HomeMy WebLinkAboutStaff Report 2312-2468CITY OF PALO ALTO
Finance Committee
Special Meeting
Wednesday, February 21, 2024
5:30 PM
Agenda Item
1.Discussion and Update on the Fiscal Year 2025 Preliminary Utilities Financial Forecast and
Rate Projections Presentation
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Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Utilities
Meeting Date: February 21, 2024
Staff Report: 2312-2468
TITLE
Discussion and Update on the Fiscal Year 2025 Preliminary Utilities Financial Forecast and Rate Projections
RECOMMENDATION
This item is for discussion, and no action is requested. Staff will use input from the Finance Committee on
these preliminary rate projections for the Electric, Gas, Water and Wastewater Collection Utilities to
finalize its recommended FY 2025 Financial Plans and proposed rate changes for each utility.
EXECUTIVE SUMMARY
Throughout the pandemic, the City of Palo Alto kept rate increases at minimal levels in order to alleviate
the burden of utility cost hikes on residents and businesses already grappling with the pandemic's effects.
In 2023, the Council approved the first in a series of rate adjustments to manage some notable and
unprecedented trends:
•During the winter of 2022-2023, energy prices increased to unprecedented levels;
•A drought from 2021 through 2023 impacted electric supply costs, wholesale water costs, and
customer demand;
•The drought abruptly ended when thirty-one atmospheric rivers from mid-December 2022 to the
end of March 2023 established a near-historic snowpack in the Sierra Nevada; and
•Relatively cool and wet weather patterns persisted locally in 2023 and water conservation habits
established during the drought together contributed to lower customer water use.
Reserve funds were drawn down during the last three years, and the preliminary projections shown in
Table 1 provide a path to steadily restore those reserve levels during the five-year planning period. This
series of rate adjustments is necessary to restore reserves to within guideline ranges within the 5-year
planning period, sustain operations given inflationary cost increases, and enable ongoing capital work
necessary to provide safe, reliable, and sustainable utilities.
Staff is also requesting feedback from the Finance Committee on the amount of the General Fund transfer
for the Gas Utility. City voters first authorized the transfer in 1950, and in November 2022 voters approved
Measure L, affirming the continuation of this practice by adding section 2.28.185 to the Municipal Code.
Each year the City Council may transfer from the Gas Utility to the General Fund an amount up to 18% of
gas utility gross revenues, though Council may choose to transfer a lesser amount. For the FY 2024
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transfer, the Council approved a transfer from the gas utility to the General Fund of 15.5% of the gross
revenues (Resolution 10101). The proposed transfer for FY 2025 aligns with the Council's previous
guidance, suggesting an 11.9% or $8.96 million transfer from the gas utility to the General Fund.
At the meeting, staff will provide a presentation describing the preliminary rate projections for the
Electric, Gas, Water and Wastewater Collection utilities. A similar presentation was provided to the
Utilities Advisory Commission (UAC) at its January 3, 2024 meeting. The presentation will be available
online prior to the meeting.
BACKGROUND
Table 1 shows the preliminary retail rate forecast over the next five fiscal years and the overall impact to
the median residential bill. The rate changes shown are preliminary estimates. Actual rate changes will be
based on updated financial data and the cost-of-service methodologies and studies for each utility and
may differ by customer class and for individual customers depending on consumption patterns. A cost-of-
service study for the Electric Utility is expected to be completed in early 2024 and will be factored into
proposals for FY 2025. Cost of service studies for the Water and Gas Utilities were completed in 2019, and
one for the Wastewater Utility was completed in 2021.
Staff’s preliminary system average rate adjustment recommendations are
•5% increase for electric
•9% increase for gas
•9% increase for water (this assumes SFPUC increases the wholesale rate at the low end of its
proposed range, however a 13% increase for water is expected if SFPUC increases the wholesale
rate at the high end of the range)
•Storm drain rates increase annually by the calendar year change in the Consumer Price Index (CPI)
which is 2.6% for FY 2025 and Table 1 estimates the same CPI for future years
•Wastewater, staff originally proposed a 9% increase as shown in Table 1. In response to UAC
Commissioner feedback to consider a higher rate increase to avoid deferring sewer infrastructure
investment, staff recommends a 15% increase and presents both alternatives in the analysis
section below for the Finance Committee’s consideration.
•Rates for fiber optic services established prior to September 18, 2006 will also increase by the CPI
rate.
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Table 1: Projected Residential Rate Changes
1)Preliminary projection pending completion of a cost of service analysis.
2)Based on General Fund transfer of 11.9% of gross revenue in FY25; gas rate changes shown with
commodity rates held constant; actual gas commodity rates vary monthly
3)Storm Drain fees increase by CPI index annually per approved 2017 ballot measure (2.6% in FY
2025)
4)Based on an FY 2023 monthly residential bill of $369
For the Water Utility, this preliminary projection allows the operations reserve to remain within the
guideline range. For the Electric and Wastewater Utilities, the distribution operations reserves dropped
below guideline ranges at the end of FY 2023, and staff projects the Gas distribution operations reserve
will drop below the guideline range by the end of FY 2024. This proposal would restore the Electric
distribution operations reserves to within the guideline range by the end of FY 2025, and for the Gas and
Wastewater Utilities by the end of FY 2026.
