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HomeMy WebLinkAbout1998-03-16 City Council (40)City 13City of Palo Alto. Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: UTILITIES DATE:.MARCH 16, 1998 CMR:155:98 SUBJECT:RESOLUTION PROVIDING UTILITIES RATE RELIEF TO FLOOD DAMAGED RESIDENCES AND BUSINESSES RECOMMENDATION Staff recommends that City Council adopt the attached resolution amending Utilities Rule and Regulation Number 2 to authorize the issuance of Utility bill credits to qualifying residents and businesses who increased their water, gas, and/or electric consumption to mitigate property damage and losses caused by the recent floods. BACKGROUND As a result of recent flooding; some residents and businesses may have found it necessary to use unusually high amounts of water, gas, and/or electricity to cleanup and dry out their homes or businesses. For example, the near continuous use of portable electric space heaters and fans to dry out a residence will result in higher than normal bills for these customers. Such bills are further impacted by the "conservation oriented" residential rate structures for water, gas, and electricity. These "inverted rate structures" charge ascending prices for higher amounts of consumption. DISCUSSION In recognition of the fact that some customers may be paying unusually high utilities bills due to circumstances beyond their control, staff believes it is appropriate to apply utility billing adjustments under a Utilities Rate Relief Program. The proposed resolution has an effective date of March 16, 1998; however, the applicable adjustment period would cover the February and March 1998 billing cycles. Notice will be provided to customers to contact the Utilities Customer Service Center to determine qualifications. To qualify, documentation of flood damage will not be necessary from residents and businesses located on City blocks if staff has previous knowledge or reports that flooding CMR:155:98 Page 1 of 4 occurred. For customers located in other areas of the City, documentation verifying that the ¯ customer experienced’flood damage may be required. Such documentation may include, but not be limited to, receipt for purchase of sump pumps, fans, portable heaters, plumbing or contractor repair receipts, or copy of a FEMA application. In some cases, a field visit by staffmay be adequate tO assure flooding occurred if other documentation does not exist. Any requests for flood related rate relief not explicitly covered by the above criteria, such as damage t~om roof leaks, will be handled on a case by case basis by the Director of Utilities. Upon qualifying, customers will receive a credit on their subsequent utility bill. The amount of the credit will be based on the portion of the bill which exceeds the customer’s normal usage for water, gas, and electricity. For example, a customer who paid a high water, gas, and electric bill of $225, but under normal circumstances would have paid about $125, would qualify for a credit of $100. In this example, the total credit would be $105 since there would be a credit of $5 in Utilities Users Tax. With regard to refuse charges, staff is not recommending rate relief for refuse utility billings for a number of reasons. In a separate report, staffis recommending suspension of fees for residents who bring flood damaged items to the landfill. Landfill fees have actually been suspended since the first week following the emergency, under authority of the City Manager in accordance with Municipal Code 5.20.280 which provides that the City Manager may adopt rules and regulations governing the use and operation of the City landfill. In addition, staffhas initiated other options for disposal of flood-damaged items at City expense. Such options include four free dumpster sites (augmented as of March 7, 1998 by additional dumpsters each Saturday, when residents are apparently using them most heavily); use of City crews to pick up flood-damaged items placed in the street; and use of a Police staff member to assist linking residents who are unable to move items ready for disposal, to community volunteer groups such as Stanford students and Boy Scouts who are willing to help. It is relevant as well to note that only 30 percent of a refuse charge directly relates to refuse collection. The remaining 70 percent of the charge funds other programs and services including street sweeping, household hazardous waste collection, recycling, landfill operations, offsite material recovery/disposal (SMART Station), reduction and diversion, and landfill rent. However, should Council direct staff to extend rate relief to refuse billings as well, staff could work with Palo Alto Sanitation Company (PASCO) to develop a methodology in which the City would reimburse PASCO for the lost revenue represented by a fee waiver. CMR:155:98 Page 2 of 4 Finally, customers experiencing financial difficulties paying their utilities, includingrefuse, can obtain rate relief through ProjectPLEDGE as well as the Residential Rate Assistance Program (RAP). These programs are not limited to customers suffering financial hardship occasioned by the recent floods. To qualify for assistance under these programs, customers need to provide evidence of the financial hardship relative to their income sources. Presently, there is a balance of approximately $4,000 in ProjectPLEDGE funds available. RESOURCE IMPACT It is difficult to estimate how many residents or businesses would qualify or choose to request a bill adjus .tment. Recent newspaper estimates indicate that approximately 400 residences experienced some form of flood damage. Of this amount, many will not experience high utilities bills because flood damage was. minor. However, if half