
will fall within the minimum/maximum ranges set forth in Section C.
{End}
O CIT Y OF
PALO ALTO
UTILITIES
8.b
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LARGE COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-3
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-3-1 Effective 7-1-20212
dated 7-1-20201 Sheet No G-3-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo Alto
Utilities:
1. Commercial Customers who use at least 250,000 therms per year at one site.
2. Customers at City-owned generation facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: $461.43489.12
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .................................................... $0.10-$2.00
2. Cap and Trade Compliance Charges ...................................................... $0.00-0.25
3. Transportation Charge .......................................................................... $0.00-
$0.1525
4. Carbon Offset Charge ........................................................................... $0.00-$0.10
Distribution Charge: .....................................................................................................$0.68797292
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as calculated
under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
O CIT Y OF
PALO ALTO
UTILITIES
8.b
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LARGE COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-3
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-3-2 Effective 7-1-20212
dated 7-1-20201 Sheet No G-3-2
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Carbon Offset Charge reflects the City’s cost to purchase offsets for greenhouse gases
produced in the burning of natural gas. The Carbon Offset Charge will change in response
to changing market conditions, changing sales volumes and the quantity of offsets
purchased within the Council-approved per therm cap.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, Cap and Trade Compliance, Carbon Offset and Transportation Charges
will fall within the minimum/maximum ranges set forth in Section C.
2. Request for Service
A qualifying Customer may request service under this schedule for more than one account
or meter if the accounts are located on one site. A site consists of one or more contiguous
parcels of land with no intervening public right-of- ways (e.g. streets).
3. Changing Rate Schedules
Customers may request a rate schedule change at any time to any applicable City of Palo
Alto full-service rate schedule.
{End}
O CIT Y OF
PALO ALTO
UTILITIES
8.b
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COMPRESSED NATURAL GAS SERVICE
UTILITY RATE SCHEDULE G-10
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-10-1 Effective 7-1-20212
dated 7-1-20201 Sheet No. G-10-1
A. APPLICABILITY:
This schedule applies to the sale of natural gas to the City-owned compressed natural gas (CNG) fueling
station at the Municipal Service Center in Palo Alto.
B. TERRITORY:
Applies to the City’s CNG fueling station located at the Municipal Service Center in City of Palo Alto.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ...............................................................................................$68.2172.30
Per Therm
Supply Charges:
Commodity (Monthly Market Based) ................................................................ $0.10-$2.00
Cap and Trade Compliance Charges .............................................................. $0.00 to $0.25
Transportation Charge ................................................................................... $0.00-$0.1525
Carbon Offset Charge ........................................................................................ $0.00-$0.10
Distribution Charge .......................................................................................................$0.01130120
D. SPECIAL CONDITIONS
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and adjusted
for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill statement, the bill
amount may be broken down into appropriate components as calculated under Section C.
The Commodity charge is based on the monthly natural gas Bidweek Price Index for delivery at
PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance with the
state’s Cap and Trade Program, including the cost of acquiring compliance instruments sufficient to
cover the City’s Gas Utility’s compliance obligations. The Cap and Trade Compliance Charge will
change in response to changing market conditions, retail sales volumes and the quantity of
allowances required.
O CIT Y OF
PALO ALTO
UTILITIES
8.b
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COMPRESSED NATURAL GAS SERVICE
UTILITY RATE SCHEDULE G-10
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-10-2 Effective 7-1-20212
dated 7-1-20201 Sheet No. G-10-2
The Carbon Offset Charge reflects the City’s cost to purchase offsets for greenhouse gases produced
in the burning of natural gas. The Carbon Offset Charge will change in response to changing market
conditions, changing sales volumes and the quantity of offsets purchased within the Council-
approved per therm cap.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto, accounting for
delivery losses to the Customer’s Meter.
The Commodity, Cap and Trade Compliance, Carbon Offset and Transportation Charges will fall
within the minimum/maximum range set forth in Section C.
{End}
O CIT Y OF
PALO ALTO
UTILITIES
8.b
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March 02, 2022 www.cityofpaloalto.org
GAS UTILITYFINANCIAL PLAN ANDPROPOSED RATECHANGESFOR FY 2023
Attachment D •
CITY OF
PALO ALTO
UTILIT
8.c
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2
•FY 2023 Proposal:
•4% overall increase for FY 2024 with no cost reductions.
•Estimates continued sales decline of 10% through 2022.
•Future Years:
•4% increases each year for FY 2024 through FY 2026
Gas Rate Options
~CITY OF
~PALO ALTO
8.c
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3
•Rate Design:
•About one-third of the rate is “supply-related:” gas supply, transmission, and
environmental charges. These rates vary monthly according to market-driven
costs that are passed directly to customers
•About two-thirds of the rate is set based on the City’s costs for maintaining its
gas distribution system (gas mains, services, related equipment). These rates
are being discussed here tonight.
Gas Rate Design
~CITY OF
~PALO ALTO
8.c
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4
Gas Utility Cost Structure
Gas Distribution (in
green): The cost to
distribute gas within
Palo Alto, including:
maintaining and
replacing gas
infrastructure, customer
service, billing,
administration, etc.
*Gas Supply (in blue): All
pass-through
*
*
*
~CITY OF
~PA ILO ALTO
Capital
Investment
$5.6 million
13%
Distribution
$19.1 million
46%
~Gas Supply
■ Distribution
--
Gas Supply
$10.4 million
25%
Gas Environmental
$2.4 million
6%
Gas Transmission
$4. 7 million
11%
~ Gas Environmental ■ Gas Transmission
I;;! Capital Investment
8.c
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5
Long Term Cost Trends
Annualized Increase,
FY18-FY23:
Annualized Increase,
FY23-FY27:
Supply,
Transmission,
Environmental:
9%/yr
Supply,
Transmission,
Environmental:
3%/yr*
Distribution:
4%/yr
Distribution:
1%/yr
Capital:
-2%/yr
Capital **
1%/yr
* Forecast is uncertain and will vary with the markets
** FY 2023 and 2027 CIP are an average of two years due to
staggered main replacement schedule.
-V')
60
50
c: 40 --0
~ 30 --
10
~CITY OF
~PA ILO ALTO
FY 2018 FY 2023 (Projected)* Fy 2027 (Projected)*
Gas Supply, Environmental, and Transmission Costs
D Capital Investment**
Gas Operations
8.c
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6
Gas Supply Cost Drivers*
•Gas supply –some volatility in gas
market prices. Gas prices have risen in
recent years as supplies have become
tighter, demand has increased
•PG&E gas transmission rates continue to
rise to fund safety investments
•Cap and trade costs continue to rise (as
intended by design)
•Carbon Neutral Gas Plan
* All of the above costs are pass-through and not
included in the distribution rate increase
~CITY OF
~PA ILO ALTO
8.c
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7
Gas Distribution Cost Trends
Annualized
Increase,
FY18-FY23:
Gas Capital:
-2.9%/yr*
Gas
Operations:
3.8%/yr
Annualized
Increase, FY23-
FY27:
Gas Capital:
3.7%/yr*
Gas
Operations:
1.4%/yr
* Due to staggered main replacement projects, costs are averaged over two years
-
35
30
25
~ 20
0
·-15 ~ -V). 10
s
FY 2018 FY 2023 (Projected)* Fy 2027 (Projected)*
■ Debt Service □ Operations ~ Capita Investment
~CITY OF
~PA ILO ALTO
8.c
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Gas Distribution Cost Drivers
•Health, retirement, and associated
overhead costs continue to increase
•Underground construction costs have
increased substantially as well
•Temporary funding ($1.07M/yr) for two
years for crossbore investigations (FY 22
& FY 23)
~CITY OF
~PALO ALTO
8.c
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9
FY 2023 Preliminary Gas Cost and Revenue Projections
Co
s
t
/
R
e
v
e
n
u
e
$60
$50
$40
$20
$10
~CITY OF
~PA ILO ALTO
$0
Rate changes (excluding supply-related rate changes)
8% 0% 4% 5% 2% 3% 4% 4% 4 %
r---co 0) 0 y-C'\11 ("j') v LO
~ "I'""" ~ N ,N N N N C\I
0 0 0 0 ,o o , 0 0 0
N N N N 'N N N N N
Actualls Pr ojections
4% 3%
-Revenue
□ Capital
II nvestme nt
□ Gas Supply
□ Operations
■ Transfers
■ Debt Service
(0 It---
N ,C',J
0 ,o
N ,N
8.c
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Projected Gas Operating Reserve Projections
$16
$14
$12
$10
~$8
C:
0 ·-
-
$4
$2
---. . --------. . .. ___. ..
FY 2021 FY 2022
~CITY OF
~PA ILO ALTO
------
. . ---
__.-. • • -· · -· · ---. ----. . ----___.,, . .......... .--
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
-Reserve (Year-End)
-Reserve Maximum
- -Reserve Target
-Reserve Minimum
-Risk Assessment
8.c
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Estimated Bill Changes
Residential
Commercial
Residential
--
Usage Bill under Bill under
(Therms/ month) Cuirrent Rates Proposed IRates
Winter (Using November 2021 commodity prices)
30 $ 55.62 $ 57 .22
5 4 (med ia n } 91.40 93.76
80 146.63 152.79
150 308.64 320.48
Summer (Us ing October 2021 commodity p r ices)
10 $ 25.47
18 (med ia n } 37.13
30 62 .31
45 96.53
~CITY OF
~PALO ALTO
$ 26 .44
38.35
64.41
99.85
Change
$/mo. %
$1.60 2.9%
2.36 2.6%
6 .16 4.2%
11.84 3.8%
$0.97 3.8%
1.22 3.3%
2 .10 3.4%
3.31 3.4%
Usage Bill under Bill under Change
(Therms/month} Current Rates Proposed Rates %
500 870 897 3 .1%
5,000 7,792 8 ,007 2 .8%
10,000 15,483 15,906 2 .7%
50,000 77,029 79,121 2 .7%
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Current Bill Comparisons
Residential
Commercial
Residential
Usage
Season (therms)
30
W inter
(Med ia n} 54
(November
2021) 80
150
10
Summer (Med ian} 18
(October 2021) 30
45
~CITY OF
~PALO ALTO
Palo Alto
$ 55 .62
91.40
146.63
308.64
$ 25 .47
37.13
62.31
96.53
%
PG&E Zone X Difference
62.48 -11.0%
116.08 -21.3%
182.76 -19.8%
362.30 -14.8%
19.52 30 .5%
36.48 1.8%
65.69 -5 .1%
102.20 -5 .5%
Gas Bill ($/month) %
Palo Alto PG&E Difference
500 870 938 (7%)
5,000 7,792 8,786 (11%)
10,000 15,483 16 008 , (3%)
50,000 77,029 71,217 8%
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Monthly Residential Bill Comparison
Palo Alto median was
14.4% below PG&E
(FY 2021 data)
$180
$160
$140
$120
$100
$80
$60
$401
$20
$-
PG&E Palo Alto
Sum mer Summer
-Low (8 Thm) -Medi an (18Thm)
-High (28 Thm) -Average (22 Thm)
~CITY OF
~PA ILO ALTO
PG &E Pa lo Al t o
-Lov.r (25 Thm} -M edian (54 Thm)
-Hi gh (93 Thm) -Ave -rage (68Thm)
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RECOMMENDATION
Staff requests that the UAC recommend that the Council:
•Adopt a resolution approving:
•The Fiscal Year 2023 Gas Financial Plan
•Up to a $3 million transfer from the Operations Reserve to the CIP
Reserve in FY 2022
•Up to a $2.766 million transfer from the Rate Stabilization Reserve to the
Operations Reserve in FY 2022
•Adopt a resolution approving a 6% distribution rate (4% overall) increase to
Gas Utility Rates
~CITY OF
~PALO ALTO
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City of Palo Alto (ID # 13961)
Utilities Advisory Commission Staff Report
Meeting Date: 3/2/2022
City of Palo Alto Page 1
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend the City Council Adopt a Resolution Approving the Fiscal Year
2023 Electric Financial Plan and Reserve Transfers, Amending the Electric
Utility Reserve Management Practices, and A mending Rate Schedules E -1
(Residential Electric Service), E -2 (Residential Master -Metered and Small
Non-Residential Electric Service), E -2-G (Residential Master -Metered and
Small Non-Residential Green Power Electric Service), E -4 (Medium Non-
Residential Electric Service), E-4-G (Medium Non -Residential Green Power
Electric Service), E-4 TOU (Medium Non -Residential Time of Use Electric
Service), E 7 (Large Non -Residential Electric Service), E -7-G (Large Non-
Residential Green Power Electric Service), E -7 TOU (Large Non-Residential
Time of Use Electric Service), E -14 (Street Lights), E-NSE (Net Metering Net
Surplus Electricity Compensation), and E -EEC (Export Electricity
Compensation)
From: Director of Utilities
Lead Department: Utilities
Recommendation
Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council adopt
a Resolution (Attachment A):
1. Approving the Fiscal Year (FY) 2023 Electric Financial Plan (Linked Document);
2. Amending the Electric Fund Reserve Management Practices, specifically amending
Section 6: Electric Special Projects Reserve, as follows:
a. Amend part e) setting the goal to commit ESP funds by the end of FY 2023; and
b. Amend part f) setting the date to revert uncommitted funds to the Electric
Supply Operations Reserve to five years after the commitment date (FY 2028)
3. Approving the following transfers at the end of FY 2022:
a. Up to $15 million from the Hydro Stabilization Reserve to the Supply Operations
Reserve;
b. Up to $5 million from the Electric Special Projects (ESP) reserve to the Supply
Operations Reserve; and
c. As discussed in Staff Report #11556i, approve an allocation of Cap and Trade
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funds up to 1/3 of REC revenue to the Cap and Trade Program Reserve to be
spent on local decarbonization programs;
4. Approving the following rate actions for FY 2023:
a. An increase to retail electric rates E-1 (Residential Electric Service), E-2 (Small
Non-Residential Electric Service), E-4 (Medium Non-Residential Electric Service),
E-4 TOU (Medium Non-Residential Time of Use Electric Service), E-7 (Large Non-
Residential Electric Service), E-7 TOU (Large Non-Residential Time of Use Electric
Service) and E-14 (Street Lights) of 5% effective July 1, 2022;
b. An update to the Export Electricity Compensation (E-EEC-1) rate to reflect
current projections of avoided cost, effective July 1, 2022;
c. An update to the Net Surplus Electricity Compensation (E-NSE-1) rate to reflect
current projections of avoided cost, effective July 1, 2022; and
d. An update to the Palo Alto Green program pass-through premium charge on the
Residential Master-Metered and Small Non-Residential Green Power Electric
Service (E-2-G), the Medium Non-Residential Green Power Electric Service (E-4-
G), and the Large Non-Residential Green Power Electric Service (E-7-G) rate
schedules (Attachment B) to reflect current costs, effective July 1, 2022.