ANALYSIS
Staff seeks input from the Finance Committee prior to finalizing the Utilities Financial Plans and developing
recommendations for rate changes that would be effective July 1, 2024. The proposed rate adjustment
recommendations, along with each utility’s Financial Plans, are currently scheduled to be presented to
the Finance Committee in April.
Every year presentations are provided to the UAC and Finance Committee with financial forecasts for the
Electric, Gas, Water, and Wastewater Collection Utilities and recommends any rate adjustments required
to maintain their financial health. These forecasts are memorialized in Financial Plans that
comprehensively discuss the outlook for each utility. Before providing recommended Financial Plans and
rate changes, typically a preliminary forecast is completed to get early feedback.
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Electric
In FY 2025 and FY 2026 the electric utility will benefit from significant one-time revenues offset by
significant capital investment expenses. Electric supply purchase costs are anticipated to be lower mainly
due to the amount of hydroelectric generation resulting from heavy rains in the winter of 2022/2023.
Staff also expects substantially higher revenues from resource adequacy and renewable energy credit
sales. On the expense side transmission costs continue to rise, and capital spending and distribution
system maintenance spending is rising due to grid modernization and fiber-related investments and an
upgrade to the Hanover Substation, some of which staff expects to recommend be offset with debt
service. On balance, however, the net effect of these various one-time costs and revenues is expected to
be positive, enabling the utility to refill reserves to target levels, especially the Hydro Rate Stabilization
Reserve. This ensures that, in the event of a significant degradation in hydro conditions, the City will not
need to use the Hydro Rate Adjuster to recover higher supply costs. In addition, an electric utility cost of
service analysis is underway, which is conducted to ensure that the cost of running the utility is allocated
to customer classes according to the cost to serve them. The cost study will incorporate the revenue and
expense data described above to determine resulting rate impacts for all customer classes.
In the longer term (FY 2027 through FY 2029) projected increases in costs related to stricter resource
adequacy requirements, increasing transmission costs, and capital investment and operational cost
increases that are expected to result in system average rate increases of 5% per year. Projected rate
changes for the median residential bill or any other customer may vary from this projection due to the
cost of service analysis currently in progress.
The current year (FY 2024) financial plan for the Electric Utility (approved April 17, 2023) is available at:
https://cityofpaloalto.primegov.com/meeting/attachment/1201.pdf?name=Attachment%20B%20-
%20FY24%20Electric%20Utility%20Financial%20Plan
Gas
Gas fund expenses are currently composed of about 60% supply and 40% distribution expenses. Most of
the supply costs are market driven pass-through charges on customers’ bills that change monthly
according to market conditions. The long-term gas rate increases shown in Table 1 will go towards funding
the distribution and capital investment costs of the Gas Utility. Throughout the pandemic, the City opted
to cap rate increases at 2% to 3% per year. This decision aimed to minimize rate increases on customers
while still aligning with reserve guidelines by scaling down the size of main replacement capital projects.
In the winter of 2022 – 2023, gas supply prices spiked to unprecedented levels and Palo Alto’s Gas Utility
reserves were drawn down to cover the difference between the Council-approved maximum gas
commodity charge and the City’s actual cost of gas. The reserves need to be replenished over time and
the Gas Utility needs to plan for a large main replacement project every other year to ensure safety and
reliability while managing ongoing construction cost inflation. Last year, a gas rate increase of 7% in FY
2025 was forecasted. However, given the continuing increases in construction costs, salaries and benefits,
overhead costs and reserve levels projected to be below minimum guideline levels at the end of the
current fiscal year (FY 2024), staff recommends a 9% overall rate increase for the Gas Utility effective July
1, 2024.
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The gas utility's transfer to the City’s General Fund is a component of the City’s gas rates. City voters first
authorized the transfer in 1950, and in November 2022 voters approved Measure L, affirming the
continuation of this practice by amending the Municipal Code. Specifically, section 2.28.185, “Natural Gas
Utility Transfer” states:
Each fiscal year the City Council may transfer from the natural gas utility to the General
Fund an amount equal to 18% of the gross revenues of the gas utility received during the
fiscal year two fiscal years before the fiscal year of the transfer. At its discretion, the City
Council may decide to transfer a lesser amount. The projected cost of the transfer shall
be included in the City’s retail natural gas rates as part of the cost of providing gas service.
Measure L authorized Council to make the transfer annually and granted Council the ability to approve a
lower amount. On 4/17/2023 Council approved the transfer of up to 15.5% of gas utility gross revenues
received during FY 2022 to the General Fund in FY 2024, or $7,707,000. In the preliminary rate projection,
the staff recommendation for the proposed FY 2025 transfer is 11.9% of the gas utility’s gross revenues
in FY 2023, or $8,960,000, which aligns with the voter-approved changes codified in PAMC 2.28.185.
