HomeMy WebLinkAboutRESO 102311
027060325
Resolution No. 10231
Resolution of the Council of the City of Palo Alto Approving the FY 2026 Water
Utility Financial Forecast, Reserve Management Practices, and Reserve Transfers,
and 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”) 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 Forecasts or 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 Reserve Management Practices (Exhibit 31) and
Financial Forecast (Exhibit 1 2) attached to and made a part of the staff report presented
to the City Council.
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 16, 2025, 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 June 16, 2025 public hearing was mailed to all City of Palo Alto
Utilities water customers by May 2, 2025.
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%)
1 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-
council-agendas-minutes/2025/june-16/rates-attachments/attachment-b-exhibit-3-fy26-water-reserve-
management-practices.pdf
2 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/2/agendas-minutes-reports/agendas-minutes/city-
council-agendas-minutes/2025/june-16/rates-attachments/finalized-attachment-b-exhibit-1-fy26-water-utility-
financial-forecast-and-cip-detail.pdf
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
2
027060325
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:
SECTION 1. The Council hereby adopts the FY 2026 Water Utility Reserve
Management Practices (Exhibit 3) and Financial Forecast (Exhibit 1) presented to the
Finance Committee on April 1, 2025 (Meeting Agenda Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16017) and as
updated by the June 16, 2025 Council report, which are attached to and made a part of
the staff report presented to the City Council.
SECTION 2. The Council hereby approves a transfer from the Rate Stabilization
Reserve to the Operations Reserve of up to $3,000,000 in FY 2025 as described in the FY 2026
Water Utility Financial Forecast (Exhibit 1).
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
shown in Exhibit 2. Utility Rate Schedule W-1, as amended, shall become effective July 1,
2025.
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 shown in Exhibit 2 3. Utility Rate Schedule W-2, as amended, shall become effective
July 1, 2025.
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 shown in Exhibit 2.
Utility Rate Schedule W-3, as amended, shall become effective July 1, 2025.
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 shown in Exhibit 2. Utility Rate Schedule W- 4, as
amended, shall become effective July 1, 2025.
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 shown in Exhibit 2. Utility Rate Schedule W-7, as amended, shall become effective July
1, 2025.
3 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-
council-agendas-minutes/2025/june-16/rates-attachments/attachment-b-exhibit-2-fy26-water-utility-rate-
schedules.pdf
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
3
027060325
SECTION 8. The City Council finds that the revenues derived from the water rates
approved by this resolution do not exceed the funds required to provide water service, do
not exceed the proportional cost of the water service attributable to the parcel, and 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.
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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Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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027060325
SECTION 10. The Council finds that the adoption of this resolution approving the FY
2026 Water Financial Forecast, Reserve Management Practices, 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
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: JUNE 16, 2025
AYES: BURT, LAUING, LU, LYTHCOTT-HAIMS, RECKDAHL, VEENKER
NOES:
ABSENT: STONE
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 1
The Water Utility Financial Forecast and CIP Details have been updated since the April 1, 2025 version reviewed by the Finance Committee;1 the
specific changes are summarized in Staff Report 2411-3776. This exhibit contains the following tables:
•Table 1: Updated June 16, 2025 Council Version of the Water Utility Financial Forecast. Key Updated Numbers Shown in Red.
•Table 2: April 1, 2025 Finance Committee Version of the Water Utility Financial Forecast for Quick Reference.
•Table 3: Updated June 16, 2025 Council Version of the Water Utility CIP Detail. Key Updated Numbers Shown in Red.
•Table 4: April 1, 2025 Finance Committee Version of the Water Utility CIP Detail for Quick Reference.
1 Finance Committee Meeting Agenda April 1, 2025, Item 1: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16017
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 1
Table 1: Updated June 16, 2025 Council Version of the Water Utility Financial Forecast. Key Updated Numbers Shown in Red.
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 1
Table 2: April 1, 2025 Finance Committee Version of the Water Utility Financial Forecast for Quick Reference.
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 1
Table 3: Updated June 16, 2025 Council Version of the Water Utility CIP Detail. Key Updated Numbers Shown in Red.
