HomeMy WebLinkAboutStaff Report 189-05CMR:189:05 Page 1 of 3
TO: HONORABLE CITY COUNCIL
ATTENTION: FINANCE COMMITTEE
FROM: CITY MANAGER DEPARTMENT: UTILITIES
DATE: MARCH 15, 2005 CMR:189:05
SUBJECT: APPROVAL OF A RESOLUTION ADOPTING AN INCREASE IN
UTILITY SERVICE CALL AND CONNECTION FEES
RECOMMENDATION
Staff and the Utilities Advisory Commission (UAC) recommend that the City Council adopt the
attached resolution to increase fees for Utility connections and Utility service calls; and implement a
capacity fee effective July 1, 2005.
DISCUSSION
The Utilities Department provides service connections to its distribution network in order to meet new
and existing customer needs for electric, gas, water, and sewer services. Connection fee rates
schedules are designed to recover the costs that the Utiliti es Department incurs for installation,
connection, and inspection of these new connections. A cost of service study is periodically
performed in order to determine whether the Utility continues to fully recover those cost components.
A recent review of c onnection costs has been completed, and the results indicate that current fees are
not fully recovering costs. In addition, some connections, which were subject to engineering
estimates, have now been standardized. As such new fees have been added to cover these
standardized services.
The Service Calls Rate Schedule has been updated to reflect the increase in labor rates. These labor
rates have continued to rise since the last time this rate schedule has been updated due to contract
increases. Therefore, staff is proposing to increase connection fees and service call rates as of July 1,
2005.
In addition, in conformance with the Government Code 66000, staff is proposing implementing a
Utility Capacity Fee. The capacity fees will cover the proportiona te cost of system improvements
required to serve the new customer sand would become effective July 1, 2005
CMR:189:05 Page 2 of 3
UTILITIES ADVISORY COMMISSION REVIEW
On March 9, 2005, the UAC split the staff recommendation into two separate motions: the first motion
was that the UAC recommend to the City Council that it approve Utility Connection Fee Rate
Schedules E-15, W-5, G-5, S-5 and Utility Service Call Rate Schedule C-1 to be effective July 1,
2005. This was passed unanimously (Dahlen absent).
The second motion was that City Council approve and authorize staff to impose a Utility Capacity Fee
in conformance with Government Code Section 6600 on new service demands or service upgrades in
the Water and Wastewater Utilities and direct staff to place the revenue from the collection of Water
and Wastewater Collection system capacity fees in special C apital Improvement Program accounts for
capacity improvements in the Water and Wastewater funds as set in Government Code 66000
Commissioner Rosenbaum expressed that since Palo Alto is one of the few Bay Area cities that do not
impose a capacity fee, this is not a business friendly action. This motion passed: 3-1 (Rosenbaum
opposed and Dahlen absent). The Commission also recommend ed staff provide to Counc il a list of
similar fees at neighboring communities.
RESOURCE IMPACT
The estimated increase in annual connection fee revenues is approximately $50,000, $80,000, and
$40,000, for the Water, Gas, and Wastewater Collection Funds respectively. In spite of the modest
increase in electric connection fees, overall electric connection fee revenue is expected to remain
unchanged due to lower connection activity.
POLICY IMPLICATIONS
This p roposal meets the following Utilities Strategic Plan objectives: to invest in utility infrastructure
to deliver reliable service and to provide superior financial service to the City and competitive rates
to customers. Utilities is in the process of estimating revenue from sources cited. These
recommendations do not represent a change in current City policies.
ENVIRONMENTAL REVIEW
The adoption of the resolution does not constitute a project under the California Environmental Air
Quality Act; therefore, no environmental assessment is required.
ATTACHMENTS
A. Resolution
B. Utility Rate Schedules E-15, W-5, G-5, S-5 and C-1
C. Utilities Advisory Commission Report dated March 9, 2005
D. Tables 1,2, and 3, detailing existing and recommended service connection charges.
E. Minutes Excerpt from UAC March 9, 2005
PREPARED BY: Jose Jovel, Utilities Engineering Estimator
Tomm Marshall, Electric Engineering Manager
Lucie Hirmina, Manager Utilities Rates
CMR:189:05 Page 3 of 3
DEPARTMENT HEAD:
JOHN ULRICH
Director of Utilities
CITY MANAGER APPROVAL:
EMILY HARRISON
Assistant City Manager