Though the percentage reduced, the transfer amount remains in line with the guidance Council provided
in the FY 2024 Budget Adoption. The percentage is an anomaly as the FY 2025 transfer is based on the
unusual actual activities in FY 2023 which included the unprecedented spike in gas prices. Recommended
beyond FY 2025 is the continuation of a gradual annual transfer increase to up to 18% of gross revenues
by FY 2027. Note that revenues for FY 2026 (two fiscal years prior) and beyond are projected and will
fluctuate depending on gas commodity market prices and other factors.
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Table 2: Proposed/Projected and Alternate General Fund Transfers as % of Gross Gas Revenues Two FYs
Prior
Approved
(Council
Resolution 10101)
Proposed /
Alternate
Projected
FY 2024 FY 2025 FY 2026 FY 2027
Gas Utility Gross Revenue Two Fiscal Years Prior ($000)
$70,4142$49,721 $75,2911 $61,032 $73,618
Percent of gas utility gross revenue to transfer
11.9%16.5%15.5%18%18%18%
Transfer amount ($000)
Transfer 11.9%$8,960 $10,070 $12,674
Transfer 18%$7,707 $13,552 $10,986 $13,251
Change in Transfer from Prior Fiscal Year (%)
16%12%26%7%76%-19%21%
Table 3: Summary of Distribution Rate Changes for Transfer Proposal and Alternatives
FY 2024
(Approved)
FY 2025 FY 2026 FY 2027
Transfer 11.9%9%7%7%
Transfer 18%8%15%5%5%
The current year (FY 2024) Financial Plan for the Gas utility (approved April 17, 2023) is available at:
https://cityofpaloalto.primegov.com/meeting/attachment/1188.pdf?name=Attachment%20C%20-
%20Gas%20FY2024%20Financial%20Plan
Water
In FY 2023, customers successfully conserved water in accordance with local, regional and state calls for
water conservation. Although the drought came to an end this past winter, the weather continued to be
relatively cool and wet throughout the irrigation season and, together with continuing water
conservation, this led to reduced water sales and lower revenue for the fiscal year. At the end of FY 2023,
the transfer authorized by the City Council of $3 million from the rate stabilization reserve to the
operations reserve was completed. Despite this, the operations reserve was within the guideline range
1 Represents actual gas utility gross revenues for FY 2023.
2 There are two values for gross revenue in FY 2027 because there are two possible rate trajectories shown in Table
3 that would impact the forecasted revenue for FY 2025 (two fiscal years prior to FY 2027); the first would increase
rates by 9% in FY 2025 leading to forecasted revenues of $70.414 million and the second would increase rates by
15% in FY 2025 leading to forecasted revenues of $73.618 million.
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but near the minimum guideline level at the end of FY 2023. Expenses were higher than forecasted due
to transfers out, accounting adjustments and capital related costs. The Water Utility needs to plan for
some large capital projects in the five-year budget including two reservoir replacements and a large main
replacement every other year. A 13% increase on the distribution rates, which is equivalent to a 7% overall
system average increase on customers water rates is needed to accommodate inflating construction costs,
increases in salaries and benefits and overhead costs, and updated revenue estimates that incorporate
ongoing conservation in the short-term. On January 17, 2024, the City’s water supplier, the San Francisco
Public Utilities Commission (SFPUC), estimated a rate range for its July 1, 2024 rate increase between 4.5%
and 13.1%, an increase from the current rate of $5.21/CCF to between $5.43/CCF and $5.89/CCF. The
three main drivers of the SFPUC rate increase are cost increases, water sales volume decreases, and funds
owed on the wholesale customer balancing account. The overall system average water rate increase
including both the wholesale rate increases together with proposed distribution rate increases, is between
9% to 13% in FY 2025. Projections for FY 2026 – FY 2029 assumes inflationary increases of 3% on SFPUC’s
wholesale rate in each subsequent year.
The current year (FY 2024) financial plan for the Water Utility (approved June 19, 2023) is available at:
http://cityofpaloalto.org/civicax/filebank/documents/76983
Wastewater Collection
Last year, the Council approved the first of a series of rate increases with the understanding that the City
would accelerate the rate of sewer main replacements from 1 mile to 2.5 miles per year by FY 2026. This
is a sustainable rate of main replacement needed to replace sewer mains within, or as close as possible
to, their 100 year life expectancy. Additionally, in FY 2023 the Wastewater Utility accelerated by a year
the most expensive sewer main replacement that the utility has ever completed. This project is double
the cost of the second largest project in 2021. It was important to coordinate the work with Caltrans to
limit or avoid digging into newly-paved street on El Camino. Council approved transfers of all funds from
the CIP Reserve ($3.178 million) and from the Rate Stabilization Reserve ($0.34 million) to the operations
reserve to utilize all available funds. Staff projected that this project would bring the operations reserve
temporarily down to the minimum guideline range.