1 Project #Project Name
Reappropriated & Carried
Forward from Previous
Years & Accruals (A)
Current Year
Estimate (B)
Current Year
Funding (B-A) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
2 ONE TIME PROJECTS
3 WS-07000 Regulation Station Imp.233,538 233,539 1 - - - -
4 WS-07001 Water Recycling Facilities - - - - -
5 WS-08001 Water Reservoir Coating - - - - -
6 WS-09000 Seismic Water System 1,330,574 1,630,574 300,000 - - - 8,776,412 7,776,412
7 Subtotal, One-time Projects 1,564,113 1,864,113 300,000 - - - 8,776,412 7,776,412
8 WATER MAIN REPLACEMENT PROGRAM
9 WS-14001 WMR - Project 28 1,226,970 1,226,970 0 - - - -
10 WS-15002 WMR - Project 29 5,419,782 5,419,782 0 - - -
11 WS-16001 WMR - Project 30 419,629 844,629 425,000 4,359,000 - -
12 WS-19001 WMR - Project 31 - 447,950 472,139 7,152,696 -
13 WS- XXXXX WMR - Project 32 485,035 682,207 11,056,610
14 WS- XXXXX WMR - Project 33 829,246
15 Subtotal, Water Main Replacement Prog.7,066,380 7,491,381 425,001 4,806,950 472,139 7,637,731 682,207 11,885,855
16 Project #Project Name
Reappropriated / Carried
Forward from Previous
Years
Current Year
Estimate
Current Year
Funding FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
17 ONGOING PROJECTS
18 WS-80014 Services/Hydrants - 412,000 412,000 424,000 437,000 450,000 464,000 464,000
19 WS-80015 Water Meters 20 367,460 367,440 342,270 407,130 404,930 427,630 412,000
20 WS-02014 W-G-W Utility GIS Data 684,752 1,213,552 528,800 544,000 560,000 583,000 600,000 600,000
21 WS-13002 Equipment/Tools 50,000 100,000 50,000 50,000 50,000 50,000 50,000 50,000
22 WS-11003 Dist. Sys. Improvements 607,956 912,955 305,000 314,000 323,000 335,000 345,000 379,500
23 WS-11004 Supply Sys. Improvements 3,592,792 4,307,792 715,000 366,000 377,000 390,000 402,000 442,200
24 WS-19000 Mayfield Reservoir - - - - - - -
25 Subtotal, Ongoing Projects 4,935,519 7,313,759 2,378,240 2,040,270 2,154,130 2,212,930 2,288,630 2,347,700
26 CUSTOMER CONNECTIONS (FEE FUNDED)
27 WS-80013 Water System Extensions 12,630 973,130 960,500 989,000 1,018,700 1,100,000 1,100,000 1,100,000
28 Subtotal, Customer Connections 12,630 973,130 960,500 989,000 1,018,700 1,100,000 1,100,000 1,100,000
29 GRAND TOTAL 13,578,642 17,642,383 4,063,741 7,836,220 3,644,969 10,950,661 12,847,249 23,109,967
30 Funding Sources
31 Connection/Capacity Fees 960,500 989,000 1,018,700 1,100,000 1,100,000 1,100,000
32 Other Utility Funds (Asset Mgmt, GIS Systems)342,000 362,667 373,333 388,667 400,000 400,000
33 Utility Rates 2,761,241 6,484,553 2,252,936 9,461,995 11,347,249 21,609,967
34 CIP-RELATED RESERVES DETAIL
6/30/2024
Actual
35 Reappropriations & Commitments & Accrual 13,577,938
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 1
Table 4: April 1, 2025 Finance Committee Version of the Water Utility CIP Detail for Quick Reference.