Executive Summary
The FY 2023 Electric Utility Financial Plan (Linked Document) includes projections of the utility’s
costs and revenues through FY 2027. Staff projects costs for the Electric Utility to increase
steadily through the forecast period. Revenue increases of at least 5% over the forecast
horizon, along with a significant use of Hydro Stabilization and Electric Special Project Reserves,
are projected to be necessary to keep operating reserves within guideline levels. Short-term
impacts to electric costs arising from dry hydro conditions are a main driver of the need for
revenue increases, as well as rising operations costs for contract line -crews and capital costs for
infrastructure improvement. Transmission costs continue to rise, also contributing to the need
for revenue increases.
As projected in the FY 2021 Financial Plan, the lack of precipitation and resulting poor reservoir
levels have increased purchase costs and necessitate the utilization of funds from the
Hydroelectric Rate Stabilization Reserve. An additional loan may be required from the Electric
Special Projects reserve to help keep the Operations Reserve above minimum guideline levels.
Operations costs are expected to increase by about 2% per year through the forecast period.
Projected capital expenses are higher due to the rebuilding of existing underground districts,
substation upgrades, the Foothills rebuild, utility pole replacements and line voltage upgrades.
The City is also evaluating the cost and scope of other system resiliency projects which may
increase costs and rates in the future.
Electric loads have been gradually decreasing and are expected to continue to decrease in the
long-term, mainly due to declining consumption in the commercial sector, putting gradual
upward pressure on rates. Electrification will likely reverse some of this trend, although the
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pace of that impact is uncertain at this time. This decline has been exacerbated by the
continuing COVID pandemic. Consumption is currently around 10% below long-term
consumption trends. Current models suggest that pandemic economic recovery will take place
through 2022 and 2023, with electric consumption stabilizing on the long run average by 202 5.
Based on the relative health of the various Electric reserve funds, staff is recommending at least
a 5% rate increase for FY 2023, however this will likely result in reserves being close to the
minimum guideline levels over the next several years.
Background
Every year staff presents the UAC with Financial Plans for its Electric, Gas, Water, and
Wastewater Collection Utilities and recommends any rate adjustments required to maintain
their financial health. These Financial Plans include a comprehensive overview of the utility’s
operations, both retrospective and prospective, and are intended to be a reference for UAC and
Council members as they review the budget and staff’s rate recommendations. Each Financial
Plan also contains a set of Reserves Management Practices describing the reserves for each
utility and the management practices for those reserves. The UAC reviewed preliminary
financial forecasts at its December 1, 2021 meeting.
Discussion
Staff’s annual assessment of the financial position of the City’s electric utility is completed in
compliance with cost of service requirements set forth in the California Constitution and
applicable statutory law. The assessment includes making long-term projections of market
conditions, of costs associated with the physical condition of infrastructure, and of other factors
that could affect utility costs. Rates are then proposed that will move towards adequate cost
recovery, based on the models developed in the 2016 Electric Cost of Service and Rates Study1,
updated with current and proposed operating costs.
Proposed Actions for FY 2022 and FY 2023:
The FY 2023 Electric Utility Financial Plan (Linked Document) includes the following proposed
actions:
1. Approving the Fiscal Year (FY) 2023 Electric Financial Plan (Linked Document);
2. Amending the Electric Fund Reserve Management Practices, specifically amending
Section 6: Electric Special Projects Reserve, as follows:
a. Amend part e) setting the goal to commit ESP funds by the end of FY 2023; and
b. Amend part f) setting the date to revert uncommitted funds to the Electric
Supply Operations Reserve to five years after the commitment date (FY 2028);
3. Approving the following transfers at the end of FY 2022:
a. Up to $15 million from the Hydro Stabilization Reserve to the Supply Operations
Reserve;
1 https://www.cityofpaloalto.org/files/assets/public/agendas -minutes-reports/reports/city-manager-reports-
cmrs/year-archive/2016/final-staff-report-id-6857_electric-utility-financial-plan-and-rate-changes.pdf
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b. Up to $5 million from the Electric Special Projects (ESP) reserve to the Supply
Operations Reserve; and
c. As discussed in CMR 11556, approve an allocation of up to $1 million from the
Cap and Trade Program Reserve to be spent on local decarbonization programs;
4. Approving the following rate actions for FY 2023:
a. An increase to retail electric rates E-1 (Residential Electric Service), E-2 (Small
Non-Residential Electric Service), E-4 (Medium Non-Residential Electric Service),
E-4 TOU (Medium Non-Residential Time of Use Electric Service), E-7 (Large Non-
Residential Electric Service), E-7 TOU (Large Non-Residential Time of Use Electric
Service) and E-14 (Street Lights) of 5% effective July 1, 2022;
b. An update to the Export Electricity Compensation (E-EEC-1) rate to reflect
current projections of avoided cost, effective July 1, 2022;
c. An update to the Net Surplus Electricity Compensation (E-NSE-1) rate to reflect
current projections of avoided cost, effective July 1, 2022; and
d. An update to the Palo Alto Green program pass-through premium charge on the
Residential Master-Metered and Small Non-Residential Green Power Electric
Service (E-2-G), the Medium Non-Residential Green Power Electric Service (E-4-
G), and the Large Non-Residential Green Power Electric Service (E-7-G) rate
schedules (Attachment B) to reflect current costs, effective July 1, 2022.
The transfer from the Hydro Stabilization Reserve will help mitigate rising purchase costs
resulting from poor hydro conditions and keep the Supply Operations reserve above minimum
guideline levels.
The transfer from the ESP reserve will also help mitigate rising costs resulting from electric
purchases, as well as the cost of contract labor required to complete Capital Improvement
Projects (CIP) and ongoing operations and maintenance. Staff anticipates repaying the balance
of outstanding loans to this reserve starting in FY 2025, or earlier should economic situations
permit.
The City of Palo Alto (City or Palo Alto) maintains a Cap and Trade Program Reserve within the
Electric fund to hold revenues from the sale of carbon allowances freely allocated by the
California Air Resources Board to the City’s electric utility. Cap and Trade Program revenues
are provided to the electric utility to support a wide variety of carbon reducing activit ies,
including local decarbonization.
In accordance with Council’s August 2020 direction, (Staff Report #11556)2 the City has also
exchanged certain types of renewable energy to take advantage of market conditions to reduce
supply costs, fund electric utility programs and capital investment, and raise funds for local
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decarbonization. The revenues received from these REC exchanges are kept in the Electric
Supply Reserve. With this Financial Plan, and as described in Staff Report #11556, staff is
allocating Cap and Trade funds equivalent to 1/3 of the FY 2022 REC Exchange program
revenues, or up to an estimated $1 million, for future local decarbonization projects.
Table 1 below shows the effects of the proposed transfers on reserve funds, as well as changes
to the CIP min/max guidelines. The attached Electric Financial Plan (Linked Document) discusses
these reserve changes in greater detail:
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Table 1: Reserves Starting and Ending Balances, Revenues, Expenses, Transfers To/(From)
Reserves, Operations and Capital (CIP) Reserve Guideline Levels for FY 2022 to FY 2027
($000)
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Starting Reserve Balances
1 Supply Operations 19,875 33,046 37,016 27,381 22,795 21,238
2 Distribution Operations 10,028 11,450 10,135 15,105 11,404 14,104
3 CIP 880 880 2,880 2,880 880 880
4 Electric Special Projects 46,665 29,649 14,649 11,649 17,649 23,649
5 Hydro Stabilization 15,400 400 400 400 400 400
6 Low Carbon Fuel Standard 6,944 6,050 5,028 3,956 3,388 2,935
7 Cap and Trade Program 1,189 1,760 6,183 9,148 11,878 14,337
Revenues
8 Supply 113,983 126,638 123,380 122,102 124,682 130,681
9 Distribution 55,845 60,564 68,520 76,267 80,222 80,483
Transfers
10 Supply Operations 19,429 3,577 (2,965) (8,730) (8,459) (8,212)
11 Distribution Operations - (2,000) - 2,000 - -
12 CIP - 2,000 - (2,000) - -
13 Electric Special Projects (5,000) (8,000) - 6,000 6,000 6,000
14 Hydro Stabilization (15,000) - - - - -
15 Low Carbon Fuel Standard - - - - - -
16 Cap and Trade Program 571 4,423 2,965 2,730 2,459 2,212
Capital Program Contribution
17 Distribution Operations - - - - - -
18 CIP Reserve
Expenses
19 Supply Expenses (120,242) (126,244) (130,050) (117,958) (117,780) (119,107)
20 Distribution Non-CIP Expenses (35,758) (37,760) (40,956) (56,247) (58,289) (59,013)
21 Planned CIP (18,664) (22,120) (22,594) (25,721) (19,233) (22,620)
22 ESP funded (12,016) (7,000) (3,000) - - -
23 Hydro funded - - - - - -
24 LCFS funded (893) (1,022) (1,072) (568) (453) (453)
Ending Reserve Balance
1+8+10+19 Supply Operations 33,046 37,016 27,381 22,795 21,238 24,600
2+9+11+17+20+21 Distribution Operations 11,450 10,135 15,105 11,404 14,104 12,954
3+12+18 CIP 880 2,880 2,880 880 880 880
4+13+22 Electric Special Projects 29,649 14,649 11,649 17,649 23,649 29,649
5+14+23 Hydro Stabilization 400 400 400 400 400 400
6+15+24 Low Carbon Fuel Standard 6,050 5,028 3,956 3,388 2,935 2,482
7+16 Cap and Trade Program 1,760 6,183 9,148 11,878 14,337 16,549
Operations Reserve Guidelines (Supply)
25 Minimum 19,170 18,843 19,470 19,293 19,430 19,651
26 Maximum 38,340 37,686 38,941 38,586 38,860 39,301
Operations Reserve Guidelines (Distribution)
27 Minimum 8,574 9,451 9,337 9,512 9,727 9,910
28 Maximum 14,739 16,444 16,135 16,433 16,811 17,124
CIP Reserve Guidelines
29 Minimum 4,455 4,483 4,508 4,510 3,162 3,718
30 Maximum 22,275 22,417 22,542 22,551 21,942 23,125
While the continuing COVID-19 pandemic and economic hardships created by it continue to put
pressure on City of Palo Alto Utility (CPAU) customers, given the rising costs and weakening
reserve health of the Electric fund, staff is proposing a 5% rate increase for FY 2023 and
anticipating 5% rate increases for the rest of the forecast period. Under this scenario, utility
reserves are projected to drop to near their minimum guideline levels. Possible program and
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service cuts may be needed to make up the difference if the utility’s financial position is worse
than forecasted.
Table 2 below compares current rate projections to those projected in last year’s Financial Plan.
Table 1: Projected Electric Rates, FY 2023 to FY 2027
Projection FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Current 5% 5% 5% 5% 5%
Last Year 5% 5% 2% 1% N/A
FY 2023 Financial Plan Projected Rate Adjustments for the Next Five Fiscal Years
Table 3 shows the projected rate adjustments over the next five years and their impact on
annual median residential electric bill (453 kwh per month in winter, 365 kwh pe r month in
summer).
Table 3: Projected Rate Adjustments, FY 2022 to FY 2026
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Electric Utility 5% 5% 5% 5% 5%
Estimated Bill Impact
($/mo) * $3.04 $3.19 $3.35 $3.51 $3.69
* Estimated impact on median residential electric bill, which is currently $60.70 for
CY 2021
The rate increases are related to several factors: low hydro supply increasing FY 2022 and FY
2023 purchase costs, increasing transmission costs over the longer term, the need for
substantial additional capital investment in the electric distribution system, and increasing
operations costs due to larger contracting needs to complete electric distribution system
maintenance and capital improvement work. Revenues have also declined as customer usage
has decreased, requiring larger rate increases to cover fixed expenses and offset the shortfalls.
Historically, total electric utility costs (excluding short-term drought impacts) were roughly
$120 million per year, allowing the electric utility to go without a rate increase from July 1, 2009
to July 1, 2016. From FY 2016 to FY 2018, annual costs (net of energy supply related revenue,
like surplus energy sales) increased to roughly $140 million per year (costs were unusually low
in FY 2019 due to some one-time savings from surplus energy sales). Costs are projected to
increase to roughly $175 million by FY 2027 (net of surplus energy sales).
Figure 1 shows the overall electric utility’s costs (net of surplus sales revenues) in FY 2018, FY
2023, and FY 2027. Costs for the electric supply portfolio decreased slightly between FY 2018
and FY 2023, but much of this is due to surplus electric supply revenues that are not expected
to continue while hydro supplies are low. Additionally, customer sales declined by 1.5% to 2%
annually over the past several years. Assuming normal hydro conditions going forward, the
continuing trend of load loss, and continually increasing transmission charges, total costs are
projected to increase by about 2% annually during the forecast period.
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The cost of managing the distribution system (e.g. maintenance, capital investment, customer
service, billing, etc.) has increased by about 6% per year and is projected to be about 1 to 2%
per year in the next five years once some larger capital projects are completed. FY 2023 capital
costs are higher due in part to the Smart Grid Technologies project, but these costs have been
approved by Council to come from the ESP Reserve and will not impact rates. FY 2018 capital
costs were low relative to FY 2023, but similar to outer years of the financial plan.
Overall, costs are projected to increase by about 2% per year over the forecast horizon, but
declining loads will necessitate rate increases greater than this to maintain the financial health
of the utility.
Figure 1: Electric Utility Costs, FY 201 8 Actual vs. FY 2023 and FY 2027 Projections
Figure 2 shows distribution costs. Capital costs have increased by about 6% per year on average
over the last five years but are skewed in this graph due to a large ($7 million) Smart Grid
Technology project budgeted for FY 2023 as well as relatively low spending during FY 2018.
Larger investments related to underground district rebuilds, substation upgrades, and the
rebuilding of the Foothills system are budgeted to occur in the next three years. In the last few
years, the City has experienced a higher number of outages in underground districts due to
aging equipment and infrastructure. To address this problem, distribution system-related
operational spending is projected to increase by about 2% annually. Some of this is due to
projected increases in costs of labor and materials. If there are higher than anticipated staff
vacancies, more expensive external contracts will be needed to complete necessary electric
system maintenance.