However, in FY 2023 costs were higher than forecasted, primarily for CIP-related costs and transfers out
to capital projects, and revenue was lower than forecasted (primarily capacity fee revenue, which varies
from year to year) and the operations reserve ended the year with negative $0.7M. Additionally, in the
current year, non-residential revenues are declining instead of increasing as a result of wet weather and
reductions in winter water usage.
Under consideration is deferring the five-mile main replacement planned for FY 2026 due to the low
reserve and revenue levels and the inflationary costs.
It is still important for the sustainable management of sewer main replacement to achieve replacing 2.5
miles per year. However, given the current reserve levels and revenue impacts, it will take more time than
initially projected last year in order to reach the sustainable replacement rate. If the City replaces the last
138 miles of the sewer main over the next 60 years and executes the five-mile project in FY 2026, the final
main would be replaced at the age of 108, which is 8 years past its useful life. By postponing the FY 2026
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project and adding a new one at the end of the 60-year period, the last main would be replaced at around
111 years old, exceeding its useful life by 11 years.
This will allow time for the Wastewater Utility revenues to increase in line with expected costs and for the
reserves to return to within the guideline range by the end of FY 2026. However, by deferring sewer main
replacement planned for FY 2026 to the end of the ~60 year cycle, construction cost inflation will mean
that customers have to pay market prices at that time, and the total costs may be much higher.
Wastewater treatment costs are projected to rise over the next several years due to higher capital
improvement project costs and debt service or loan repayments at the Regional Water Quality Control
Plant (RWQCP). A series of large increases in treatment costs are planned during the next five years to
address aging infrastructure at the treatment plant.
During the UAC’s January 3, 2024 meeting, a 9% rate increase in FY 2025 for the Wastewater Utility was
presented. Based upon feedback from the UAC Commissioners during the meeting, a scenario with a 15%
rate increase in FY 2025 has been molded that allows a sewer replacement project of a reduced size to
continue in FY 2026, while each option resumes the 2.5 miles per year of sewer main replacement in FY
28.
•15% rate increase in FY 25 ($7.29 per residential customer per month)
•7-9% per year rate increases in FY 26 – FY 29
•Continue with planned sewer replacement with $1M in FY 25 and $2M in FY 26
•$2M Pump station retrofit in FY 28
Table 4 shows the projected residential bill impact and each rate increase trajectory together with
estimated monthly bill and net difference in monthly bills from FY 2025 through FY 2029. The difference
between the 15% and 9% alternatives is $2.92 in FY 2025 and ranges from $1.96 to $3.46 per month for
residential customers in each subsequent year.
Table 4: Projected Residential Bill Impact, Rate Increase Percentage, Estimated Monthly Sewer Bill, and
Net Difference in Monthly Bills FY 2025 to FY 2029
Alternatives FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
7.29 5.03 5.48 5.31 5.02 Proposal: 15% in
FY 2025 15%9%9%8%7%
4.37 4.77 5.20 5.66 6.17
Estimated Bill Impact for
Residential Customers
($/mo.) and Rate
Increase Percentage (1)Alternative: 9% in
FY 2025 9%9%9%9%9%
Proposal: 15% in
FY 2025 55.93 60.96 66.44 71.75 76.77 Estimated Monthly
Sewer Bill ($)
Alternative: 9% in
FY 2025 53.01 57.78 62.98 68.64 74.81
Net Difference in
Monthly Bills ($)
15% vs. 9% in FY
2025 2.92 3.18 3.46 3.11 1.96
(1) estimated impact on residential wastewater monthly bill, which is currently $48.64
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The most recent (FY 2024) financial plan for the Wastewater Collection Utility (approved June 19, 2023)
is available at:
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-
reports-cmrs/attachments/03-07-2023-id-2302-0944-ww-financial-plan-lisa.pdf
FISCAL/RESOURCE IMPACT
Based on the preliminary rate increases as shown, the estimated distribution revenue impacts in FY 2025
would be an increase of $4.4 million in the Water Fund if the SFPUC increases the wholesale water rate
to $5.43/CCF (up to $6.3 million in the Water Fund if the SFPUC increases the wholesale water rate to
$5.89/CCF), an increase of $3.3 million in the Wastewater Collection Fund at the 15% rate increase level
in FY 2025 ($2.0 million in the Wastewater Collection Fund at the 9% rate increase level in FY 2025) and
$5.1 million in the Gas Fund. For the Electric Fund, the revenue change for FY 2025 is uncertain but is not
expected to increase significantly despite the rate changes. This is due to various factors, including
forecasted load reduction in FY 2025 and the implementation of the cost of service analysis, which is
expected to yield higher rate changes for some customer classes than others.