1 Project #Project Name
Reappropriated & Carried
Forward from Previous
Years & Accruals (A)
Current Year
Estimate (B)
Current Year
Funding (B-A) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
2 ONE TIME PROJECTS
3 WS-07000 Regulation Station Imp.233,538 233,539 1 - - - -
4 WS-07001 Water Recycling Facilities - - - - -
5 WS-08001 Water Reservoir Coating - - - - -
6 WS-09000 Seismic Water System 1,330,574 1,630,574 300,000 - - - 8,776,412 7,776,412
7 Subtotal, One-time Projects 1,564,113 1,864,113 300,000 - - - 8,776,412 7,776,412
8 WATER MAIN REPLACEMENT PROGRAM
9 WS-14001 WMR - Project 28 1,226,970 1,226,970 0 - - - -
10 WS-15002 WMR - Project 29 5,419,782 5,419,782 0 - - -
11 WS-16001 WMR - Project 30 419,629 844,629 425,000 4,359,000 - -
12 WS-19001 WMR - Project 31 - 447,950 472,139 7,452,696 -
13 WS- XXXXX WMR - Project 32 485,035 682,207 11,056,610
14 WS- XXXXX WMR - Project 33 829,246
15 Subtotal, Water Main Replacement Prog.7,066,380 7,491,381 425,001 4,806,950 472,139 7,937,731 682,207 11,885,855
16 Project #Project Name
Reappropriated / Carried
Forward from Previous
Years
Current Year
Estimate
Current Year
Funding FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
17 ONGOING PROJECTS
18 WS-80014 Services/Hydrants - 412,000 412,000 424,000 437,000 450,000 464,000 464,000
19 WS-80015 Water Meters 20 367,460 367,440 342,270 407,130 404,930 427,630 412,000
20 WS-02014 W-G-W Utility GIS Data 684,752 1,213,552 528,800 544,000 560,000 583,000 600,000 600,000
21 WS-13002 Equipment/Tools 50,000 100,000 50,000 50,000 50,000 50,000 50,000 50,000
22 WS-11003 Dist. Sys. Improvements 607,956 912,955 305,000 314,000 323,000 335,000 345,000 379,500
23 WS-11004 Supply Sys. Improvements 3,592,792 4,307,792 715,000 366,000 377,000 390,000 402,000 442,200
24 WS-19000 Mayfield Reservoir - - - - - - -
25 Subtotal, Ongoing Projects 4,935,519 7,313,759 2,378,240 2,040,270 2,154,130 2,212,930 2,288,630 2,347,700
26 CUSTOMER CONNECTIONS (FEE FUNDED)
27 WS-80013 Water System Extensions 12,630 973,130 960,500 989,000 1,018,700 1,100,000 1,100,000 1,100,000
28 Subtotal, Customer Connections 12,630 973,130 960,500 989,000 1,018,700 1,100,000 1,100,000 1,100,000
29 GRAND TOTAL 13,578,642 17,642,383 4,063,741 7,836,220 3,644,969 11,250,661 12,847,249 23,109,967
30 Funding Sources
31 Connection/Capacity Fees 960,500 989,000 1,018,700 1,100,000 1,100,000 1,100,000
32 Other Utility Funds (Asset Mgmt, GIS Systems)342,000 362,667 373,333 388,667 400,000 400,000
33 Utility Rates 2,761,241 6,484,553 2,252,936 9,761,995 11,347,249 21,609,967
34 CIP-RELATED RESERVES DETAIL
6/30/2024
Actual
35 Reappropriations & Commitments & Accrual 13,577,938
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 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 Service.
C. RATES:
Per Meter
Monthly Service Charge: Per Month
For meters 5/8-inch to 1 inch .................................................................................... $ 27.63 23.62
For 1 1/2 inch meter .................................................................................................. 89.28 76.31
For 2-inch meter ........................................................................................................ 138.11 118.05
For 3-inch meter ........................................................................................................ 292.75 250.22
For 4-inch meter ........................................................................................................ 520.66 445.01
For 6-inch meter ........................................................................................................1,065.97 911.09
For 8-inch meter ........................................................................................................1,961.28 1,676.31
For 10-inch meter ......................................................................................................3,100.74 2,650.21
For 12-inch meter .......................................................................................................4,077.45 3,485.00
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 ......................................................................... $ 5.805.67
Distribution Rate:
Tier 1 usage ........................................................................................................................$ 3.492.99
Tier 2 usage (All usage over 100% of Tier 1) .......................................................................8.146.96
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 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.4. 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 2025 through 2029, inclusive.
Customers will be provided notice of any adjustments via their billing statements or by any
other mailing by CPAU to the customer’s regular billing address.
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 Sheet No W-1-3
3. Calculation of Usage Tiers
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}
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 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 ................................................................ $ 5.805.67
Distribution Rate: .................................................................................................................$ 4.214.92
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.6. 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
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 Sheet No W-2-2
D.SPECIAL NOTES:
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 2025 through 2029, inclusive. Customers will be provided notice of any
adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular
billing address.