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Figure 2: Electric Distribution Costs, FY 201 8 vs. FY 2023 and FY 2027 Projections
Figure 3 shows commodity costs. While net electric supply portfolio costs stayed relatively
stable and even decreased slightly from FY 2018 to FY 2023, this was mainly due to surplus
energy revenues and decreasing loads. Transmission cost s increased by 8% annually in the
same timeframe and are projected to increase by about 9% annually in future years. These
increases are due to rehabilitation and replacement of the statewide electric transmission
system as well as expansion of that system to accommodate new generation, mostly
renewable.
Staff works to contain transmission costs through partner agencies, including the Transmission
Agency of Northern California (TANC) and Northern California Power Agency (NCPA), and
through direct partnerships with other local utilities (the Bay Area Municipal Transmission
group, BAMx). These groups intervene in transmission proceedings at the Federal Energy
Regulatory Commission (FERC) and the California Independent System Operator (CAISO), and
have achieved some reductions in long-term transmission costs. Staff is developing strategies to
achieve cost savings in electric supply and will discuss these strategies in greater detail at future
meetings.
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Figure 3: Electric Supply Costs, FY 2018 Actual vs. FY 2023 and FY 2027 Projections
Staff also recognizes the importance of managing operating costs and maximizing efficiency in
order to minimize rate increases. As discussed above, staff is working on cost containment
measures related to transmission and renewable energy costs. Utility consumers also see some
long-term cost savings from City-wide efforts to manage personnel costs. As reflected in the
Utilities Strategic Plan, staff is exploring additional ways to effectively use available resources,
particularly across Divisions.
Electric Bill Comparison with Surrounding Cities
For the median consumption level, the annual CPAU residential electric bill for calendar year
2021 was $728, which was 41% lower than the annual bill for a PG&E customer with the same
consumption ($1,237) and approximately 16% higher than the annual bill for a City of Santa
Clara customer ($629). The bill calculations for PG&E customers are based on PG&E Climate
Zone X, which includes most surrounding comparison communities.
Table 4 presents sample median residential bills for Palo Alto, PG&E, and the City of Santa Clara
(Silicon Valley Power) for several usage levels. Rates used to calculate the monthly bills shown
below were in effect as of January 1, 2022.
Over the next several years low usage customers in PG&E territory are expected to continue to
see higher percentage rate increases than high usage customers as PG&E compresses its tiers
from the highly exaggerated levels that have been in place since the energy crisis. This is likely
to make the bill for the median Palo Alto consumer look even more favorable compared to
most PG&E customers. Even with the compressed tiers, bills for high usage Palo Alto consumers
are likely to remain substantially lower than the bills for high usage PG&E customers.
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Table 4: Residential Monthly Electric Bill Comparison (Effective 1/1/2022, $/mo.)
Season Usage (kwh) Palo Alto PG&E Santa Clara
Winter
300 41.27 84.72 39.22
453 (Median) 69.22 127.93 59.95
650 107.37 197.16 86.65
1200 213.89 392.28 161.17
Summer
300 41.27 87.11 39.22
(Median) 365 52.18 110.17 48.03
650 107.37 211.27 86.65
1200 213.89 406.39 161.17
Table 5 shows the average monthly electric bill for commercial customers for various usage
levels.
Table 5: Commercial Monthly Electric Bill Comparison (1/1/2022, $/mo.)
Usage (kwh/mo) Palo Alto PG&E Santa Clara
1,000 177 303 196
160,000 24,795 34,211 21,472
500,000 77,477 86,456 66,937
2,000,000 273,431 333,240 267,523
Proposed Rate Changes
The City adopted the current rates effective July 1, 2019, when CPAU increased electric rates by
8%. With the onset of the COVID-19 pandemic, usage amongst all customer classes has
decreased. Many businesses have been operating at minimum staffing conditions or fully
remote. City of Palo Alto staff have reduced expenses where possible, but costs related to
ongoing distribution system work have increased, as staffing shortages have required contract
crews to complete required maintenance and CIP work.
In order to move towards full cost recovery while minimizing rate impacts in light of pandemic-
related economic challenges, staff recommends a rate increase to all customer classes of 5%. If,
after the pandemic, usage and/or spending looks to be moving in a different direction, staff will
suggest a re-balancing of rates at that time.
Staff is also engaging the services of consultants to review and revise the Electric Utility’s Cost
of Service study and rates. This study will examine how costs are allocated among the
residential and commercial classes and realign them if needed, and will develop cost-based
rates for several emerging groups, such as: all-electric customers, DC-fast charging facilities, and
micro-grid customers. When staff brought the COSA guidelines to the UAC, Finance and
Council, there was a directive for staff to propose residential rates to support electrification,
prior to a COSA. Staff’s response to that request is provided as Attachment D
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The current rates and proposed rates for FY 2023, and are reflected in Table 6 below:
Table 6: Current and Proposed Electric Rates
Current Rates
Proposed Rates
(7/1/2022)
Change
$ %
E-1 (Residential)
Tier 1 Energy ($/kWh) 0.13757 0.14445 0.00688 5%
Tier 2 Energy ($/kWh) 0.19367 0.20335 0.00968 5%
Minimum Bill ($/day) 0.3283 0.3447 0.0164 5%
E-2 & E-2-G (Small Non-Residential)
Summer Energy ($/kWh) 0.20853 0.21896 0.01043 5%
Winter Energy ($/kWh) 0.14624 0.15355 0.00731 5%
Minimum Bill ($/day) 0.8359 0.8777 0.0418 5%
E-4 & E-4-G (Medium Non-Residential)
Summer Energy ($/kWh) 0.12848 0.13490 0.00642 5%
Winter Energy ($/kWh) 0.09946 0.10443 0.00497 5%
Summer Demand ($/kW) 28.91 30.36 1.45 5%
Winter Demand ($/kW) 18.97 19.92 0.95 5%
Minimum Bill ($/day) 17.2742 18.1379 0.8637 5%
E-7 & E-7-G (Large Non-Residential)
Summer Energy ($/kWh) 0.11432 0.12004 0.00572 5%
Winter Energy ($/kWh) 0.07738 0.08125 0.00387 5%
Summer Demand ($/kW) 30.69 32.22 1.53 5%
Winter Demand ($/kW) 17.05 17.90 0.85 5%
Minimum Bill ($/day) 49.1139 51.5696 2.4557 5%
Table 7 shows the impact of the proposed July 1, 2022 rate changes on the residential and non -
residential bills for various consumption levels.
Table 7: Impact of Proposed Electric Rate Changes on Customer Bills
Rate Schedule Usage (kWh/mo)
Bill under
Current
Rates ($/mo)
Bill Under Rates
Proposed 7/1/22
($/mo)
Change
$/mo %
E-1 (Residential) 300 $41.27 $43.34 $2.07 5%
(Summer Median)
365
52.18 54.79 2.61 5%
(Winter Median)
453
69.22 72.68 3.46 5%
650 107.37 112.74 5.37 5%
1200 213.89 224.58 10.69 5%
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E-2 (Small Non-
Residential) 1,000 177 186 9 5%
E-4 (Medium
Non-Residential)
160,000 24,795 26,035 1,240 5%
500,000 77,477 81,352 3,873 5%
E-7 (Large Non-
Residential 2,000,000 273,431 287,095 13,664 5%
Net Energy Metering Buyback Rates
The City operates two Net Energy Metering (NEM) programs. Solar customers served by the
CPAU’s original NEM program, also called NEM 1, are compensated at retail rates for electricity
they export to the grid, and solar customers served by the NEM successor program, or NEM 2
(effective after the City reached its NEM 1 cap at the end of 2017), are compensated at the
Export Electricity Compensation (E-EEC-1) rate for exported electricity.
Customers on the NEM 1 program who have chosen to have the value of any annual net
generation they produced over the past 12 months credited back to their account do so u nder
the Net Metering Net Surplus Electricity Compensation (E-NSE-1) rate, which is calculated using
the utility’s avoided costs from the prior year. The Net Surplus Electricity Compensation rate
represents the value of the City’s avoided costs or value of customer-generated electricity in
Palo Alto during the prior calendar year, including compensation for the energy, avoided
capacity charges, avoided transmission and ancillary service charges, avoided transmission and
distribution (T&D) losses, and renewable energy credits (RECs), or environmental attributes.
Under the City’s NEM successor program, participating solar customers are billed at the current
retail rate for electricity drawn from the grid, and receive a credit for electricity they export to
the grid at the Export Electricity Compensation (E-EEC-1) buyback rate. This buyback rate also
reflects the avoided cost or value of customer-generated electricity in Palo Alto, calculated on a
forward-looking basis for the upcoming fiscal year. As shown in the table below, the current
avoided cost for solar generation in Palo Alto is 10.45 cents/kWh, which is slightly lower than
the avoided cost on the current NEM buyback rate (10.78 cents/kWh). This slight decrease in
the overall avoided cost is driven by a small decrease in the value of the RECs generated by
these solar systems.
Table 6: NEM Compensation Rates – Current vs. Proposed
Rate
Current
$/kWh
Proposed
$/kWh
Export Electricity (E-EEC-1) $0.1078 $0.1045
Net Surplus Electricity (E-NSE-1) $0.0992 $0.1026
Palo Alto Green (PAGreen) Program
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The PaloAltoGreen (PAG) program provides CPAU’s commercial customers an opportunity to
voluntarily pay a premium to receive renewable electricity credits to match their energy usage.
Under this program, CPAU staff purchase and retire Green-e certified RECs in the wholesale
market on behalf of PAG customers. This enables participating commercial customers to claim
credit for the REC purchases in order to satisfy their corporate sustainability goals and meet
federal “green certification” requirements.
The PAG charge is a pass-through charge; the revenue collected through the PAG rate premium
is intended to fully recover the costs of administering the program. The PAG program has very
low overhead costs (e.g., the cost of hiring an auditor to carry out an annual Green-e
verification process for the program), so the vast majority of the program cost is the purchase
cost of the RECs. In the past year the wholesale cost of Green-e certified RECs in the Western
US market has continued to increase (from approximately $6/REC to $7.5/REC). As such, the
PAG rate premium needs to be raised from $6 per 1,000 kWh block (.6 cents/kWh) to $7.5 per
1,000 kWh block (.75 cents/kWh). This change will be reflected on the Residential Master-
Metered and Small Non-Residential Green Power Electric Service (E-2-G), the Medium Non-
Residential Green Power Electric Service (E-4-G), and the Large Non-Residential Green Power
Electric Service (E-7-G) rate schedules (Attachment B).
Reserve Management Practice Changes: Electric Special Projects (ESP) Reserve
In November 2011, Council changed the name of the Calaveras Reserve to the Electric Special
Project (ESP) Reserve and adopted ESP Reserve Guidelines to ensure the reserve funds were
spent to benefit electric ratepayers. The guidelines were established to provide a framework
for evaluating projects and set deadlines for committing the funds, to ensure progress was
made in expending the funds and returning benefits to the electric ratepayers. Consistent with
the guidelines, funds have been used for several initiatives including funding studies and pilot
programs in support of bigger initiatives. In addition, Council has approved loans of
uncommitted ESP reserve funds to help stabilized Operations Reserves. Per Council approval,
$10 million was transferred from the Electric Special Projects (ESP) Reserve to the Operations
Reserve in FY 2018 to mitigate higher supply costs due to the drought occurring then, with $5
million having been repaid to date. Staff is requesting an additional $5 million loan to help with
the current drought as well as high Operations and CIP expenses.
In 2015, Staff recommended to the Utilities Advisory Commission (UAC) and Council two
projects to be funded by the ESP: the implementation of smart grid systems, and transmission
system upgrades. At the time, given the uncertain timeline and cost of both projects, both the
UAC and Council recommended that timelines for evaluation and use of ESP funds be extended.
Today, the Smart Grid project is underway with Council-approved ESP funding, anticipated to
be $22 million over the next five years. Transmission system upgrades and negotiations have
been slower to develop, and in the interim staff is developing a list of other projects which may
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be applicable for ESP funding. Staff will discuss proposals for using ESP funds with the UAC
budget sub-committee in early 2022.
Given this, staff is requesting that the timelines for evaluation be extended, with a goal to
commit funds by the end of FY 2023, and to have any uncommitted funds revert to the Electric
Supply Operations Reserve five years after that (FY 2028).
If Council does not approve this change, the funds will revert to the Operations Reserve at the
end of FY 2022.
Timeline
The Finance Committee is scheduled to review the FY 2023 Electric Financial Plan (Linked
Document) in April 2022. The City Council will consider adopting the Financial Plan and rate
amendments as part of the FY 2023 budget review and adoption process.
Stakeholder Engagement
The UAC reviewed preliminary financial forecasts at its December 1, 2021 meeting, and the
Finance Committee reviewed the preliminary forecasts at its February 1, 2022 meeting. Staff
and the UAC’s recommendation on the FY 2023 Electric rate increases will go to the Finance
Committee in April and be presented to City Council in June during the budget adoption
process.
Resource Impact
The estimated FY 2023 revenue impact would be an increase of $7.9 million in the Electric
Fund. The City is a utility customer, so rate increases will also result in estimated City expense
increases of about $281,000. Resource impacts to City departments and funds of the
recommended rate adjustments carried in the FY 2023 proposed budget will be reflected in the
annual budget process.
Environmental Review
The UAC’s review and recommendation to Council on the FY 2023 Electric Financial Plans and
rate adjustments does not meet the California Environmental Quality Act’s definition of a
project, pursuant to Public Resources Code Section 21065, thus no environmental review is
required.
Attachments:
• Attachment A: Resolution
• Attachment B: Proposed Electric Rate Schedules
• Attachment C: Presentation
i https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-
cmrs/year-archive/2020-2/id-11566.pdf
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Attachment A
6055603
Utility Electric Rate Schedules
FY23 Electric Financial Plan
*Yet to be Passed*
Resolution No. ____
Resolution of the Council of the City of Palo Alto Approving the Fiscal
Year 2023 Electric Utility Financial Plan and Reserve Transfers, Amending the
Electric Utility Reserves Management Practices and Amending Utility Rate
Schedules E-1 (Residential Electric Service), E-2 (Residential Master-Metered
and Small Non-Residential Electric Service), E-2-G (Residential Master-
Metered and Small Non-Residential Green Power Electric Service), E-4
(Medium Non-Residential Electric Service), E-4-G (Medium Non-Residential
Green Power Electric Service), E-4 TOU (Medium Non-Residential Time of Use
Electric Service), E 7 (Large Non-Residential Electric Service), E-7-G (Large Non-
Residential Green Power Electric Service), E-7 TOU (Large Non-Residential
Time of Use Electric Service), E-14 (Street Lights), E-NSE (Net Surplus
Electricity Compensation Rate), and E-EEC (Export Electricity Compensation)
R E C I T A L S
A. Each year the City of Palo Alto (“City”) regularly assesses the financial position of
its utilities with the goal of ensuring adequate revenue to fund operations. This includes making
long-term projections of market conditions, the physical condition of the system, and other
factors that could affect utility costs, and setting rates adequate to recover these costs. It does
this with the goal of providing safe, reliable, and sustainable utility services at competitive rates.
