HomeMy WebLinkAboutStaff Report 2303-11732.The Utilities Advisory Commission and Staff Request That the Finance Committee
Recommend the City Council Adopt a Resolution Approving the FY 2024 Wastewater
Collection Utility Financial Plan Including Proposed 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) (Continued from March 7, 2023) Supplemental
Memo, Presentation
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Finance Committee
Staff Report
From: Kiely Nose, Assistant City Manager
Lead: Utilities Department
Meeting Date: March 21, 2023
Staff Report: 2303-1173
TITLE
The Utilities Advisory Commission and Staff Request That the Finance Committee Recommend
the City Council Adopt a Resolution Approving the FY 2024 Wastewater Collection Utility Financial
Plan Including Proposed 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) (Continued from March
7, 2023)
BACKGROUND & ANALYSIS
The Finance Committee continued this item at the March 7, 2023 meeting and directed staff to
return with implications of sewer main replacements on the horizon of adopting Alternative A
or Modified Alternative B as discussed at that meeting.
Staff is providing a presentation with the alternatives for consideration1
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 Updated Wastewater Presentation https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-
reports/reports/city-manager-reports-cmrs/attachments/03-21-2023-id2302-1107-ww-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: Wastewater Presentation
APPROVED by:
Dean Batchelor, Director Utilities
Staff: Lisa Bilir, Senior Resource Planner
March 21, 2023 www.cityofpaloalto.org
WASTEWATER COLLECTION UTILITY FINANCIAL PROJECTIONS
(revised as of March 21, 2023)
Staff: Lisa Bilir
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WASTEWATER PROJECTIONS (revised as of March 21, 2023)
FY 2024 recommendation: 9% overall rate increase
•Accelerate main replacement from 1 mile per year to 2.5 miles per year in FY 2026 to replace
the last main no more than ~ 8 years beyond ~100 year life expectancy
•Alternatives A, B and C lower sewer rate increases & slower transition to 2.5 miles per year;
increasing likelihood of increased repair and maintenance costs, sanitary sewer overflows,
sinkholes or other catastrophic impacts
•Fully funds current main replacement project (SSR 31)
Summary of Recommended Rate Increases and Alternate Scenarios
Fiscal Year 2024 2025 2026 2027 2028 Start 2.5 Mile Per Year
Main Replacement
Recommendation 9%9%9%8%5%2026
Alternative A 9%8%6%6%6%2028
Modified Alternative B 7%7%6%6%6%2032
Alternative B 7%7%5%5%5%2034
Alternative C 5%5%5%5%5%Later than 2034
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WASTEWATER COST AND REVENUE PROJ. (Modified Alternative B)
* CIP in the projected years include changes due to commitments/reappropriations and funds transferred to the CIP Reserve
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WASTEWATER COST AND REVENUE PROJ.
(Staff Recommendation, presented on March 7, 2023)
* CIP in the projected years include changes due to commitments/reappropriations and funds transferred to the CIP Reserve
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WASTEWATER OPERATIONS RESERVE PROJECTION
(revised as of March 21, 2023)
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WASTEWATER CIP RESERVE PROJECTION
(revised as of March 21, 2023)
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RECOMMENDATION
The Utilities Advisory Commission and Staff recommend that the Finance
Committee Recommend that the City Council Adopt a resolution approving:
•The Fiscal Year 2024 Wastewater Collection Financial Plan, including
9% overall rate increase
•Transfer up to $3.178 million from the Capital Improvements
Projects Reserve to the Operations Reserve in FY 2023
•Transfer up to $342 thousand from the Rate Stabilization Reserve to
the Operations Reserve in FY 2023
•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)