of the estimated residents applied and qualified for a credit, the revenue impacts on the water, gas, and electric funds are estimated at approximately a reduction of $4,000, $6,000, and $10,000 respectively. Based on these amounts, Utilities Users Tax would be reduced by approximately $1,000’. To the extent a source of funding is necessary to replace the reduction in sales revenue, the Water, Gas, and Electric Funds Rate Stabilization Reserves exist for such contingencies and can accommodate this shortfall. POLICY IMPLICATIONS The proposed resolution establishes a policy which is consistent but not spelled out in the current Utilities Rule and Regulation Number 2 " Policy Billing Adjustments." This rule provides for "adjusting a customer’s bill for reasons of equity and fairness." Specific circumstances are described, such as water or gas leak credits in which the customer had no control over the leaking. With the recent flooding, some residents and businesses may have used more water, gas, and/or elec~city responding to a situation similarly beyond their control. In this regard, the proposed revision (shown in bold) to Rule 2 extends authority for issuing billing adjustments to utility service charges incurred in connection with events of force majeure, including, without limitation, floods, fires, and earthquakes. The adjustment would be limited to the charges related to the increase in aboveaverage consumption occasioned by an event of force majeure. ENVIRONMENTAL REVIEW Approval of a modification to Utility Rule and Regulation Number 2 does not constitute a project under the California Environmental Quality Act. Therefore, an environmental assessment is not required. CMR: 155:98 Page 3 of 4 ATTACHMENT Resolution Utility Rule and Regulation Number 2 Prepared by:Randy Baldschun, Assistant Director of Utilities, Administrative Services Director of Utilities CITY MANAGER APPROVAL: HARRISON Assistant City Manager CMR:155:98 Page 4 of 4 POLICY BILLING ADJUSTMENTS RULE AND ,REGULATION 2 A. GENERAL Under certain circumstances, the City will adjust a customer’s bill for reasons of equity and faimess. Such adjustments may relate to meter reading errors, late payment charges, water or gas leaks, and "smoothing~" of two consecutive billing cycles. Similarly, bill adjustments shall apply in cases where excessive consumption of water, gas, and/or electricity occurred as a result of the customer’s reasonable efforts to mitigate or remedy property damage or loss caused by an event of force majeure.. See Rule & Regulation No. 12 for a discussion of billing adjustments related to meter error or malfunction and backbilling a customer for billing errors. 1.METER READING ERRORS (A)Meter reading errors may be brought to the attention of the City by the customer or identified by a computer generated report as part of the billing review process. In many cases, a field investigation may be initiated by the City to verify unusual meter readings. (B)In general, when a meter reading error has been identified, the customer will be notified of {he error on a timely basis and/or a revised bill reflecting the corrected meter readings and the appropriate adjustment will be issued by the City. 2. LATE PAYMENT CHARGES (A)Based on the particular merits of a given situation, late payment charges may be waived by the City. Examples of situations whereby a waiver is granted are generally. those under which the customer is faced with circumstances beyond his or her control. Two examples are: (1) The posting of payments received by the City is delayed or in error. (2)The customer is withholding payment or partial payment pending resolution of an inquiry. Issued by the City Council Supersedes Sheet No. 2-1 dated 7-1-92 Effective 3-16-98 Sheet No: 2-1 POLICY BILLING ADJUSTMENTS RULE AND REGULATION 2 3. WATER OR GAS LEAK CREDITS Billing adjustments may be made for wateror gas lost as a result of leakage in a line on the customer’s premises beyond the City meter. Leaking faucets, toilets, hoses, or sprinklers do not qualify for a billing credit unless a determination has been made by the City that the customer had no control of such device(s) leaking. Under no circumstances will a billing credit be provided a customer when the facts indicate that a custome had knowledge of a water or gas leak, but failed to. take corrective measures in a timely manner. It is the customer’s responsibility to maintain their lines and equipment in a reasonable condition such that leaks do not occur. (A)Generally, a leak credit will only be granted for a one month billing cycle. However, depending on the circumstances, a two month billing cycle may be granted by the Supervisor, Customer Service Center. Leak credits will not be provided beyond a two month billing cycle. (B)All customer classes are eligible for the leak credit. To qualify for the water leak credit, evidence of having repaired the leak is required. Such evidence may consist of a plumbers repair bill or field verification by the City. Customers who are negligent or slow to react in repairing a leak do not qualify for a leak credit. (c)To arrive at the corrected bill amount which reflects the leak credit, the City .will estimate what would have been the normal consumption and calculate a normal bill based on that consumption. Then, actual conCumption in excess of the normal figure will be billed at the City’s current wholesale commodity cost plus ten percent. The sum of theses two calculations represents a revised billing amount. The leak credit is the difference between the revised billing amount and the original bill. 4.SMOOTHING ADJUSTMENT (A)A smoothing adjustment averages the usage of a customer over two billing cycles and re-calculates the bill based