STAKEHOLDER ENGAGEMENT
The UAC reviewed the preliminary financial forecasts at its January 3, 2024 meeting. Input from
Commissioners was sought regarding the preliminary rate adjustment recommendations and the transfer
amount from the gas utility to the general fund for FY 2025. Commissioners asked about the effect on
Palo Alto customers from PG&E electric transmission cost increases, the marginal cost of electric
transmission, how much surplus energy Palo Alto has, and they asked for more information about each of
the electric reserve transfers. One Commissioner commented that there should be a separate fund within
each utility by cost category with no loans between funds and we should use root-cause analysis.
Commissioners asked questions about the ongoing cost of service study work on the Electric Utility.
Commissioners agreed with the recommendation to transfer 11.9% instead of 18% of Gas Utility gross
revenue to the General Fund for FY 2025. A water rate trajectory with 5% overall increases in each year
from FY 2025 through FY 2029 was presented. Some Commissioners commented that staff should
consider proposing a higher water rate increase in order to replenish reserves faster and build up CIP
reserves for future One Water Plan CIP recommendations. The water rate proposal included in this
preliminary rate report and presentation was revised. One Commissioner asked for more detail on
operating cost components. For the Wastewater Collection Utility, Commissioners suggested staff
consider a higher rate increase to avoid deferring sewer infrastructure investment, especially given the
City’s favorable rates compared to neighboring agencies. Two alternative rate increases for discussion
with the Finance Committee have been prepared. An excerpt of the minutes from the UAC’s January 3,
2024 meeting is located at the Utilities Advisory Commission website.
The UAC is scheduled to review the long-term Financial Plans and proposed rate adjustments for the
Electric, Water, Wastewater and Gas Utilities in March. The Finance Committee is tentatively scheduled
to review the long-term Financial Plans and proposed rate adjustments in April. Once the Finance
Committee has provided its recommendation, notification of any recommended Water and Wastewater
Collection rate adjustments will be sent to customers, giving them the opportunity to protest the
proposed changes as required by Article XIIID of the State Constitution (added by Proposition 218). The
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Financial Plans and proposed new rate schedules will be considered by the City Council with the FY 2025
budget, at which time the public hearing required by Article XIIID of the State Constitution will be held.
ENVIRONMENTAL REVIEW
The Finance Committee’s review of the preliminary financial projections does not meet the definition of
a project, pursuant to Section 21065 of the California Environmental Quality Act, thus no environmental
review is required.
ATTACHMENTS
No Attachments
APPROVED BY:
Dean Batchelor, Director of Utilities
Staff: Lisa Bilir, Senior Resources Planner
February 21, 2024 www.cityofpaloalto.org
PRELIMINARY FY 2025 RATECHANGES
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PRELIMINARY SYSTEM AVERAGE RATE PROJECTIONS
1)Preliminary projection pending completion of a cost of service analysis.
2)Based on general fund transfer of 11.9% of gross revenue in FY25; gas rate changes shown with commodity rates held constant;
actual gas commodity rates vary monthly
3)Storm Drain fees increase by CPI index annually per approved 2017 ballot measure (2.6% in FY 2025)
4)Based on an FY 2023 monthly residential bill of $369
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ONGOING COST CONTAINMENT
•Consistent with the Utilities Strategic Plan, cost containment
is being instituted as an ongoing priority and annual cycle
•Winter completion of preliminary out-year rate forecasts
•Review by all Divisions for alignment of multiyear strategies
•Ongoing management review of personnel actions
•Review/revision of position classifications to match evolving needs
•Addition/Deletion of positions to reflect organizational priorities
•Review/approval to fill individual position vacancies in conjunction
with ASD Budget Office and Human Resources
•Regular review of performance metrics and expenditures
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RECENTLY IMPLEMENTED COST CONTAINMENT
•Agreement with Valley Water: $250K to $1M/year + up to $16 million in funding for
reverse osmosis facility to improve recycled water quality
•Selling surplus Resource Adequacy and RECs ($20+ million/year)
•Negotiated improvements to Western hydroelectric contract ($2 million/year)
•Established a cross-functional field crew to install water, gas, and sewer services
simultaneously at new construction sites, reducing hours spent in the field; staff
time freed up to be reallocated to sewer replacements
•Implemented mobile workforce applications, reducing administrative data entry
time, freeing up staff for other work
•Scheduled larger CIP projects every other year to achieve efficiencies in project
management and also better bids / lower construction costs
•Expanding use of bank draft to reduce credit card fees, particularly for large accounts
•BAWSCA water bond refunding to achieve lower debt service payments for
wholesale customers, including Palo Alto beginning in 2023
•Negotiating layoff of transmission asset to better monetize resource
5
FUTURE POTENTIAL COST CONTAINMENT
•Switch to new customer information system with reduced support costs
•Explore prepay of renewable power purchase agreements to monetize municipal
tax-exempt debt
•Increased water and energy end use technical training for Customer Service
Representatives, reducing transferred phone calls and staff time
•Working to cluster gas main replacements to reduce mobilization costs for
construction contractors
•Evaluating in-house (rather than contractor) pipeline materials procurement to
reduce construction markups
ELECTRIC UTILITY
www.cityofpaloalto.org
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FY 2025 proposal:
•Rate changes that vary by customer class and consumption pattern resulting in an 0.5%
increase in revenue. 8% ($6.20/month) increase for the median residential customer.