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}
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 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 .......................................................................................................$ 5.68 4.86
4-inch connection .......................................................................................................35.22 30.11
6-inch connection ....................................................................................................... 102.32 87.46
8-inch connection .......................................................................................................218.07 186.39
10-inch connection .....................................................................................................392.19 335.21
12-inch connection .....................................................................................................633.50 541.46
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.
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20245
dated 7-1-20234 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}
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20254
dated 7-1-20234 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 .................................................................................... $ 24.1620.65
For 3/4-inch meter .................................................................................... 32.31 27.62
For 1-inch meter .................................................................................... 48.59 41.53
For 1 ½-inch meter .................................................................................... 89.28 76.31
For 2-inch meter .................................................................................... 138.11 118.05
For 3-inch meter .................................................................................... 292.75 250.22
For 4-inch meter .................................................................................... 520.66 445.01
For 6-inch meter ....................................................................................1,065.97 911.09
For 8-inch meter ....................................................................................1,961.28 1,676.31
For 10-inch meter ....................................................................................3,100.74 2,650.21
For 12-inch meter ....................................................................................4,077.45 3,485.00
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 ...................................................... $ 5.675.80
Distribution Rate: ........................................................................................... 4.924.21
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20254
dated 7-1-20234 Sheet No W-4-2
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.3. 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 2025 through 2029, inclusive.
Customers will be provided notice of any adjustments via their billing statements or by any
other mailing by CPAU to the customer’s regular billing address.
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
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20254
dated 7-1-20234 Sheet No W-4-3
consumption.
{End}
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20242025
dated 7-1-20234 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 .................................................................................... $ 24.1620.65
For 3/4-inch meter .................................................................................... 32.31 27.62
For 1-inch meter .................................................................................... 48.59 41.53
For 1 1/2 inch meter .................................................................................... 89.28 76.31
For 2-inch meter .................................................................................... 138.11 118.05
For 3-inch meter .................................................................................... 292.75 250.22
For 4-inch meter .................................................................................... 520.66 445.01
For 6-inch meter ....................................................................................1,065.97 911.09
For 8-inch meter ....................................................................................1,961.28 1,676.31
For 10-inch meter ....................................................................................3,100.74 2,650.21
For 12-inch meter ....................................................................................4,077.45 3,485.00
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 ........................................................... $ 5.805.67
Distribution Rate: ..................................................................................................... 6.417.49
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
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 7-1-20242025
dated 7-1-20234 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.3. 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 2025 through 2029, inclusive.
Customers will be provided notice of any adjustments via their billing statements or by any
other mailing by CPAU to the customer’s regular billing address.
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}
Exhibit 2 2 Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 3
WATER UTILITY RESERVES MANAGEMENT PRACTICES
The following reserves management practices shall be used when developing the Water Utility Financial Plan:
Section 1. Definitions
a)“Financial Planning Period” – The Financial Planning Period is the range of future fiscal years covered by the
Financial Plan. For example, for the Water Utility Financial Plan delivered in conjunction with the FY 2015 budget,
FY 2015 to FY 2021 is the Financial Planning Period.
b)“Fund Balance” – As used in these Reserves Management Practices, Fund Balance refers to the Utility’s
Unrestricted Net Assets.
c)“Net Assets” - The Government Accounting Standards Board defines a Utility’s Net Assets as the difference
between its assets and liabilities.
d)“Unrestricted Net Assets” - The portion of the Utility’s Net Assets not invested in capital assets (net of related
debt) or restricted for debt service or other restricted purposes.
Section 2. Reserves
The Water Utility’s Fund Balance is reserved for the following purposes:
a)For existing contracts, as described in Section 3 (Reserve for Commitments)
b)For operating and capital budgets re-appropriated from previous years, as described in Section 4 (Reserve for Re-
appropriations)
c)For cash flow management and contingencies related to the Water Utility’s Capital Improvement Program (CIP),
as described in Section 5 (CIP Reserve)
d)For rate stabilization, as described in Section 6 (Rate Stabilization Reserve)
e)For operating contingencies, as described in Section 7 (Operations Reserve)
f)Any funds not included in the other reserves will be considered Unassigned Reserves and shall be returned to
ratepayers or assigned a specific purpose as described in Section 8 (Unassigned Reserves).
