HomeMy WebLinkAboutStaff Report 2303-11721.Recommend the City Council Adopt a Resolution Approving a Revised Fiscal Year 2024
Water Utility Financial Plan, Including Revised Proposed 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) Supplemental Memo, Presentation
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Finance Committee
Staff Report
From: Kiely Nose, Assistant City Manager
Lead Department: Utilities Department
Meeting Date: March 21, 2023
Staff Report: 2303-1172
TITLE
Recommend the City Council Adopt a Resolution Approving a Revised Fiscal Year 2024 Water
Utility Financial Plan, Including Revised Proposed 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)
BACKGROUND
On March 7, 2023 the Finance Committee unanimously recommended Council approve the FY
2024 Water rate changes and Financial Plan. However, based on the Committee’s feedback, staff
plan to bring forward an alternative scenario for Committee consideration. Staff recommends
reviewing this revised scenario in-lieu of possible alternations to the Wastewater Financial Plans
and Rates as discussed on March 7, 2023.
Staff is providing Attachment A for review with alternatives.1
Overall, when compared to the total expected utility bill impacts outlined on March 1, 2023 to
the Utilities Advisory Commission and the Finance Committee on March 7, 2023, staff have
brough forward two alternative scenarios impacts the electric and water rates or the electric
water and wastewater rates. Below is a summary of total bill impacts that staff will review in
greater detail at the Committee meeting.
On March 7, 2023, staff presented an overall projected change in residential median bill of $17.10
per month, a 5% increase. The total bill projection is inclusive of the following utilities: electric,
gas, wastewater, water, refuse, and storm drain.
Alternative Electric and Water Rates:
When considering the recommended adjustments to the electric and water rates included on the
March 21, 2023 Finance Committee agenda, the overall projected change in total residential
1 Water Presentation https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-
manager-reports-cmrs/attachments/03-21-2023-id2303-1172-w-presentation-fy24.pdf
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median bill is $11.70 per month, a 3% increase from current rates, a difference of $5.40 per
month lower than the March 7 proposals reviewed by the Committee.
Alternative Electric, Water, and Wastewater Rates:
When considering the potential adjustments to the electric, water, and wastewater rates
included on the March 21, 2023 Finance Committee agenda, the overall projected change in total
residential median bill is $10.80 per month, a 3% increase from current rates, a difference of
$6.30 per month lower than the March 7 proposals reviewed by the Committee.
ATTACHMENT:
Attachment A: Water Presentation
APPROVED by:
Dean Batchelor, Director Utilities
Staff: Lisa Bilir, Sr. Resource Planner
March 21, 2023 www.cityofpaloalto.org
WATER UTILITY FINANCIAL PLAN AND PROPOSED RATE CHANGES FOR FY 2024
(revised as of March 21, 2023)
Staff: Lisa Bilir
2
WATER RATE PROPOSAL (revised as of March 21, 2023)
Overall Water Rate Increases
Fiscal Year 2024 2025 2026 2027 2028
3/7/23 Finance Committee
Recommendation
7%3%3%3%5%
Alternative 6%4%3%3%5%
Fiscal Year 2024 2025 2026 2027 2028
3/7/23 Finance Committee
Recommendation
3%6%6%6%6%
Alternative 2%7%6%6%6%
Water Distribution Rate Increases
3
WATER COST AND REVENUE PROJECTION
(Finance Committee as of March 7, 2023)
* Includes changes due to commitments/reappropriations and funds transferred to the CIP Reserve
4
WATER COST AND REVENUE PROJECTION
(revised as of March 21, 2023)
* Includes changes due to commitments/reappropriations and funds transferred to the CIP Reserve
5
WATER OPERATIONS RESERVE PROJECTION
(revised as of March 21, 2023)
6
WATER CIP RESERVE PROJECTIONS
(revised as of March 21, 2023)
The Capital Reserve Ending
Balances are the same
under the 3/7/23 Finance
Committee
Recommendation
and Alternative
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RECOMMENDATION
Option 1:No change to the Finance Committee Recommendation from 3/7/23
for the Water Utility Financial Plan and Rate Increase (including a 3%
water distribution rate increase);
OR
Option 2:Staff recommend that the Finance Committee Recommend that the
City Council:
1. Adopt a resolution approving:
a)a. FY 2024 Water Utility Financial Plan, including 2% water
distribution rate increase
b)b. Up to a $3.746 million transfer from the Capital Improvement
Projects Reserve to the Operations Reserve in FY 2023
c)c. Up to a $3.0 million transfer from the Rate Stabilization Reserve
in FY 2023
d)d. Increasing Water Utility Rates Via the Amendment of Rate
Schedules W-1, W-2, W-3, W-4, and W-7