•Reserves recovering from 2020-2022 drawdown
•Planned repayment to Hydroelectric Rate Stabilization and Electric Special Projects
Reserves will reduce Operations Reserves below minimum levels
•Net supply costs forecast to decline from improved hydro conditions and lower natural gas
prices
•Revenues from surplus system Resource Adequacy and Renewable Energy Certificates
further reducing supply costs
Future years:
•5% rate increase per year projected for FY 2026-FY 2029
•Issue debt for Grid Modernization by end of FY25
Electric Rate Proposal
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Electric Utility Cost Structure
Electric
Distribution costs
(in green):
$84 million
44%
Electric Supply: The cost
to buy electricity and
transport it to Palo Alto,
including operational
overhead (e.g. energy
scheduling)
Electric Supply
costs (in blue):
$107 million
56%
Electric
Distribution: The
cost to distribute
electricity within
Palo Alto, including:
maintaining and
replacing electric
infrastructure,
customer service,
billing,
administration, etc.
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LONG TERM COST TRENDS
Annualized
Increase,
FY20-FY25
Annualized
Increase,
FY25-FY29
Supply:
0.7%/yr
Distribution:
7.3%/yr
Supply:
5%/yr
Distribution:
6.6%/yr
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LONG TERM COST TRENDS: SUPPLY
Annualized Increase,
FY20-FY25
Annualized Increase,
FY25-FY29
Transmission:
6%/yr
Generation:
-3%/yr
Transmission:
5%/yr
Generation:
6%/yr
Overhead:
6%/yr
Overhead:
2%/yr
11
LONG TERM COST TRENDS: DISTRIBUTION
Annualized
Increase,
FY20-FY25:
Annualized
Increase,
FY25-FY29:
Capital:
14%/yr
Operations:
6%/yr
Capital:
10%/yr
Operations:
2.9%/yr
Debt:
100%/yr
Debt:
32%/yr
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Supply Cost Drivers
•Record high load costs in FY23, double prior 4-year average
•Surplus Resource Adequacy reducing power supply costs by
$14.4 million in FY25
•Surplus Renewable Energy Credits reducing power supply
costs by $7.6 million in FY25
•Higher hydroelectric generation projections reduced
projected supply costs by nearly $4.7 million in FY24
•Transmission costs remain high – still waiting on
transmission rate case resolution, refund, and lower rates
•Geothermal Power Purchase Agreement starting 2025,
Western Base Resource costs reduced slightly
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Distribution Cost Drivers
•Inflation
•Medical/retirement benefit costs and associated overhead
costs continue to increase
•Increased capital investment in the electric distribution
system needed due to system age
•Grid Modernization, which is currently assumed to be bond
financed
•Underground construction costs have increased substantially
•Additional contract expense for line crew until internally
staffed
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FY 2025 Preliminary: Electric Cost and Revenue Projections
Co
s
t
/
R
e
v
e
n
u
e
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Electric Supply Operating Reserve Projections
16
Electric Supply Reserve Projections
17
Electric Distribution Operating Reserve Projections
18
Electric Distribution Reserve Projections
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Electric Distribution CIP Reserves
GAS UTILITY
www.cityofpaloalto.org
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FY 2025 Projection
•9% overall rate increase to customer bills, due to 15%
distribution rate increase
•7% overall rate increase in FY 2026 and FY 2027, 6%
annually in FY 2028 and FY 2029
•Feedback requested on FY 2025 Measure L transfer
(PAMC 2.28.185)
•Supply costs expected to remain stable this winter
Preliminary Gas Rate Projections
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Preliminary Gas Projections
•FY 2023 Year-end Ops Reserve above minimum guideline level
Compared with Forecast
•+$5.6M – sales higher than forecasted; high gas consumption
•+$2.1M – purchases lower than forecasted; lower Cap-and-Trade and Carbon offset costs
•FY 2024 Year-end Ops Reserve Forecasted to be below risk assessment guideline level
•-$2.3M – FY23 Cap-and-Trade auction sales revenue transfer to reserve deferred to FY24
•-$1.4M – FY23 Carbon offset costs deferred to FY24
•FY 2025 Year-end Ops Reserve forecasted to be at risk assessment guideline level and
expected to return near target guideline level by FY 2029
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Gas Utility Basics
City of Palo Alto gas distribution system:
•20,000 meters
•205 miles of mains
•18,000 service lines
24
•About one-third to two-third of the rate is
“supply-related:” gas supply, transmission,
and environmental charges. These rates
vary monthly according to market-driven
costs that are passed directly to
customers
•The remaining portion of the rate is set
based on the City’s costs for maintaining
its gas distribution system (gas mains,
services, related equipment). These rates
are being discussed here tonight.