The City adopts Financial Plans to summarize these projections.
B. The City uses reserves to protect against contingencies and to manage other
aspects of its operations, and regularly assesses the adequacy of these reserves and the
management practices governing their operation. The status of utility reserves and their
management practices are included in Reserves Management Practices attached to and made
part of the Financial Plans.
C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the
City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and
charges.
D. On June __, 2022, the City Council heard and approved the proposed rate
increase at a noticed public hearing.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby approves the FY 2023 Electric Utility Financial Plan.
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Attachment A
6055603
Utility Electric Rate Schedules
FY23 Electric Financial Plan
SECTION 2. The Council hereby approves amendments to Section 6 (Electric Special
Projects Reserve) of the Electric Utility Reserves Management Practices to read as attached and
incorporated.
SECTION 3. The Council hereby approves the following transfers to be made by the
end of FY 2022, as described in the FY 2023 Electric Utility Financial Plan:
a. Approve a transfer of up to $15 million from the Hydro Stabilization Reserve to the
Supply Operations Reserve;
b. Approve a transfer of up to $5 million from the Electric Special Projects (ESP) reserve
to the Supply Operations Reserve; and
c. Approve an allocation of up to $1 million from the Cap and Trade Program Reserve to
be allocated to local decarbonization programs); and
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-1 (Residential Electric Service) is hereby amended to read as attached and
incorporated. Utility Rate Schedule E-1, as amended, shall become effective July 1, 2022.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-2 (Residential Master-Metered and Small Non-Residential Electric Service) is
hereby amended to read as attached and incorporated. Utility Rate Schedule E-2, as amended,
shall become effective July 1, 2022.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-2-G (Residential Master-Metered and Small Non-Residential Green Power
Electric Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule
E-2-G, as amended, shall become effective July 1, 2022.
SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-4 (Medium Non-Residential Electric Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule E-4, as amended, shall become effective July
1, 2022.
SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-4-G (Medium Non-Residential Green Power Electric Service) is hereby
amended to read as attached and incorporated. Utility Rate Schedule E-4-G, as amended, shall
become effective July 1, 2022.
SECTION 9. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-4 TOU (Medium Non-Residential Time of Use Electric Service) is hereby
amended to read as attached and incorporated. Utility Rate Schedule E-4 TOU, as amended,
shall become effective July 1, 2022.
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Attachment A
6055603
Utility Electric Rate Schedules
FY23 Electric Financial Plan
SECTION 10. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-7 (Large Non-Residential Electric Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule E-7, as amended, shall become effective
July 1, 2022.
SECTION 11. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-7-G (Large Non-Residential Green Power Electric Service) is hereby amended to
read as attached and incorporated. Utility Rate Schedule E-7-G, as amended, shall become
effective July 1, 2022.
SECTION 12. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-7 TOU (Large Non-Residential Time of Use Electric Service) is hereby amended
to read as attached and incorporated. Utility Rate Schedule E-7 TOU, as amended, shall become
effective July 1, 2022.
SECTION 13. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule E-14 (Street Lights) is hereby amended to read as attached and incorporated.
Utility Rate Schedule E-14, as amended, shall become effective July 1, 2022.
SECTION 14. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule E-NSE (Net Surplus Electricity Compensation Rate) is hereby amended to read as
attached and incorporated. Utility Rate Schedule E-NSE-1, as amended, shall become effective
July 1, 2022.
SECTION 15. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule E-EEC-1 (Export Electricity Compensation) is hereby amended to read as attached and
incorporated. Utility Rate Schedule E-EEC-1, as amended, shall become effective July 1, 2022.
SECTION 16. The Council makes the following findings:
a. The revenue derived from the adoption of this resolution shall be used only for the
purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.
b. The fees and charges adopted by this resolution are charges imposed for a specific
government service or product provided directly to the payor that are not provided
to those not charged, and do not exceed the reasonable costs to the City of providing
the service or product.
//
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Attachment A
6055603
Utility Electric Rate Schedules
FY23 Electric Financial Plan
SECTION 17. The Council finds that approving the Financial Plan and Reserve transfers
does not meet the California Environmental Quality Act’s (CEQA) definition of a project under
Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an
administrative governmental activity which will not cause a direct or indirect physical change in
the environment, and therefore, no environmental assessment is required. The Council finds that
changing electric rates to meet operating expenses, purchase supplies and materials, meet
financial reserve needs and obtain funds for capital improvements necessary to maintain service
is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public
Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a).
After reviewing the staff report and all attachments presented to Council, the Council
incorporates these documents herein and finds that sufficient evidence has been presented
setting forth with specificity the basis for this claim of CEQA exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________
Assistant City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
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RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-1-1 Sheet No E-1-1
dated 7-1-20198 Effective 7-1-20192022
A. APPLICABILITY:
This Rate Schedule applies to separately metered single-family residential dwellings receiving
Electric Service from the City of Palo Alto Utilities.
B.TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
Per kilowatt-hour (kWh) Commodity Distribution Public Benefits Total
Tier 1 usage
$0.0854708
339
$0.0542904971 $0.0046900447 $0.1444513757
Tier 2 usage
Any usage over Tier 1
0.11858115
69
0.0800807351 0.0046900447 0.2033519367
Minimum Bill ($/day) 0.34473283
D.SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Calculation of Usage Tiers
Tier 1 Electricity usage shall be calculated and billed based upon a level of 11 kWh per
day, prorated by Meter reading days of Service. As an example, for a 30-day bill, the
Tier 1 level would be 330 kWh. For further discussion of bill calculation and proration,
refer to Rule and Regulation 11.
{End}
Attachment B
O CITYOF
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UTILITIES
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RESIDENTIAL MASTER-METERED AND SMALL NON-RESIDENTIAL ELECTRIC
SERVICE
UTILITY RATE SCHEDULE E-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-2-1 Sheet No E-2-1
dated 7-1-20198 Effective 7-1-202219
A. APPLICABILITY:
This Rate Schedule applies to the following Customers receiving Electric Service from the City
of Palo Alto Utilities:
1. Small non-residential Customers receiving Non-Demand Metered Electric Service; and
2. Customers with Accounts at Master-Metered multi-family facilities.
B. TERRITORY: This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
Per kilowatt-hour (kWh) Commodity Distribution Public Benefits Total
Summer Period
$0.121511185
5
$0.0927608551
$0.0046900447
$0.2189620853
Winter Period
0.0871508502
0.0617105675
0.0046900447
0.1535514624
Minimum Bill ($/day)
0.87778359
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective
from November 1 to April 30. When the billing period includes use in both the Summer
and the Winter Periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
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RESIDENTIAL MASTER-METERED AND SMALL NON-RESIDENTIAL ELECTRIC
SERVICE
UTILITY RATE SCHEDULE E-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-2-2 Sheet No E-2-2
dated 7-1-20198 Effective 7-1-202219
3. Maximum Demand Meter Whenever the monthly use of energy has exceeded 8,000 kWh for three consecutive
months, a maximum Demand Meter will be installed as promptly as is practicable and
thereafter continued in service until the monthly use of energy has fallen below 6,000
kWh for twelve consecutive months, whereupon, at the option of the City, it may be
removed.
The maximum Demand in any month will be the maximum average power in kilowatts
taken during any 15-minute interval in the month provided that if the Customer’s load is
intermittent or subject to fluctuations, the City may use a 5-minute interval. A
thermal-type Demand Meter which does not reset after a definite time interval may be
used at the City's option.
The billing Demand to be used in computing charges under this schedule will be the
actual maximum Demand in kilowatts for the current month. An exception is that the
billing Demand for Customers with Thermal Energy Storage (TES) will be based upon
the actual maximum Demand of such Customers between the hours of noon and 6 pm on
weekdays.
{End}
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RESIDENTIAL MASTER-METERED AND SMALL NON-RESIDENTIAL GREEN POWER
ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-2-G-1 Sheet No E-2-G-1
dated 7-1-202119 Effective 7-1-202221
A. APPLICABILITY:
This Rate Schedule applies to the following Customers receiving Electric Service from the City
of Palo Alto Utilities under the Palo Alto Green Program:
1. Small non-residential Customers receiving Non-Demand Metered Electric Service; and
2. Customers with Accounts at Master-Metered multi-family facilities.
B. TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
1. 100% Renewable Option:
Per kilowatt-hour (kWh) Commodity Distribution
Public
Benefits
Palo Alto
Green
Charge Total
Summer Period
$0.12151118
55
$0.09276085
51
$0.004690
0447
$0.007500
60
$0.226462
1453
Winter Period
0.087150850
2
0.061710567
5
0.0046900
447
0.0075006
0
$0.161051
5224
Minimum Bill ($/day)
0.87778359
2. 1000 kWh Block Purchase Option:
Per kilowatt-hour (kWh) Commodity Distribution
Public
Benefits
Total
Summer Period
$0.12151118
55
$0.09276085
51
$0.004690
0447
$0.218962
0853
Winter Period
0.087150850
2
0.061710567
5
0.0046900
447
0.1535514
624
Minimum Bill ($/day)
0.87778359
Palo Alto Green Charge (per 1000 kWh block) $7.506.00
O CITYOF
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UTILITIES
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RESIDENTIAL MASTER-METERED AND SMALL NON-RESIDENTIAL GREEN POWER
ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-2-G-2 Sheet No E-2-G-2
dated 7-1-202119 Effective 7-1-202221
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective
from November 1 to April 30. When the billing period includes use in both the Summer
and Winter Periods, usage will be prorated based upon the number of days in each
seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Palo Alto Green Program Description and Participation
Palo Alto Green provides for either the purchase of enough renewable energy credits
(RECs) to match 100% of the energy usage at the facility every month, or for the
purchase of 1000 kilowatt-hour (kWh) blocks. These REC purchases support the
production of renewable energy, increase the financial value of power from renewable
sources, and create a transparent and sustainable market that encourages new
development of wind and solar power.
Customers choosing to participate shall fill out a Palo Alto Green Power Program
application provided by the Customer Service Center. Customers may request at any
time, in writing, a change to the number of blocks they wish to purchase under the Palo
Alto Green Program.
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PALO ALTO
UTILITIES
9.b
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RESIDENTIAL MASTER-METERED AND SMALL NON-RESIDENTIAL GREEN POWER
ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-2-G-3 Sheet No E-2-G-3
dated 7-1-202119 Effective 7-1-202221
4. Maximum Demand Meter Whenever the monthly use of energy has exceeded 8,000 kWh for three consecutive
months, a maximum Demand Meter will be installed as promptly as is practicable and
thereafter continued in service until the monthly use of energy has fallen below 6,000
kWh for twelve consecutive months, whereupon, at the option of the City, it may be
removed.
The maximum Demand in any month will be the maximum average power in kilowatts
taken during any 15-minute interval in the month, provided that if the Customer-s load is
intermittent or subject to fluctuations, the City may use a 5-minute interval. A
thermal-type Demand Meter which does not reset after a definite time interval may be
used at the City's option.
The billing Demand to be used in computing charges under this schedule will be the
actual maximum Demand in kilowatts for the current month. An exception is that the
billing Demand for Customers with Thermal Energy Storage (TES) will be based upon
the actual maximum Demand of such Customers between the hours of noon and 6 pm on
weekdays.
{End}
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UTILITIES
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MEDIUM NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-1 Sheet No E-4-1
dated 7-1-20198 Effective 7-1-202219
A. APPLICABILITY:
This Rate Schedule applies to Demand metered Secondary Electric Service for Customers with
a maximum Demand below 1,000 kilowatts. This Rate Schedule applies to three-phase Electric
Service and may include Service to master-metered multi-family facilities or other facilities
requiring Demand-metered Service, as determined by the City.
B. TERRITORY:
This rate schedule applies anywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
Rates per kilowatt (kW) and kilowatt-hour (kWh):
Commodity Distribution Public Benefits Total
Summer Period
Demand Charge (per kW) $4.524.41 $25.8424.50 $30.3628.91
Energy Charge (per kWh)
0.1096010536 0.0206101865 0.0046900447 0.1349012848
Winter Period
Demand Charge (per kW) $2.822.75 $17.1016.22 $19.9218.97
Energy Charge (per kWh)
0.0791307634 0.0206101865 0.0046900447 0.1044309946
Minimum Bill ($/day) 18.137917.2742
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
0 CITY OF
PALO ALTO
UTILITIES
9.b
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MEDIUM NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-2 Sheet No E-4-2
dated 7-1-20198 Effective 7-1-202219
2. Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective
from November 1 to April 30. When the billing period includes use both in the Summer
and the Winter Periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Maximum Demand Meter Whenever the monthly use of energy has exceeded 8,000 kWh for three consecutive
months, a Maximum Demand Meter will be installed as promptly as is practicable and
thereafter continued in Service until the monthly use of energy has fallen below 6,000
kWh for twelve consecutive months, whereupon, at the option of the City, it may be
removed.
The Maximum Demand in any month will be the maximum average power in kilowatts
taken during any 15-minute interval in the month, provided that if the Customer’s load is
intermittent or subject to fluctuations, the City may use a 5-minute interval. A
thermal-type Demand Meter which does not reset after a definite time interval may be
used at the City's option.
The Billing Demand to be used in computing charges under this schedule will be the
actual Maximum Demand in kilowatts for the current month. An exception is that the
Billing Demand for Customers with Thermal Energy Storage (TES) will be based upon
the actual Maximum Demand of such Customers between the hours of noon and 6 pm on
weekdays.
4. Power Factor For new or existing Customers whose Demand is expected to exceed or has exceeded 300
kilowatts for three consecutive months, the City has the option of installing applicable
Metering to calculate a Power Factor. The City may remove such Metering from the
Service of a Customer whose Demand has been below 200 kilowatts for four consecutive
months.
0 CITY OF
PALO ALTO
UTILITIES
9.b
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MEDIUM NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-3 Sheet No E-4-3
dated 7-1-20198 Effective 7-1-202219
When such metering is installed, the monthly Electric bill will include a “Power Factor
Adjustment”, if applicable. The adjustment will be applied to a Customer’s bill prior to
the computation of any primary voltage discount. The Power Factor Adjustment is
applied by increasing the total energy and Demand charges for any month by 0.25
percent (0.25%) for each one percent (1%) that the monthly Power Factor of the
Customer’s load was less than 95%.