Section 3. Reserve for Commitments
At the end of each fiscal year the Reserve for Commitments will be set to an amount equal to the total remaining
spending authority for all contracts in force for the Water Utility at that time.
Section 4. Reserve for Re-appropriations
At the end of each fiscal year the Reserve for Re-appropriations will be set to an amount equal to the amount of all
remaining capital and non-capital budgets, if any, that will be re-appropriated to the following fiscal year in accordance
with Palo Alto Municipal Code Section 2.28.090.
Section 5. CIP Reserve
The CIP Reserve is used to manage cash flow for capital projects and acts as a reserve for capital contingencies. Staff
will manage the CIP Reserve according to the following practices:
a)The following guideline levels are set forth for the CIP Reserve. These guideline levels are calculated for each fiscal
year of the Financial Planning Period and approved by Council resolution.
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 3
Minimum Level 20% of the maximum CIP Reserve guideline level
Maximum Level Average annual (12 month)1 CIP budget, for 48
months of budgeted CIP expenses2
b)Changes in Reserves: Staff is authorized to transfer funds between the CIP Reserve and the Reserve for
Commitments when funds are added or removed from to that reserve as a result of a change in contractual
commitments related to CIP projects. Any other additions to or withdrawals from the CIP reserve require Council
action.
c)Minimum Level: If, at the end of any fiscal year, the minimum guideline is not met, staff shall present a plan to the
City Council to replenish the reserve. The plan shall be delivered by the end of the following fiscal year, and shall,
at a minimum, result in the reserve reaching its minimum level by the end of the next fiscal year. For example, if
the CIP Reserve is below its minimum level at the end of FY 2017, staff must present a plan by June 30, 2018 to
return the reserve to its minimum level by June 30, 2019. In addition, staff may present, and the Council may
adopt, an alternative plan that takes longer than one year to replenish the reserve, or that does so in a shorter
period of time.
d)Maximum Level: If there are funds in this reserve in excess of the maximum level staff must propose in the next
Financial Plan to transfer these funds to another reserve, return the funds to ratepayers, or designate a specific
use of the funds for CIP investments that will be made by the end of the next Financial Planning Period . Staff may
also seek City Council to approve holding funds in this reserve in excess of the maximum level if they are held for
a specific future purpose related to the CIP.
Section 6. Rate Stabilization Reserve
Funds may be added to the Rate Stabilization Reserve by action of the City Council and held to manage the
trajectory of future year rate increases. Withdrawal of funds from the Rate Stabilization Reserve requires Council
action. If there are funds in the Rate Stabilization Reserve at the end of any fiscal year, any subsequent Water
Utility Financial Plan must result in the withdrawal of all funds from this Reserve by the end of the next Financial
Planning Period. The Council may approve exceptions to this requirement, when proposed by staff to provide
greater rate stabilization to customers.
Section 7. Operations Reserve
The Operations Reserve is used to manage normal variations in costs and as a reserve for contingencies. Any portion
of the Water Utility’s Fund Balance not included in the reserves described in Section 3-Section 6 above will be included
in the Operations Reserve unless this reserve has reached its maximum level as set forth in Section 7(d) below. Staff
will manage the Operations Reserve according to the following practices:
a)The following guideline levels are set forth for the Operations Reserve. These guideline levels are calculated for
each fiscal year of the Financial Planning Period based on the levels of Operations and Maintenance (O&M) and
commodity expense forecasted for that year in the Financial Plan.
1 Each month is calculated based upon 1/12 of the annual budget.
2 For example, in the Financial Plan for FY 2021, the 48 month period to use to derive the annual average is FY
2021 through FY 2024. In the FY 2022 Financial Plan, the 48 month period to use to derive the annual average
would be FY 2022 through FY 2025 etc.