Gas Rate Design
FY 2023
25
Gas Utility Cost Structure (FY 2023)
Gas Distribution (in Green): The cost
to distribute gas within Palo Alto,
including: maintaining and replacing
gas infrastructure, customer service,
billing, administration, etc.
Gas Supply, Transmission, and
Environmental (in Blue):
All pass-through
-
10
20
30
40
50
60
70
80
90
2019 2025 2029
$ (M
i
l
l
i
o
n
s
)
Gas Supply , Environmental, and Transmission Costs
Capital Investment **
Gas Opera�ons
26
Long Term Cost Trends
Annualized
Increase,
FY19-FY25
Annualized
Increase,
FY25-FY29
Supply,
Transmission,
Environmental:
10%/yr*
Supply,
Transmission,
Environmental:
2%/yr*
Operations:
8%/yr
Operations:
5%/yr
Capital:
8%/yr
Capital **
11%/yr
* Forecast is uncertain and will vary with market prices
** FY25 and FY29 CIP are an average of two years due
to staggered main replacement schedule.
27
Gas Supply Cost Drivers*
•PG&E gas transmission rates
continue to rise steadily to fund
safety investments
•Insurance purchased in response
to winter 22/23 natural gas
market volatility
•Cap and Trade costs continue to
rise (as intended by design)
•Carbon Neutral Gas Plan; carbon
offset purchases
* All of the above costs are pass-through and not
included in rate increase
-
10
20
30
40
50
60
2019 2025 2029
$ (M
i
l
l
i
o
n
s
)
Debt Service Opera�ons Capital Investment
28
Gas Distribution Cost Trends
Annualized
Increase,
FY19-FY25
Gas Capital:
8%/yr*
Gas
Operations:
8%/yr
Annualized
Increase,
FY25-FY29
Gas Capital:
11%/yr*
Gas
Operations:
6%/yr
* FY25 and FY 20 CIP is an average
of two years due to staggered
main replacement schedule.
Gas Debt
Service:
0%/yr
Gas Debt
Service:
Debt Free by
FY27
29
Gas Distribution Cost Drivers
•Health, retirement, and associated
overhead costs continue to increase
•Underground construction costs have
increased substantially as well
•Continued funding for crossbore
investigations
•Increases in transfers to capital
projects fund
30
Current Gas Bill Comparisons ($/Mo. or Yr.)
Commercial
Staff is in the process of doing a more extensive review
of commercial competitiveness and will provide
updates in the future
Residential
Palo Alto median residential bill is projected to be
about 10% below PG&E’s median bill in FY 2024,
based on actuals and projected supply rates
31
Preliminary - Gas General Fund Transfer
•Measure L: 18% of gas utility gross revenues from two fiscal years
prior; Council may elect to transfer less
•Council approved transferring up to 15.5% of FY 2022 gas utility
gross revenues to the general fund in FY 2024
•Equity Transfer Alternatives:
•Transfer 11.9% (Staff Recommended): lower transfer amount
due to high commodity revenue in FY 2023, gradual transition to
18% transfer by FY 2027
•Transfer 18%: transfer full amount allowed under Measure L
18% cap
M
2M
4M
6M
8M
10M
12M
14M
16M
2022 2023 2024 2025 2026 2027 2028 2029
An
n
u
a
l
T
r
a
n
s
f
e
r
A
m
o
u
n
t
($)
Fiscal Year
Actual Transfer 11.9%Transfer 18%
32
FY 2025 General Fund Transfer Alternatives and Gas Rate Projections
Note: Revenues can fluctuate depending on gas commodity market prices
Percent of Gross Gas Utility Revenue to Transfer
Fiscal Year 2024 2025 2026 2027 2028 2029
Transfer 11.9%15.5% 11.9% 16.5% 18.0% 18.0% 18.0%
Transfer 18%15.5% 18.0% 18.0% 18.0% 18.0% 18.0%
FY 2024 Financial Plan 15.5% 11.1% 12.9% 13.1% 12.8%-
Summary of Overall Rate Changes
Fiscal Year 2024 2025 2026 2027 2028 2029
Transfer 11.9%8% 9% 7% 7% 6% 6%
Transfer 18%8% 15% 5% 5% 5% 6%
FY 2024 Financial Plan 8% 7% 5% 5% 5%-
4%5%2%
3%
3%8%
9%7%
7%6%6%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
20
1
9
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
Actual Projec�on
$ M
i
l
l
i
o
n
s
Fiscal Year
Capital
Gas Supply
Opera�ons
Transfers
Debt Service
Note:Gas Revenue Rate % Changes (excludes supply -related rate changes)
Revenue
33
Gas Cost and Revenue Projections
Transfer 11.9%
*Revenue excludes Cap-and-Trade auction
sales revenue, which goes directly to the
Cap-and-Trade reserve
**FY23 Commitments and Reappropriations
reserves balances for Operations and Capital
Investment are anticipated to be utilized in
FY24 and FY25