The monthly Power Factor is the average Power Factor based on the ratio of kilowatt
hours to kilovolt-ampere hours consumed during the month. Where time-of-day
Metering is installed, the monthly Power Factor shall be the Power Factor coincident with
the Customer's Maximum Demand.
5. Changing Rate Schedules
Customers may request a rate schedule change at any time to any City of Palo Alto full-
service rate schedule as is applicable to their kilowatt-Demand and kilowatt-hour usage
profile.
6. Primary Voltage Discount
Where delivery is made at the same voltage as that of the line from which the Service is
supplied, a discount of 2 1/2 percent for available line voltages above 2 kilovolts will be
offered, but the City is not required to supply Service at a particular line voltage where it
has, or will install, ample facilities for supplying at another voltage equally or better
suited to the Customer's electrical requirements, as determined in the City’s sole
discretion. The City retains the right to change its line voltage at any time after providing
reasonable advance notice to any Customer receiving the discount in this section. The
Customer then has the option to change his system so as to receive Service at the new
line voltage or to accept Service (without voltage discount) through transformers to be
supplied by the City subject to a maximum kilovolt-ampere size limitation.
7. Standby Charge
a. Applicability: The standby charge, subject to the exemptions in subsection
D(7)(e), applies to Customers that have a non-utility generation source
interconnected on the Customer’s side of the City’s revenue meter and that
occasionally require backup power from the City due to non-operation of the non-
utility generation source.
0 CITY OF
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UTILITIES
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MEDIUM NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-4 Sheet No E-4-4
dated 7-1-20198 Effective 7-1-202219
b. Standby Charges:
Commodity Distribution Total Standby Charge (per kW of Reserved Capacity)
Summer Period $0.69 $15.23 $15.92
Winter Period $0.63 $9.04 $9.67
c. Meters. A separate Meter is required for each non-utility generation source.
d. Calculation of Maximum Demand Credit.
(1) In the event the Customer’s Maximum Demand (as defined in Section
D.3) occurs when one or more of the non-utility generators on the Customer’s
side of the City’s revenue meter are not operating, the Maximum Demand will be
reduced by the sum of the Maximum Generation of those non-utility generators,
but in no event shall the Customer’s Maximum Demand be reduced below zero.
(2) If the non-utility generation source does not operate for an entire billing
cycle, the standby charge does not apply and the Customer shall not receive the
Maximum Demand credit described in this Section.
e. Exemptions.
(1) The standby charge shall not apply to backup generators designed to operate
only in the event of an interruption in utility Service and which are not used to
offset Customer electricity purchases.
(2) The standby charge shall not apply if the Customer meets the definition of an
“Eligible Customer-generator” as defined in California Public Utilities Code
Section 2827(b)(4), as amended.
(3) The applicability of these exemptions shall be determined at the discretion of
the Utilities Director.
{End}
0 CITY OF
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UTILITIES
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MEDIUM NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-G-1 Sheet No E-4-G-1
dated 7-1-202119 Effective 7-1-20221
A. APPLICABILITY:
This Rate Schedule applies to Demand metered Secondary Electric Service for Customers with a
maximum Demand below 1,000 kilowatts (kW) who receive power under the Palo Alto Green
Program. This Rate Schedule applies to three-phase Electric Service and may include Service to
Master-metered multi-family facilities or other facilities requiring Demand metered Service, as
determined by the City.
B. TERRITORY: The rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES: 1. 100% Renewable Option:
Commodity Distribution Public Benefits
Palo Alto Green Charge Total
Summer Period
Demand Charge (per kW) $4.524.41 $25.8424.50
$30.3628.91
Energy Charge (per kWh)
0.1096010536
0.0206101865
0.0046900447 0.00750060
0.1424013448
Winter Period
Demand Charge (per kW) $2.822.75 $17.1016.22
$19.9218.97
Energy Charge (per kWh)
0.0791307634
0.0206101865
0.0046900447 0.00750060
0.1119310546
Minimum Bill ($/day) 18.137917.2742
O CIT Y OF
PALO ALTO
UTILITIES
9.b
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MEDIUM NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-G-2 Sheet No E-4-G-2
dated 7-1-202119 Effective 7-1-20221
2. 1000 kWh Block Purchase Option:
Commodity Distribution Public Benefits Total
Summer Period
Demand Charge (per kW) $4.524.41 $25.8424.50 $30.3628.91
Energy Charge (per kWh) 0.1096010536 0.0206101865 0.0046900447 0.1349012848
Palo Alto Green Charge (per 1000 kWh block) $7.506.00
Winter Period
Demand Charge (per kW) $2.822.75 $17.1016.22 $19.9218.97
Energy Charge (per kWh) 0.0791307634 0.0206101865 0.0046900447 0.1044309946
Palo Alto Green Charge (per 1000 kWh block) $7.506.00
Minimum Bill ($/day) 18.137917.2742
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges, and/or taxes. On a Customer’s bill statement,
the bill amount may be broken down into appropriate components as calculated under Section C.
2. Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective
from November 1 to April 30. When the billing period includes use both in the Summer
and the Winter Periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Maximum Demand Meter
Whenever the monthly use of energy has exceeded 8,000 kilowatt-hours for three
consecutive months, a Maximum Demand Meter will be installed as promptly as is
practicable and thereafter continued in Service until the monthly use of energy has
dropped below 6,000 kilowatt-hours for twelve consecutive months, whereupon, at the
O CIT Y OF
PALO ALTO
UTILITIES
9.b
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MEDIUM NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-G-3 Sheet No E-4-G-3
dated 7-1-202119 Effective 7-1-20221
option of the City, it may be removed.
The Maximum Demand in any month will be the maximum average power in kilowatts
taken during any 15-minute interval in the month, provided that if the Customer’s load is
intermittent or subject to fluctuations, the City may use a 5-minute interval. A
thermal-type Demand Meter, which does not reset after a definite time interval, may be
used at the City's option.
The Billing Demand to be used in computing charges under this schedule will be the
actual Maximum Demand in kilowatts for the current month. An exception is that the
Billing Demand for Customers with Thermal Energy Storage (TES) will be based upon
the actual Maximum Demand of such Customers between the hours of noon and 6 PM on
weekdays.
4. Power Factor
For new or existing Customers whose Demand is expected to exceed or has exceeded 300
kilowatts for three consecutive months, the City has the option of installing applicable
Metering to calculate a Power Factor. The City may remove such Metering from the
Service of a Customer whose Demand has dropped below 200 kilowatts for four
consecutive months.
When such Metering is installed, the monthly Electric bill will include a “Power Factor
Adjustment”, if applicable. The adjustment will be applied to a Customer’s bill prior to
the computation of any primary voltage discount. The Power Factor Adjustment is
applied by increasing the total energy and Demand charges for any month by 0.25
percent or (1/4) for each one percent (1%) that the monthly Power Factor of the
Customer’s load was less than 95%.
The monthly Power Factor is the average Power Factor based on the ratio of kilowatt-
hours to kilovolt-ampere hours consumed during the month. Where time-of-day
Metering is installed, the monthly Power Factor shall be the Power Factor coincident with
the Customer's Maximum Demand.
5. Changing Rate Schedules
Customers may request a rate schedule change at any time to any applicable full-service
rate schedule as is applicable to their kilowatt-Demand and kilowatt-hour usage profile.
O CITYOF
PALO ALTO
UTILITIES
9.b
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MEDIUM NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-G-4 Sheet No E-4-G-4
dated 7-1-202119 Effective 7-1-20221
6. Palo Alto Green Program Description and Participation
Palo Alto Green provides for either the purchase of enough renewable energy credits
(RECs) to match 100% of the energy usage at the facility every month, or for the
purchase of 1000 kilowatt-hour (kWh) blocks. These REC purchases support the
production of renewable energy, increase the financial value of power from renewal
sources, and creates a transparent and sustainable market that encourages new
development of wind and solar.
Customers choosing to participate shall fill out a Palo Alto Green Power Program
application provided by the Customer Service Center. Customers may request at any
time, in writing, a change to the number of blocks they wish to purchase under the Palo
Alto Green Program.
7. Primary Voltage Discount
Where delivery is made at the same voltage as that of the line from which the Service is
supplied, a discount of 2.5 percent for available line voltages above 2 kilovolts will be
offered, but the City is not required to supply Service at a particular line voltage where it
has, or will install, ample facilities for supplying at another voltage equally or better
suited to the Customer's electrical requirements, as determined in the City’s sole
discretion. The City retains the right to change its line voltage at any time after providing
reasonable advance notice to any Customer receiving the discount in this section. The
Customer then has the option to change the system so as to receive Service at the new
line voltage or to accept Service (without voltage discount) through transformers to be
supplied by the City subject to a maximum kilovolt-ampere size limitation.
8. Standby Charge
a. Applicability: The standby charge, subject to the exemptions in subsection
D(8)(e), applies to Customers that have a non-utility generation source
interconnected on the Customer’s side of the City’s revenue Meter and that
occasionally require backup power from the City due to non-operation of the non-
utility generation source.
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MEDIUM NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-G-5 Sheet No E-4-G-5
dated 7-1-202119 Effective 7-1-20221
b. Standby Charges:
Commodity Distribution Total Standby Charge (per kW of Reserved Capacity)
Summer Period $0.69 $15.23 $15.92
Winter Period $0.63 $9.04 $9.67
c. Meters: A separate Meter is required for each non-utility generation source.
d. Calculation of Maximum Demand Credit:
(1) In the event the Customer’s Maximum Demand (as defined in Section
D.3) occurs when one or more of the non-utility generators on the Customer’s
side of the City’s revenue Meter are not operating, the Maximum Demand will be
reduced by the sum of the Maximum Generation of those non-utility generators,
but in no event shall the Customer’s Maximum Demand be reduced below zero.
(2) If the non-utility generation source does not operate for an entire billing
cycle, the standby charge does not apply and the Customer shall not receive the
Maximum Demand credit described in this Section.
e. Exemptions:
(1) The standby charge shall not apply to backup generators designed to operate
only in the event of an interruption in utility Service and which are not used to
offset Customer electricity purchases.
(2) The standby charge shall not apply if the Customer meets the definition of an
“Eligible Customer-generator” as defined in California Public Utilities Code
Section 2827(b)(4), as amended.
(3) The applicability of these exemptions shall be determined at the discretion of
the Utilities Director.
{End}
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MEDIUM NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-4 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-TOU-1 Sheet No E-4-TOU-1
dated 7-1-201918 Effective 7-1-202219
A. APPLICABILITY:
This voluntary Rate Schedule applies to Demand metered Secondary Electric Service for
Customers with Demand between 500 and 1,000 kilowatts per month and who have sustained
this level of usage for at least three consecutive months during the most recent 12 month period.
This Rate Schedule applies to three-phase Electric Service and may include Service to Master-
Metered multi-family facilities or other facilities requiring Demand-metered Service, as
determined by the City. In addition, this Rate Schedule is applicable for Customers who did
not pay power factor adjustments during the last 12 months.
B. TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
Rates per kilowatt (kW) and kilowatt-hour (kWh):
Commodity Distribution Public Benefits Total
Summer Period
Demand Charge (per kW)
Peak $2.712.61 $8.898.44 $11.6011.05
Mid-Peak 0.9795 8.898.44 9.869.39
Off-Peak 0.9795 8.898.44 9.869.39
Energy Charge (per kWh)
Peak $0.1002209642 $0.0206001864 $0.0046900447 $0.1255111954
Mid-Peak 0.1264712142 0.0206001864 0.0046900447 0.1517614453
Off-Peak 0.0772107451 0.0206001864 0.0046900447 0.1025009763
Winter Period
Demand Charge (per kW)
Peak $1.571.53 $9.539.04 $11.1010.57
Off-Peak 1.571.53 9.539.04 11.1010.57
Energy Charge (per kWh)
Peak $0.1226811781 $0.0206001864 $0.0046900447 $0.1479714092
Off-Peak 0.1051610113 0.0206001864 $0.0046900447 0.1304512425
0 CITY OF
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UTILITIES
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MEDIUM NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-4 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-TOU-2 Sheet No E-4-TOU-2
dated 7-1-201918 Effective 7-1-202219
Commodity Distribution Public Benefits Total
Minimum Bill ($/day) 18.137917.2742
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement,
the bill amount may be broken down into appropriate components as calculated under Section C.
2. Definition of Time Periods
SUMMER PERIOD (Service from May 1 to October 31):
Peak: 12:00 noon to 6:00 p.m. Monday through Friday (except holidays)
Mid Peak: 8:00 a.m. to 12:00 noon Monday through Friday (except holidays)
6:00 p.m. to 9:00 p.m.
Off-Peak: 9:00 p.m. to 8:00 a.m. Monday through Friday (except holidays)
All day Saturday, Sunday, and holidays
WINTER PERIOD (Service from November 1 to April 30):
Peak: 8:00 a.m. to 9:00 p.m. Monday through Friday (except holidays)
Off-Peak: 9:00 p.m. to 8:00 a.m. Monday through Friday (except holidays)
All day Saturday, Sunday, and holidays
SEASONAL RATE CHANGES: When the billing period includes use in both the
Summer and the Winter periods, the usage will be prorated based on the number of days
in each seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Demand Meter Whenever the monthly use of energy has exceeded 8,000 kilowatt-hours for three
consecutive months, a Demand Meter will be installed as promptly as is practicable and
0 CITY OF
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MEDIUM NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-4 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-TOU-3 Sheet No E-4-TOU-3
dated 7-1-201918 Effective 7-1-202219
thereafter continued in Service until the monthly use of energy has fallen below 6,000
kilowatt-hours for twelve consecutive months, whereupon, at the option of the City, it
may be removed.
The Billing Demand to be used in computing charges under this schedule will be the
actual Maximum Demand in kilowatts taken during any 15-minute interval in each of the
designated time periods as defined under Section D.2.
4. Power Factor Adjustment
Time of Use Customers must not have had a power factor adjustment assessed on their
Service for at least 12 months. Power factor is calculated based on the ratio of kilowatt
hours to kilovolt-ampere hours consumed during the month, and must not have fallen
below 95% to avoid the power factor adjustment.
Should the City of Palo Alto Utilities Department find that the Customer’s Service should
be subject to power factor adjustments, the Customer will be removed from the E-4-TOU
rate schedule and placed on another applicable rate schedule as is suitable to their
kilowatt Demand and kilowatt-hour usage.
5. Changing Rate Schedules
Customers electing to be served under E-4 TOU must remain on said Rate Schedule for a
minimum of 12 months. Should the Customer so wish, at the end of 12 months, the
Customer may request a Rate Schedule change to any applicable City of Palo Alto full-
service Rate Schedule as is suitable to their kilowatt Demand and kilowatt-hour usage.