on a uniform usage pattern for each month. The Supervisor, Customer Service Center or a designated representative shall determine if a smoothing adjustment is indicated. Issued by the City Council Supersedes Sheet No. 2-1 dated 7-1-92 Effective 3-16-98 Sheet No. 2-1 POLICY BILLING ADJUSTMENTS RULE ,AND REGULATION 2 = (B)A smoothing adjustment may be appropriate if consumption between two billing cycles changes to an extraordinary high level and is caused by the following: (1) An estimated meter reading by the City or; (2) A longer or irregular billing cycle. BILLING ADJUSTMENTS IN CONNECTION WITH FORCE MAJEURE EVENTS (A) (B) (c) (D) For purposes of this Rule and Regulation, the term "force majeure" means the occurrence of an event that is beyond the reasonable control of the utility customer and, which by reasonable efforts,_ the customer could not prevent. Such events include, but are not limited to, an Act of God, an irresistible, superhuman cause, fire, flood, earthquake, or any other similar cause. - A billing adjustment in connection with a force majeure event shall be limited to charges for water, gas, and/or electricity consumption in excess of the historical average for the customer. The billing adjustment will be applied as a credit on the customer’s bill. The credit is for the amount of excess usage and represents the difference between the amount charged for the applicable period and an amount calculated based on the customer’s average consumption for a similar period. This credit shall include a refund of any applicable utilities users tax that was based on the amount of excess usage. The Director of Utilities shall determine the historical average consumption. ~Depending on the availability of data and other reasonable considerations, the basis for calculating such averages may be the same month(s) in a previous year, a recent 12 month average, a 6 month seasonal average for winter or summer, or other appropriate period(s) as determined by the Director of Utilities. To qualify for an adjustment under this section, the customer may be required to provide documentation to verify damage to the residence or building, or contents thereof. In circumstances in which the City has previously verified such damage such as by a field visit or has made a determination from other information resources, documentation from the customer may not be required. {END} CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 3-16-98 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ,TEMPORARILY SUSPENDING THE COLLECTION OF CERTAIN UTILITY CHARGES AS A RESULT OF FLOOD-RELATED DAMAGE AND LOSSES AND APPROVING A REVISION TO UTILITIES RULE AND REGULATION NI/MBER 2 PERTAINING TO POLICY BILLING ADJUSTMENTS WHEREAS, the flooding of San Francisquito Creek during ’February 2 3, 1998 caused real property and personal property damage and losses in Palo Alto, and those Palo Alto utility customers who sustained such damage and losses exceeded their normal consumption of water, electric and gas services in order to mitigate or remedy the effects of such damage and losses; WHEREAS, under Utilities Rule and Regulation Number 2, the City of Palo Alto will adjust a Palo Alto utility customer’s bill for reasons of equity and fairness, and billing adjustments are~ expressly authorized in connection with utility service charges attributable to meter reading errors and water or natural gas leakages not caused by a utility customer; and WHEREAS, in furtherance of the health, safety and welfare of Palo Alto utility customers and for reasons of equity and fairness, it is the intent of the City of Palo Alto to authorize billing adjustments in connection with utility service charges incurred in connection with events of force majeure, including, without limitation, floods, fires and earthquakes; NOW, THEREFORE, the Council of the City Of Palo Alto does hereby RESOLVE as follows: SECTION I. The City Council hereby directs the Director of Utilities to suspend the collection of water, gas and electric service charges authorized pursuant to Section 12.20.010 of the Palo Alto Municipal Code, when that portion of the water, gas and electric service charges for which such utility charges would be payable are in excess of the water, gas and electric service charges normally consumed by Palo Alto utility customers directly related to the flooding of San Francisquito~Creek during February 2 - 3, 1998. The Director of Utilities shall determine whether any Palo Alto utility customer’s consumption of water, gas and electricity in excess of that customer’s normal usage is related to the referenced flooding for purposes of this section. SECTION 2. The City Council hereby approves a revision to the attached Utilities Rule and Regulation number 2, which will permit billing adjustments to be made for increases in the consumption of water,~ gas and electric service resulting from reasonable efforts to mitigate or remedy the property damage and losses caused by an event of force majeure. 1980311 syn 0071380 SECTION 3. The suspension of collection of water, gas and electric service charges for consumption in excess of a utility customer’s normal usage shall be effective for the billing cycles during the months of February and March, 1998. SECTION 4. The Council hereby finds that the action~taken hereunder, including the approval of a modification to Rule and Regulation number 2, does not constitute a project for purposes of the California Environmental Quality Act, and, therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT ABSTENTIONS: ATTEST:APPROVED: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney Mayor City Manager Director of Utilities Acting Director of Administrative Services 2 980311 s’yn 0071380