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Exhibit 3
Minimum Level 60 days of O&M and commodity expense
Target Level 90 days of O&M and commodity expense
Maximum Level 120 days of O&M and commodity expense
b)Minimum Level: If, at the end of any fiscal year, the funds remaining in the Operations Reserve are lower than the
minimum level set forth above, staff shall present a plan to the City Council to replenish the reserve. The plan shall
be delivered within six months of the end of the fiscal year, and shall, at a minimum, result in the reserve reaching
its minimum level by the end of the following fiscal year. For example, if the Operations Reserve is below its
minimum level at the end of FY 2014, staff must present a plan by December 31, 2014 to return the reserve to its
minimum level by June 30, 2015. In addition, staff may present, and the Council may adopt, an alternative plan
that takes longer than one year to replenish the reserve.
c)Target Level: If, at the end of any fiscal year, the Operations Reserve is higher or lower than the target level, any
Financial Plan created for the Water Utility shall be designed to return the Operations Reserve to its target level
within four years.
d)Maximum Level: If, at any time, the Operations Reserve reaches its maximum level, no funds may be added to this
reserve. Any further increase in the Water Utility’s Fund Balance shall be automatically included in the Unassigned
Reserve described in Section 8, below.
Section 8. Unassigned Reserve
If the Operations Reserve reaches its maximum level, any further additions to the Water Utility’s Fund Balance will be
held in the Unassigned Reserve. If there are any funds in the Unassigned Reserve at the end of any fiscal year, the next
Financial Plan presented to the City Council must include a plan to assign them to a specific purpose or return them
to the Water Utility ratepayers by the end of the first fiscal year of the next Financial Planning Period. For example, if
there were funds in the Unassigned Reserves at the end of FY 2015, and the next Financial Planning Period is FY 2016
through FY 2021, the Financial Plan shall include a plan to return or assign any funds in the Unassigned Reserve by the
end of FY 2016. Staff may present an alternative plan that retains these funds or returns them over a longer period of
time.
Docusign Envelope ID: D83D2493-E110-4A2F-A125-BFB3E7176E27
Certificate Of Completion
Envelope Id: D83D2493-E110-4A2F-A125-BFB3E7176E27 Status: Completed
Subject: RESO 10231 Water Rates
Source Envelope:
Document Pages: 24 Signatures: 6 Envelope Originator:
Certificate Pages: 2 Initials: 0 Christine Prior
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
Christine.Prior@PaloAlto.gov
IP Address: 165.225.242.87
Record Tracking
Status: Original
6/25/2025 11:02:35 AM
Holder: Christine Prior
Christine.Prior@PaloAlto.gov
Location: DocuSign
Security Appliance Status: Connected Pool: StateLocal
Storage Appliance Status: Connected Pool: City of Palo Alto Location: Docusign
Signer Events Signature Timestamp
Aylin Bilir
Aylin.Bilir@paloalto.gov
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 165.225.242.124
Sent: 6/25/2025 11:05:24 AM
Viewed: 6/25/2025 11:15:00 AM
Signed: 6/25/2025 11:16:01 AM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Lauren Lai
Lauren.Lai@paloalto.gov
Director Administrative Services/CFO
COPA
Security Level: Email, Account Authentication
(None)
Signature Adoption: Drawn on Device
Using IP Address: 199.33.32.254
Sent: 6/25/2025 11:16:03 AM
Viewed: 6/25/2025 12:29:59 PM
Signed: 6/25/2025 12:30:07 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Alan Kurotori
Alan.Kurotori@paloalto.gov
Director of Utilities
City of Palo Alto
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 199.33.32.254
Sent: 6/25/2025 12:30:10 PM
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Signed: 6/30/2025 3:25:10 PM
Electronic Record and Signature Disclosure:
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Ed Shikada
Ed.Shikada@paloalto.gov
Ed Shikada
City of Palo Alto
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 199.33.32.254
Sent: 6/30/2025 3:25:12 PM
Viewed: 7/1/2025 7:56:30 AM
Signed: 7/1/2025 7:56:35 AM
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Signer Events Signature Timestamp
Ed Lauing
Ed.Lauing@paloalto.gov
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 73.158.105.71
Sent: 7/1/2025 7:56:38 AM
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Signed: 7/1/2025 12:23:43 PM
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Mahealani Ah Yun
Mahealani.AhYun@paloalto.gov
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 217.61.175.43
Signed using mobile
Sent: 7/1/2025 12:23:45 PM
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Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 6/25/2025 11:05:24 AM
Certified Delivered Security Checked 7/1/2025 3:14:28 PM
Signing Complete Security Checked 7/1/2025 3:14:49 PM
Completed Security Checked 7/1/2025 3:14:49 PM
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