6. Primary Voltage Discount
Where delivery is made at the same voltage as that of the line from which the Service is
supplied, a discount of 2 1/2 percent for available line voltages above 2 kilovolts will be
offered, but the City is not required to supply Service at a particular line voltage where it
has, or will install, ample facilities for supplying at another voltage equally or better
suited to the Customer's electrical requirements, as determined in the City’s sole
discretion. The City retains the right to change its line voltage at any time after providing
reasonable advance notice to any Customer receiving the discount in this section. The
Customer then has the option to change his system so as to receive Service at the new
line voltage or to accept Service (without voltage discount) through transformers to be
supplied by the City subject to a maximum kilovolt-ampere size limitation.
0 CITY OF
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UTILITIES
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MEDIUM NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-4 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-TOU-4 Sheet No E-4-TOU-4
dated 7-1-201918 Effective 7-1-202219
7. Standby Charge
a. Applicability: The standby charge, subject to the exemptions in subsection
D(7)(e), applies to Customers that have a non-utility generation source
interconnected on the Customer’s side of the City’s revenue Meter and that
occasionally require backup power from the City due to non-operation of the non-
utility generation source.
b. Standby Charges:
Commodity Distribution Total Standby Charge (per kW of Reserved Capacity)
Summer Period $0.69 $15.23 $15.92
Winter Period $0.63 $9.04 $9.67
c. Meters. A separate Meter is required for each non-utility generation source.
d. Calculation of Maximum Demand Credit.
(1) In the event the Customer’s Maximum Demand occurs when one or more
of the non-utility generators on the Customer’s side of the City’s revenue Meter
are not operating, the Maximum Demand will be reduced by the sum of the
Maximum Generation of those non-utility generators, but in no event shall the
Customer’s Maximum Demand be reduced below zero.
(2) If the non-utility generation source does not operate for an entire billing
cycle, the standby charge does not apply and the Customer shall not receive the
Maximum Demand credit described in this Section.
e. Exemptions.
(1) The standby charge shall not apply to backup generators designed to operate
only in the event of an interruption in utility Service and which are not used to
offset Customer electricity purchases.
(2) The standby charge shall not apply if the Customer meets the definition of an
“Eligible Customer-generator” as defined in California Public Utilities Code
Section 2827(b)(4), as amended.
0 CITY OF
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UTILITIES
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MEDIUM NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-4 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-4-TOU-5 Sheet No E-4-TOU-5
dated 7-1-201918 Effective 7-1-202219
(3) The applicability of these exemptions shall be determined at the discretion of
the Utilities Director.
{End}
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UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-1 Sheet No E-7-1
dated 7-1-201918 Effective 7-1-202219
A. APPLICABILITY:
This Rate Schedule applies to Demand Metered Service for large non-residential Customers
with a Maximum Demand of at least 1,000KW per month per site, who have sustained this
Demand level at least 3 consecutive months during the last twelve months.
B. TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. RATES: Rates per kilowatt (kW) and kilowatt-hour (kWh):
Commodity Distribution Public Benefits Total
Summer Period
Demand Charge (kW) $5.165.03 $27.0625.66 $32.2230.69
Energy Charge (kWh) 0.1147610932 0.0005900053 0.0046900447 0.1200411432
Winter Period
Demand Charge (kW) $2.962.89 $14.9414.16 $17.9017.05
Energy Charge (kWh) 0.0759707238 0.0005900053 0.0046900447 0.0812507738
Minimum Bill ($/day) 51.569649.1139
D. SPECIAL NOTES:
1. Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
O CITYOF
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UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-2 Sheet No E-7-2
dated 7-1-201918 Effective 7-1-202219
2. Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective
from November 1 to April 30. When the billing period includes use both in the summer
and in the winter periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Request for Service
Qualifying Customers may request Service under this schedule for more than one
Account or one Meter if the Accounts are on one site. A site, for the purposes of this Rate
Schedule, consists of one or more Accounts which cover contiguous parcels of land with
no intervening public right-of-ways (e.g. streets) and which have a common billing
address.
4. Maximum Demand Meter
Whenever the monthly use of energy has exceeded 8,000 kilowatt-hours for three
consecutive months, a Maximum Demand Meter will be installed as promptly as is
practicable and thereafter continued in Service until the monthly use of energy has fallen
below 6,000 kilowatt-hours for twelve consecutive months, whereupon, at the option of
the City, it may be removed.
The Maximum Demand in any month will be the maximum average power in kilowatts
taken during any 15-minute interval in the month provided that if the Customer’s load is
intermittent or subject to fluctuations, the City may use a 5-minute interval. A thermal-
type Demand Meter which does not reset after a definite time interval may be used at the
City's option.
The Billing Demand to be used in computing charges under this schedule will be the
actual Maximum Demand in kilowatts for the current month. An exception is that the
Billing Demand for Customers with Thermal Energy Storage (TES) will be based upon
the actual Maximum Demand of such Customers between the hours of noon and 6 pm on
weekdays.
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LARGE NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-3 Sheet No E-7-3
dated 7-1-201918 Effective 7-1-202219
5. Power Factor
For new or existing Customers whose Demand is expected to exceed or has exceeded 300
kilowatts for three consecutive months, the City has the option to install applicable
Metering to calculate a Power Factor. The City may remove such Metering from the
Service of a Customer whose Demand has been below 200 kilowatts for four consecutive
months.
When such metering is installed, the monthly Electric bill shall include a “Power Factor
Adjustment”, if applicable. The adjustment shall be applied to a Customer’s bill prior to
the computation of any primary voltage discount. The power factor adjustment is applied
by increasing the total energy and Demand charges for any month by 0.25 percent
(0.25%) for each one percent (1%) that the monthly Power Factor of the Customer’s load
was less than 95%.
The monthly Power Factor is the average Power Factor based on the ratio of kilowatt
hours to kilovolt-ampere hours consumed during the month. Where time-of-day
Metering is installed, the monthly Power Factor shall be the Power Factor coincident with
the Customer's Maximum Demand.
6. Changing Rate Schedules
Customers may request a rate schedule change at any time to any applicable full service
rate schedule as is applicable to their kilowatt-Demand and kilowatt-hour usage profile.
7. Primary Voltage Discount
Where delivery is made at the same voltage as that of the line from which the Service is
supplied, a discount of 2 1/2 percent for available line voltages above 2 kilovolts will be
offered, but the City is not required to supply Service at a particular line voltage where it
has, or will install, ample facilities for supplying at another voltage equally or better
suited to the Customer's electrical requirements, as determined in the City’s sole
discretion. The City retains the right to change its line voltage at any time after providing
reasonable advance notice to any Customer receiving the discount in this section. The
Customer then has the option to change his system so as to receive Service at the new
line voltage or to accept Service (without voltage discount) through transformers to be
supplied by the City subject to a maximum kVA size limitation.
O CITYOF
PALO ALTO
UTILITIES
9.b
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LARGE NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-4 Sheet No E-7-4
dated 7-1-201918 Effective 7-1-202219
8. Standby Charge
a. Applicability: The standby charge, subject to the exemptions in subsection
D(8)(e), applies to Customers that have a non-utility generation source
interconnected on the Customer’s side of the City’s revenue Meter and that
occasionally require backup power from the City due to non-operation of the non-
utility generation source.
b. Standby Charges:
Commodity Distribution Total Standby Charge (per kW of Reserved Capacity)
Summer Period $0.84 $12.55 $13.39
Winter Period $0.72 $6.04 $6.76
c. Meters. A separate Meter is required for each non-utility generation source.
d. Calculation of Maximum Demand Credit.
(1) In the event the Customer’s Maximum Demand (as defined in Section
D.4) occurs when one or more of the non-utility generators on the Customer’s
side of the City’s revenue Meter are not operating, the Maximum Demand will be
reduced by the sum of the Maximum Generation of those non-utility generators,
but in no event shall the Customer’s Maximum Demand be reduced below zero.
(2) If the non-utility generation source does not operate for an entire billing
cycle, the standby charge does not apply and the Customer shall not receive the
Maximum Demand credit described in this Section.
e. Exemptions.
(1) The standby charge shall not apply to backup generators designed to operate
only in the event of an interruption in utility Service and which are not used to
offset Customer electricity purchases.
(2) The standby charge shall not apply if the Customer meets the definition of an
“Eligible Customer-generator” as defined in California Public Utilities Code
O CITYOF
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UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-5 Sheet No E-7-5
dated 7-1-201918 Effective 7-1-202219
Section 2827(b)(4) , as amended.
(3) The applicability of these exemptions shall be determined at the discretion of
the Utilities Director.
{End}
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UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-7 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-TOU-1 Sheet No E-7-TOU-1
dated 7-1-201918 Effective 7-1-202219
A. APPLICABILITY:
This voluntary Rate Schedule applies to Demand Metered Service for non-residential
Customers with a Maximum Demand of at least 1,000KW per month per site, who have
sustained this Demand level at least 3 consecutive months during the last twelve months. In
addition, this Rate Schedule is applicable for Customers who did not pay power factor
adjustments during the last 12 months.
B. TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
Rates per kilowatt (kW) and kilowatt-hour (kWh):
Commodity Distribution Public Benefits Total
Summer Period
Demand Charge (per kW)
Peak $3.243.11 $9.088.62 $12.3211.73
Mid-Peak 0.990.97 9.088.62 10.079.60
Off-Peak 0.990.97 9.088.62 10.079.60
Energy Charge (per kWh)
Peak $0.1192111356 $0.0005900053 $0.0046900447 $0.1244911856
Mid-Peak 0.1501114299 0.0005900053 0.0046900447 0.1553914799
Off-Peak 0.0921208776 0.0005900053 0.0046900447 0.0974009276
Winter Period
Demand Charge (per kW)
Peak $1.511.47 $7.567.17 $9.078.63
Off-Peak 1.511.47 7.567.17 9.078.63
Energy Charge (per kWh)
Peak $0.0799707619 $0.0005900053 $0.0046900447 $0.0852508119
0 CITY OF
PALO ALTO
UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-7 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-TOU-2 Sheet No E-7-TOU-2
dated 7-1-201918 Effective 7-1-202219
Off-Peak 0.0686406540 0.0005900053 0.0046900447 0.0739207040
Minimum Bill ($/day) 51.569649.1139
D. SPECIAL NOTES:
1. Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement,
the bill amount may be broken down into appropriate components as calculated under Section C.
2. Definition of Time Periods
SUMMER PERIOD (Service from May 1 to October 31):
Peak: 12:00 noon to 6:00 p.m. Monday through Friday (except holidays)
Mid Peak: 8:00 a.m. to 12:00 noon Monday through Friday (except holidays)
6:00 p.m. to 9:00 p.m.
Off-Peak: 9:00 p.m. to 8:00 a.m. Monday through Friday
All day Saturday, Sunday, and holidays
WINTER PERIOD (Service from November 1 to April 30):
Peak: 8:00 a.m. to 9:00 p.m. Monday through Friday (except holidays)
Off-Peak: 9:00 p.m. to 8:00 a.m. Monday through Friday (except holidays)
All day Saturday, Sunday, and holidays
SEASONAL RATE CHANGES: When the billing period includes use in both the Summer and
the Winter periods, the usage will be prorated based on the number of days in each seasonal
period, and the charges based on the applicable rates therein. For further discussion of bill
calculation and proration, refer to Rule and Regulation 11.
3. Request for Service
O CIT Y OF
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UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-7 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-TOU-3 Sheet No E-7-TOU-3
dated 7-1-201918 Effective 7-1-202219
Qualifying Customers may request Service under this schedule for more than one Account or one
Meter if the Accounts are on one site. A site, for the purposes of this Rate Schedule, consists of
one or more Accounts which cover contiguous parcels of land with no intervening public right-
of-ways (e.g. streets) and which have a common billing address.
4. Demand Meter
Whenever the monthly use of energy has exceeded 8,000 kilowatt-hours for three consecutive
months, a Demand Meter will be installed as promptly as is practicable and thereafter continued
in Service until the monthly use of energy has fallen below 6,000 kilowatt-hours for twelve
consecutive months, whereupon, at the option of the City, it may be removed.
The Billing Demand to be used in computing charges under this schedule will be the actual
Maximum Demand in kilowatts taken during any 15-minute interval in each of the designated
time periods as defined under Section D.2. 5. Power Factor Adjustment
Time of Use Customers must not have had a power factor adjustment assessed on their Service
for at least 12 months. Power factor is calculated based on the ratio of kilowatt hours to kilovolt-
ampere hours consumed during the month, and must not have fallen below 95% to avoid the
power factor adjustment.
Should the City of Palo Alto Utilities Department find that the Customer’s Service should be
subject to power factor adjustments, the Customer will be removed from the E-7-TOU rate
schedule and placed on another applicable rate schedule as is suitable to their kilowatt Demand
and kilowatt-hour usage.
6. Changing Rate Schedules
Customers electing to be served under E-7 TOU must remain on said Rate Schedule for a
minimum of 12 months. Should the Customer so wish, at the end of 12 months, the Customer
may request a Rate Schedule change to any applicable City of Palo Alto full-service Rate
Schedule as is suitable to their kilowatt Demand and kilowatt-hour usage.
7. Primary Voltage Discount
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UTILITIES
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LARGE NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-7 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-TOU-4 Sheet No E-7-TOU-4
dated 7-1-201918 Effective 7-1-202219
Where delivery is made at the same voltage as that of the line from which the Service is
supplied, a discount of 2 1/2 percent for available line voltages above 2 kilovolts will be offered,
but the City is not required to supply Service at a particular line voltage where it has, or will
install, ample facilities for supplying at another voltage equally or better suited to the Customer's
electrical requirements, as determined in the City’s sole discretion. The City retains the right to
change its line voltage at any time after providing reasonable advance notice to any Customer
receiving the discount in this section. The Customer then has the option to change his system so
as to receive Service at the new line voltage or to accept Service (without voltage discount)
through transformers to be supplied by the City subject to a maximum kilovolt-ampere size
limitation.
8. Standby Charge
a. Applicability: The standby charge, subject to the exemptions in subsection D(8)(e),
applies to Customers that have a non-utility generation source interconnected on the
Customer’s side of the City’s revenue Meter and that occasionally require backup power
from the City due to non-operation of the non-utility generation source.
b. Standby Charges:
Commodity Distribution Total Standby Charge (per kW of Reserved Capacity)
Summer Period $0.84 $12.55 $13.39
Winter Period $0.72 $6.04 $6.76
c. Meters. A separate Meter is required for each non-utility generation source.
d. Calculation of Maximum Demand Credit.
(1) In the event the Customer’s Maximum Demand occurs when one or more of the
non-utility generators on the Customer’s side of the City’s revenue Meter are not
operating, the Maximum Demand will be reduced by the sum of the Maximum
Generation of those non-utility generators, but in no event shall the Customer’s
Maximum Demand be reduced below zero.
O CIT Y OF
PALO ALTO
UTILITIES
9.b
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LARGE NON-RESIDENTIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-7 TOU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-TOU-5 Sheet No E-7-TOU-5
dated 7-1-201918 Effective 7-1-202219
(2) If the non-utility generation source does not operate for an entire billing cycle, the
standby charge does not apply and the Customer shall not receive the Maximum Demand
credit described in this Section.
e. Exemptions.
(1) The standby charge shall not apply to backup generators designed to operate only in
the event of an interruption in utility Service and which are not used to offset Customer
electricity purchases.
(2) The standby charge shall not apply if the Customer meets the definition of an
“Eligible Customer-generator” as defined in California Public Utilities Code Section
2827(b)(4) , as amended.
(3) The applicability of these exemptions shall be determined at the discretion of the
Utilities Director.
{End}
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PALO ALTO
UTILITIES
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LARGE NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-G-1 Sheet No E-7-G-1
dated 7-1-202119 Effective 7-1-202221
A. APPLICABILITY:
This Rate Schedule applies to Demand metered Service for large non-residential Customers who
choose Service under the Palo Alto Green Program. A Customer may qualify for this Rate
Schedule if the Customer’s Maximum Demand is at least 1,000KW per month per site, who have
sustained this Demand level at least 3 consecutive months during the last twelve months.
B. TERRITORY:
The rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. UNBUNDLED RATES:
1. 100% Renewable Option:
Commodity Distribution Public Benefits
Palo Alto Green Charge Total
Summer Period
Demand Charge ( per kW) $5.165.03 $27.0625.66 $32.2230.69
Energy Charge (per kWh) 0.1147610932 0.0005900053 0.0046900447 0.00750060 0.1275412032
Winter Period
Demand Charge (per kW) $2.962.89 $14.9414.16 $17.9017.05
Energy Charge (per kWh) 0.0759707238 0.0005900053 0.0046900447 0.00750060 0.0887508338
Minimum Bill ($/day) 51.569649.1139
O CIT Y OF
PALO ALTO
UTILITIES
9.b
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LARGE NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-G-2 Sheet No E-7-G-2
dated 7-1-202119 Effective 7-1-202221
2. 1000 kWh Block Purchase Option:
Commodity Distribution Public Benefits Total
Summer Period
Demand Charge (per kW) $5.165.03 $27.0625.66 $32.2230.69
Energy Charge (per kWh) 0.1147610932 0.0005900053 0.0046900447 0.1200411432
Palo Alto Green Charge (per 1000 kWh block) $7.506.00
Winter Period
Demand Charge (per kW) $2.962.89 $14.9414.16 $17.9017.05
Energy Charge (per kWh) 0.0759707238 0.0005900053 0.0046900447 0.0812507738
Palo Alto Green Charge (per 1000 kWh block) $7.506.00
Minimum Bill ($/day) 51.569649.1139
D. SPECIAL NOTES:
1. Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
2. Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective
from November 1 to April 30. When the billing period includes use both in the Summer
and the Winter Periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates therein. For further
discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Maximum Demand Meter
Whenever the monthly use of energy has exceeded 8,000 kilowatt-hours for three
consecutive months, a Maximum Demand Meter will be installed as promptly as is
O CIT Y OF
PALO ALTO
UTILITIES
9.b
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LARGE NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-G-3 Sheet No E-7-G-3
dated 7-1-202119 Effective 7-1-202221
practicable and thereafter continued in Service until the monthly use of energy has
dropped below 6,000 kilowatt-hours for twelve consecutive months, whereupon, at the
option of the City, it may be removed.
The Maximum Demand in any month will be the maximum average power in kilowatts
taken during any 15-minute interval in the month, provided that if the Customer’s load is
intermittent or subject to fluctuations, the City may use a 5-minute interval. A
thermal-type Demand Meter which does not reset after a definite time interval may be
used at the City's option.
The Billing Demand to be used in computing charges under this schedule will be the
actual Maximum Demand in kilowatts for the current month. An exception is that the
Billing Demand for Customers with Thermal Energy Storage (TES) will be based upon
the actual Maximum Demand of such Customers between the hours of noon and 6 PM on
weekdays.
4. Request for Service
Qualifying Customers may request Service under this schedule for more than one
Account or one Meter if the Accounts are at one site. A site, for the purposes of this Rate
Schedule, consists of one or more Accounts which cover contiguous parcels of land with
no intervening public right-of-ways (e.g. streets) and which have a common billing
address.
5. Power Factor
For new or existing Customers whose Demand is expected to exceed or has exceeded 300
kilowatts for three consecutive months, the City has the option of installing applicable
Metering to calculate a Power Factor. The City may remove such Metering from the
Service of a Customer whose Demand has dropped below 200 kilowatts for four
consecutive months.
When such Metering is installed, the monthly Electric bill shall include a “Power Factor
Adjustment”, if applicable. The adjustment shall be applied to a Customer’s bill prior to
the computation of any primary voltage discount. The power factor adjustment is applied
by increasing the total energy and Demand charges for any month by 0.25 percent or
(1/4) for each one percent (1%) that the monthly Power Factor of the Customer’s load
was less than 95%.
O CIT Y OF
PALO ALTO
UTILITIES
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LARGE NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-G-4 Sheet No E-7-G-4
dated 7-1-202119 Effective 7-1-202221
The monthly Power Factor is the average Power Factor based on the ratio of kilowatt-
hours to kilovolt-ampere hours consumed during the month. Where time-of-day
Metering is installed, the monthly Power Factor shall be the Power Factor coincident with
the Customer's Maximum Demand.
6. Changing Rate Schedules
Customers may request a rate schedule change at any time to any applicable full service
rate schedule as is applicable to their kilowatt-Demand and kilowatt-hour usage profile
7. Palo Alto Green Program Description and Participation
Palo Alto Green provides for either the purchase of enough renewable energy credits
(RECs) to match 100% of the energy usage at the facility every month, or for the
purchase of 1000 kilowatt-hour (kWh) blocks. These REC purchases support the
production of renewable energy, increase the financial value of power from renewal
sources, and creates a transparent and sustainable market that encourages new
development of wind and solar.
Customers choosing to participate shall fill out a Palo Alto Green Power Program
application provided by the Customer Service Center. Customers may request at any
time, in writing, a change to the number of blocks they wish to purchase under the Palo
Alto Green Program.
8. Primary Voltage Discount
Where delivery is made at the same voltage as that of the line from which the Service is
supplied, a discount of 2 1/2 percent for available line voltages above 2 kilovolts will be
offered, but the City is not required to supply Service at a qualified line voltage where it
has, or will install, ample facilities for supplying at another voltage equally or better
suited to the Customer's Electrical requirements, as determined in the City’s sole
discretion. The City retains the right to change its line voltage at any time after providing
reasonable advance notice to any Customer receiving the discount in this section. The
Customer then has the option to change the system so as to receive Service at the new
line voltage or to accept Service (without voltage discount) through transformers to be
supplied by the City subject to a maximum kilovolt-ampere size limitation.
9. Standby Charge
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LARGE NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-G-5 Sheet No E-7-G-5
dated 7-1-202119 Effective 7-1-202221
a. Applicability: The standby charge, subject to the exemptions in subsection
D(9)(e), applies to Customers that have a non-utility generation source
interconnected on the Customer’s side of the City’s revenue Meter and that
occasionally require backup power from the City due to non-operation of the non-
utility generation source.
b. Standby Charges:
Commodity Distribution Total Standby Charge (per kW of Reserved Capacity)
Summer Period $0.84 $12.55 $13.39 Winter Period $0.72 $6.04 $6.76
c. Meters: A separate Meter is required for each non-utility generation source.
d. Calculation of Maximum Demand Credit:
(1) In the event the Customer’s Maximum Demand (as defined in Section
D.3) occurs when one or more of the non-utility generators on the Customer’s
side of the City’s revenue Meter are not operating, the Maximum Demand will be
reduced by the sum of the Maximum Generation of those non-utility generators,
but in no event shall the Customer’s Maximum Demand be reduced below zero.
(2) If the non-utility generation source does not operate for an entire billing
cycle, the standby charge does not apply and the Customer shall not receive the
Maximum Demand credit described in this Section.
e. Exemptions:
(1) The standby charge shall not apply to backup generators designed to operate
only in the event of an interruption in utility Service and which are not used to
offset Customer electricity purchases.
(2) The standby charge shall not apply if the Customer meets the definition of an
“Eligible Customer-generator” as defined in California Public Utilities Code
Section 2827(b)(4), as amended.
(3) The applicability of these exemptions shall be determined at the discretion of
the Utilities Director.
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UTILITIES
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LARGE NON-RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No E-7-G-6 Sheet No E-7-G-6
dated 7-1-202119 Effective 7-1-202221
{End}
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STREET LIGHTS
UTILITY RATE SCHEDULE E-14
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-14-1 Sheet No. E-14-1
dated 7-1-201918 Effective 7-1-202219
A. APPLICABILITY:
This Rate Schedule applies to all street and highway lighting installations, which CPAU elects to
operate and maintain.
B. TERRITORY:
Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City.
C. RATES:
Per Lamp Per Month
Class A: CPAU supplies
electricity and switching service
only.
Lamp Rating:
High Pressure Sodium Vapor Lamps
100 watts 6.215.91
200 watts 11.4610.91
250 watts 14.0813.41
310 watts 17.4216.59
400 watts 22.4321.36
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STREET LIGHTS
UTILITY RATE SCHEDULE E-14
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-14-2 Sheet No. E-14-2
dated 7-1-201918 Effective 7-1-202219
Per Lamp Per Month –
Class C: CPAU supplies
electricity and switching and
maintains lighting system,
including lamps and glassware.
Lamp Rating:
Mercury-Vapor Lamps
400 watts 35.8334.12
High Pressure Sodium Vapor Lamps
70 watts 32.9731.40
100 watts 34.5532.90
150 watts 37.1735.40
250 watts 42.4240.40
Light Emitting Diode (LED) Lamps
70 watts-equivalent 29.4828.08
100 watts-equivalent 30.6829.22
150 watts-equivalent 31.7730.26
250 watts 34.7833.12
D. SPECIAL CONDITIONS:
1. Type of Service: This Rate Schedule applies to series, multiple, and single lamp street
lighting systems to which CPAU delivers Service at secondary voltage. Unless a variation is
approved by CPAU in its sole discretion, Service to street lighting systems will be delivered
at 120/240 volts, three-wire, single-phase or 120/208 volt three-wire, single phase from
star-connected poly-phase lines. Single phase service from 480-volt sources will be available
in certain areas at CPAU’s discretion. All voltages stated herein are nominal, and reasonable
variations may occur. New lights will normally be installed as multiple lamp systems with a
single Service point or single lamp with and individual Service point.
2. Point of Delivery: Delivery will be made to the Customer's system at a Service point or at
points designated by CPAU. CPAU will furnish the Service connection to one point for each
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STREET LIGHTS
UTILITY RATE SCHEDULE E-14
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-14-3 Sheet No. E-14-3
dated 7-1-201918 Effective 7-1-202219
lamp or group of lamps, provided the Customer has designed the system to include the
minimum number of delivery points. CPAU will make all underground connections to
CPAU’s system at the Customer's expense.
3. Switching: CPAU will perform switching (on CPAU's side of the points of delivery) at no
Charge, provided there are at least 10 kilowatts of lamp load on each circuit separately
switched, including all lamps on the circuit whether served under this Rate Schedule or not.
An extra charge of $2.50 per month will be made for each circuit separately switched unless
such switching installation is made for CPAU's convenience.
4. Annual Burning Schedule: The rates in this Rate Schedule apply to lamps which will be
turned on and off once each night in accordance with a regular burning schedule approved by
CPAU and not exceeding 4,100 hours per year.
5. Maintenance: The Class C rates in this Rate Schedule include all labor necessary for
replacement of glassware, including inspection and cleaning. Maintenance of glassware by
CPAU is limited to standard glassware that is commonly used and manufactured in
reasonably large quantities, as determined by CPAU in its sole discretion. The Class C rates
include maintenance of circuits between lamp posts and of circuits and equipment in and on
the posts, provided these are all of good standard construction as determined by CPAU.
CPAU in its sole discretion may decline to grant Class C rates for maintenance of systems
with non-standard glassware, or inadequate circuitry and equipment. Class C rates applied to
any agency other than the City of Palo Alto also include painting of posts with one coat of
good ordinary paint, as determined by CPAU to be needed to maintain good appearance.
Maintenance does not include replacement of posts damaged by third parties or acts of
nature.
6. System Owned In-Part by CPAU: If CPAU agrees to a Customer’s request for CPAU to
install, own, or maintain any portion of the lighting fixtures, supports, and/or interconnecting
circuits, the Customer shall be responsible for an extra monthly Charge of one and one-fourth
percent of CPAU's contribution to the cost of the street lighting system.
7. Rates For Lamps Not on this Rate Schedule: In the event a Customer installs a lamp which is
not represented on this Rate Schedule, CPAU will prepare an interim rate reflecting CPAU's
estimated costs associated with the specific lamp. This interim rate will serve as the effective
rate for billing purposes until the new lamp rating is added to Rate Schedule E-14.
{End}
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EXPORT ELECTRICITY COMPENSATION
UTILITY RATE SCHEDULE E-EEC-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-EEC-1 Sheet No.E-EEC-1
dated 7-1-202119 Effective 7-1-202221
A. APPLICABILITY:
This Rate Schedule applies in conjunction with the otherwise applicable Rate Schedules for each
Customer class. This Rate Schedule may not apply in conjunction with any time-of-use Rate
Schedule. This Rate Schedule applies to Customer-Generators as defined in Rule and Regulation 2
who are either not eligible for Net Energy Metering or who are eligible for Net Energy metering but
elect to take Service under this Rate Schedule.
B. TERRITORY:
Applies to locations within the service area of the City of Palo Alto.
C. RATE:
The following buyback rate shall apply to all electricity exported to the grid.
Per kWh
Export electricity compensation rate $0.10451078
D. SPECIAL CONDITIONS
1. Metering equipment: Electricity delivered by CPAU to the Customer-Generator or received by
CPAU from the Customer-Generator shall be measured using a Meter capable of registering the
flow of electricity in two directions (aka “bidirectional meter”). The electrical power
measurements will be used for billing the Customer-Generator. CPAU shall furnish, install and
own the appropriate Meter.
2. Billing:
a. CPAU shall measure during the billing period, in kilowatt-hours, the electricity delivered
and received after the Customer-Generator serves its own instantaneous load.
b. CPAU shall bill the Customer-Generator consumption charges for the electricity delivered
by CPAU to the Customer-Generator based on the Customer-Generator’s applicable Rate
Schedule.
c. In the event the electricity generated exceeds the electricity consumed and therefore is
received by CPAU, the Customer will receive a credit for all electricity received by
CPAU at the buyback Rate designated in section C above.
{End}
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NET METERING NET SURPLUS ELECTRICITY COMPENSATION
UTILITY RATE SCHEDULE E-NSE-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-NSE-1 Sheet No.E-NSE-1
dated 07-01-202119 Effective 7-1-202221
A. APPLICABILITY:
This Rate Schedule applies to eligible residential and small commercial Net Energy Metering
Customers who, at the end of an annual settlement period, as described in Rule 29, are Net Surplus
Customer-Generators of electricity who elect to receive monetary compensation as such preference
is indicated on the net surplus electricity election form. This Rate Schedule only applies to
Customers who participate in Net Energy Metering, and does not apply to Customers that take
service under the City’s Net Energy Metering Successor Rate, as each of these terms are defined in
Rule and Regulation 2.
B. TERRITORY:
This rate schedule applies anywhere the City of Palo Alto provides electric service.
C. RATES:
Per kWh
Net Surplus Electricity Compensation rate $0.10260992
D. SPECIAL CONDITIONS
1. Net Surplus Electricity Compensation Rate eligibility shall be determined as specified in Rule
29. Net surplus electricity, as specified in Rule 29, if applicable, will be multiplied by the above
compensation rate to determine the Customer’s annual net surplus electricity compensation
stated in dollars.
2. Additional terms, conditions and definitions govern Net Energy Metering Service and
Interconnection, as described in Rule 29.
{End}
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UTILITIES
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March 02, 2022 www.cityofpaloalto.org
ELECTRIC UTILITY FINANCIAL PLAN ANDPROPOSED RATECHANGES FOR FY 2023
Attachment C
•
CITY OF
PALO ALTO
UTILIT
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FY 2023 proposal:
•5 to 8% overall increase
•Lower revenues from rates and interest income; Higher purchase costs, contract line crew
costs
•Reserve margins are minimal. Some combination of reserve withdrawals, cost reductions,
or rate increases will be necessary.
•5% involves changes to and activation of the Hydro Rate Adjuster at the $0.013/kWh level
•8% scenario was originally presented to the UAC in December
Future years:
•5 to 7% rate increase in FY 2024, depending on hydro situation
•Electric Special Project Reserve loan repayments rescheduled to FY 2025/2026.
Electric Rate Proposal
~CITY OF
~PALO ALTO
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Electric Utility Cost Structure
Electric
Distribution costs
(in green):
$62 million
42%
Electric Supply: The cost
to buy electricity and
transport it to Palo Alto,
including operational
overhead (e.g. energy
scheduling)
Electric Supply
costs (in blue):
$86 million
58%
Electric
Distribution: The
cost to distribute
electricity within
Palo Alto, including:
maintaining and
replacing electric
infrastructure,
customer service,
billing,
administration, etc.
~CITY OF
~PA ILO ALTO
31%
~ Generation
■ Operati ons
38%
11%
5% 15%
~ Transm i ssion □ Supp ly Overhead
~ Capita l Investment
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LONG TERM COST TRENDS
Annualized
Increase,
FY18-FY23:
Annualized
Increase,
FY23-FY27:
Supply:
-1%/yr
Distribution:
6%/yr
Supply:
3%/yr
Distribution:
1%/yr
• .
CITY OF
PALO
ALTO
,_....,
II)
C
0 ·---·-~ ....._.
-v,..
200
150
100
.50
FY 2018 FY 2023
(Projected)
Electric Distribution
Fy 2027
(Projected)
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LONG TERM COST TRENDS: SUPPLY
Annualized Increase,
FY18-FY23:
Annualized Increase,
FY23-FY27:
Transmission:
8%/yr
Generation:
-4%/yr
Transmission:
9%/yr
Generation:
-0.3%/yr
Overhead:
2%/yr
Overhead:
2%/yr
• .
CITY OF
PALO
ALTO
100
80
-160 (/')
£:
0 ·-40
~ --<.n-20
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■--■ •• ■--■ ............ .............. ............
.. ■--■ •• ■--■ ............ ............ ............
.. ■--■ •• ■--■ ............ .............. ............
■.•"l■• ■.•"I■• ............ .............. ............
.. ■--■ •• ■--■ ............ .............. ............
.. ■--■ •• ■--■ ............ .. ··-· ...... ............ -• -. -• -. -• -
FY 2023 Fy 2027
(Projected) (Projected)
Transmission ~ Overhead
9.c
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6
Supply Cost Drivers
•Low hydroelectric conditions and high market prices due to
increased natural gas costs have dramatically increased
electric supply costs
•Overhead costs have decreased as NCPA has sought revenue
by providing services to more agencies
•Transmission costs have increased dramatically –system
replacement, new lines to integrate new generators. CPA
partners with others to advocate for cost control.
•Renewable projects have come online. In the longer term,
generation costs should stay fairly stable due to CPA’s long-
term fixed price contracts
~CITY OF
~PA ILO ALTO
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7
LONG TERM COST TRENDS: DISTRIBUTION
Annualized Increase,
FY18-FY23:
Annualized Increase,
FY23-FY27:
Capital:
5%/yr
Operations:
6%/yr
Capital:
0.3%/yr
Operations:
1%/yr
• .
CITY OF
PALO
ALTO
90
80
70
-60
Vl
C: 50 0
40
~ 30 --u,.
20
10
FY 2018 IFY 2023 (Projected) Fy 2027 (Projected)
Debt Service □ Operations ~ Capital Investment
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8
Distribution Cost Drivers
•Medical/retirement benefit costs and associated overhead
costs continue to increase
•Increased capital investment in the electric distribution
system needed due to system age
•Underground construction costs have increased substantially
•Additional contract expense for line crew until internally
staffe dUJ ,11. rn
I
I
~CITY OF
~PALO ALTO
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9
Option 1: Electric Cost and Revenue Projections
Co
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Ill
C
.5!
~
~CITY OF
~PA ILO ALTO
6% 8% 0% 0% 5% 5% 11% 14% 5% 5% 5%
$200 RA TE CHANG ES: ________________________________________________________________________ _
$150 ~Electric Commodity
~Capital Investment
$100 CJJ Tra nsf ers
□Operations
$SO ---• Debt Service
-Revenue
$0
r--00 O'I 0 .-t N ("I") <::t U") I.D r--
.-t .-t .-t N N N N N N N N
0 0 0 0 0 0 0 0 0 0 0
N N N N N N N N N N N
>->->->->->->->->->->-u.. u.. u.. u.. u.. u.. u.. u.. u.. u.. u..
Actuals Projections
--------------------------------------------------------------------------------------------
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10
Option 1: Electric Supply Operating Reserve Projections
"' $45
C:
.2
·-~ $40
~CITY OF
~PA ILO ALTO
$35
$30
$25
$20
$15
$10
$5
$0
------------------
-Reserve Max imum
-------------------------------------------------------------------------------------------------------------·Re s er,te -,·ar-ge ----------·
-Reserve Min im u m
-Reserve (Year-End)
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
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11
Option 1: Electric Supply Reserve Adequacy
~CITY OF
~PA ILO ALTO
.,, $60
C
~
~
$50
$40
$30
$20
$10
$0
§8:§I Hydro Stabilization Reserve (Year-End)
!mill Operations Reserve (Year-End)
-Risk Assessment
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
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12
Option 1: Electric Distribution Operating Reserve Projections
~CITY OF
~PA ILO ALTO
.,, $18
C
~
~
$16
$12
$10 1 ___ :::___ __________ =:::=======================:::::;:;:===------
$8
--.. -----· · -· · -· · -· · --· · -__ .. --·· -·· . ---..
-··-··-··---··---$6
--Reserve Maximum
$4 --Reserve Target ------------------------------------------
--Reserve Minimum
$2 --Reserve (Vear-tna)
Risk Assess ment
$0
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
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Option 2: Electric Cost and Revenue Projections
Co
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.,,
C:
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~
~CITY OF
~PA ILO ALTO
11% 14% 6% 8% 0% 0% 8% 7% 6% 4% 1%
$200
$150
RA TE CHANGES: _____________________________________________________________ ~if: __ _
I milll Electric Commodity
Capital Investment
$100 ______ IiI! _____ _ EJJ Transfers
□Operations
$50 ---•Debt Service
-Revenue
$0
r---00 O"I 0 ..-1 N f'() s::t I.() I.D r---
..-1 ..-1 ..-1 N N N N N N N N
0 0 0 0 0 0 0 0 0 0 0
N N N N N N N N N N N
>->->->->->->->->->->-LL LL LL LL LL LL LL LL LL LL LL
Actuals Projections
-------------------------------------------------------------------------------------------
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14
Option 2: Electric Supply Operating Reserve Projections
~CITY OF
~PA ILO ALTO
Ill $45
C:
.2
·-~ $40
$35
$30
$25
$20
$15
$10
$5
$0
__ -.._ _______ _
-Reserve Maxi mum
-------------------------------------------------------------------------------------------------------------R·esenre-T-ar-g·et------------
-Reserve M in imum
-Reserve (Yea r-End)
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
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Option 2: Electric Supply Reserve Adequacy
Ill
C:
.2
~CITY OF
~PA ILO ALTO
$60
$50
$40
$30
$20
$10
$0
~Hydro Stabilization Reserve (Year-
End)
&~:,~:,~IOperations Reserve (Year-End)
-Risk Assessment
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
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Option 2: Electric Distribution Operating Reserve Projections
Ill $20
C:
.!2
~ $18
~CITY OF
~PA ILO ALTO
$16
$14
$12
$10
$8
$6
$4
$2
$0
---------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
~~---~---------~---------:::::-~----=--------=---=--------------
-------------------
----, ----~ --~ -... ~ -
--------------------,--·--------------------------------------------------------------------
-----------------------------------7
~ -------__________ Q@ti _____________________________________ ,__... • -r ----------------------------- -------------
. . . -.. --· ·---.. -•·-· ,__ .. ___ ___
-------------------------------------------------------------------Res eF1.i:e--Msa.xi-1:-r:1a1.1aR+---
- -Reserve Ta rget
----------------------------------------------------------------------------------------------
-Reserve Minimum
---------------------------------------------------------------------Rese Fve--(-Y-ea F-End)---
-Ris k Assessment
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
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Estimated Bill Changes
Rate Sche ule
E-1 ( R,esi d entfla I)
E-2 (Sm al Non-
Res i dentia )
E-4 (M ed i u m
· o n -Resi dentia I)
E-7 (Large Nori1-
Resiid e rit'i a I
~CITY OF
~PALO ALTO
Bill under
Usage Wh/n1p) Current
Rates ($/mo)
3.00 $41.27
(S 1U mme r Median) S2 .. ,18
3,65
(Wi nter Median) 69' 22 • II J"·
453
650. 10Z.37
1200. 213.89
1 JOOO 177
16:0 JOOO. 2..41795
5001 000. 771477
2,000JOO.O. 2.731431
Bill U der Rates Change
Pro ased 7/1/22
($/mo) $/mo %
$43.34 $2.07 5%
54..79 2.61 5%
72 68 3.46 So/c '·. □
112.74 5.37 5%
224.58 :10.69 5%
186 9 5%
26,035 1,,240 5%
81,35.2 3,,873 5%
287,095 13,664 5%
9.c
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Current Bill Comparison
Residential
Commercial
,.
Season Usage (kwh)
300
W i nte r
453 (Med ia n )
650
1200
300
Su mmer
(Mle d ia n )i 365
650
1200
~CITY OF
~PALO ALTO
-
Palo Alto PG&E
4-1.27 84.72
16"9.22 12.7.93
107.37 1'97.16
213 .89 392.28
4-1.27 87.11
52.18 110.17
107.37 211.27
213.89 4J06.39
Santa Clara
39.22
.59.95
86.65 I
16117
39.22
48.03
86.65
161.17
--.,
Usage (kw h/mo) Pa~o Alrto PG&E San t a CII a r a
l.1000 177 303 '196
160,1000 24_.795 34,211 21i 1Tl
500,101)0 77_.477 86,,456 6619 137
2 .. 000.1000 273_.431 333,240 2671523
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Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council adopt a Resolution (Attachment A):
1.Approving the Fiscal Year (FY) 2023 Electric Financial Plan
2.Approve a transfer of up to $15 million from the Hydro Stabilization Reserve to the Supply Operations Reserve;
3.Approve a transfer of up to $5 million from the Electric Special Projects (ESP) reserve to the Supply Operations Reserve;
4.Approve an allocation of Cap and Trade funds up to 1/3 of REC revenue to the Cap and Trade Program Reserve to be spent on
local decarbonization programs;
5.Approve amendments to the Electric Utility Reserves Management Practices, Section 6: Electric Special Projects (ESP) Reserve:
1.Change the date by which the funds for the ESP Reserve must be committed to the end of FY 2023, instead of by the end of
FY 2017; and
2.Change the date by which any uncommitted ESP Reserve funds will be transferred to the Electric Supply Operation Reserve
and the ESP Reserve closed to the end of FY 2027, instead of FY 2022.
Staff Recommendation
~CITY OF
~PALO ALTO
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Staff requests that the Utilities Advisory Commission (UAC) recommend that the Council adopt a Resolution (Attachment A):
7.Approve an increase to retail electric rates E-1 (Residential Electric Service), E-2 (Small Non-Residential Electric Service), E-4
(Medium Non-Residential Electric Service), E-4 TOU (Medium Non-Residential Time of Use Electric Service), E-7 (Large Non-
Residential Electric Service), E-7 TOU (Large Non-Residential Time of Use Electric Service) and E-14 (Street Lights) of 5% effective
July 1, 2022;
8.Update the Export Electricity Compensation (EEC-1) rate to reflect current projections of avoided cost, effective July 1, 2022;
9.Update the Net Surplus Electricity Compensation Rate (E-NSE) rate to reflect current projections of avoided cost, effective July 1,
2022;
10.Update the Palo Alto Green program pass-through premium charge on the Residential Master-Metered and Small Non-
Residential Green Power Electric Service (E-2-G), the Medium Non-Residential Green Power Electric Service (E-4-G), and the
Large Non-Residential Green Power Electric Service (E-7-G) rate schedules to reflect current costs, effective July 1, 2022.
Staff Recommendation (continued)
~CITY OF
~PALO ALTO
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