4%5%2%
3%
3%8%15%5%5%5%6%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
20
1
9
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
Actual Projec�on
$ M
i
l
l
i
o
n
s
Fiscal Year
Capital
Gas Supply
Opera�ons
Transfers
Debt Service
Note:Gas Revenue Rate % Changes (excludes supply -related rate changes)
Revenue
34
Gas Cost and Revenue Projections
Transfer 18%
*Revenue excludes Cap-and-Trade auction
sales revenue, which goes directly to the
Cap-and-Trade reserve
**FY23 Commitments and Reappropriations
reserves balances for Operations and Capital
Investment are anticipated to be utilized in
FY24 and FY25
35
Gas Operations Reserve Projections
Transfer 11.9%
$0
$5
$10
$15
$20
$25
2023 2024 2025 2026 2027 2028 2029
(M
i
l
l
i
o
n
s
)
Fiscal Year
Reserve (Year-End)
Reserve Maximum
Reserve Target
Reserve Minimum
Risk Assessment
-$5
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2023 2024 2025 2026 2027 2028 2029
Actual Projected
(M
i
l
l
i
o
n
s
)
Fiscal Year
Commitments &
Reappropria�ons
CIP Reserve
Supply Rate Stabiliza�on
Opera�ons Reserve
36
Gas Reserve Projections
Note: Excludes Cap and Trade Reserve
WATER UTILITY
www.cityofpaloalto.org
38
Preliminary Water Rate Projections
•Proposal FY 2025 - 13% Distribution Rate Increase
•FY 2023 year-end Operations Reserve near minimum guideline due to drought
•Projected Water Distribution Rate Changes
•Projected Total Water Rate Changes
•Commodity rate projected to increase between 4.2% and 13.1% based on latest SFPUC projection (January 2024);
highly uncertain and subject to change due to uncertain regional drought usage rebound and weather
•Water main replacement acceleration not included
•One Water supply alternatives not included
39
Preliminary Water Rate Projections
•FY 2023 Year End Ops Reserve below target
•Water sales (net of supply cost savings) $2.4M lower than forecasted
•Expenses $1.6M higher than forecasted (including transfers out, accounting
adjustment to beginning balance, CIP)
•Ops Reserve projected to be close to minimum guideline range for 4 years and return to
target guideline levels in FY 2029;
•CIP Reserve below minimum temporarily in FY 2026 and returns to within guideline range
by the end of FY 2027 due to two one-time tank replacements/rehabilitation in FY 2026
and FY 2027
•Sales forecast updated to reflect drought rebound by FY 2026 and 2-5% lower water sales
annually during the forecast period
40
WATER UTILITY BASICS
41
WATER UTILITY COST STRUCTURE
Cost to bring the
water to Palo Alto
Cost to distribute water
within Palo Alto, including:
maintaining and replacing
water infrastructure,
customer service, billing,
administration, etc.
Supply
$25.9
million
Distribu�on
$32.2
million
55%
Supply Distribu�on
-
10
20
30
40
50
60
70
80
FY 2019 FY 2025 (Projected)FY 2029 (Projected)
$ (M
i
l
l
i
o
n
s
)
Distribu�on Supply
42
LONG TERM COST TRENDS
Annualized
Increase,
FY19-FY25:
Annualized
Increase,
FY25-FY29:
Supply:
3.4%/yr
Distribution:
2.5%/yr
Supply:
2.6%/yr
Distribution:
4.6%/yr
43
WATER DISTRIBUTION COSTS
Debt Service
$3.2 million
10%
Opera�ons
$20.0 million
62%
Capital
$9.0 million
28%
-
5
10
15
20
25
30
35
40
45
FY 2019 FY 2025 (Projected)FY 2029 (Projected)
$ (M
i
l
l
i
o
n
s
)
Debt Service Opera�ons Capital
44
WATER DISTRIBUTION COST TRENDS
Annualized
Increase,
FY19-FY25:
Capital*:
2.4%/yr
Operations:
6.8%/yr
Debt
Service:
0.0%/yr
Annualized
Increase,
FY25-FY29:
Capital:
8.4%/yr
Operations:
4.2%/yr
Debt
Service:
-5.5%/yr
•Capital in 2019 includes an average of 2019 and 2020 and includes capital contribution
to the CIP Reserve in 2025 and 2029
45
WATER OPERATIONS & CAPITAL COST DRIVERS
Operating
•Drought-related water sales reductions
•Health, retirement, and associated overhead costs
continue to increase
Capital
•Construction costs have not declined
•Large one-time costs for reservoir
rehabilitation/replacement
•Planned increase in costs for generator backup at
pumping stations and for emergencies
46
WATER SUPPLY COST DRIVERS
•Water System Improvement Program (WSIP)
•2002: advocacy by wholesale customers results in AB
1823 requiring SFPUC to adopt and implement the
WSIP
•In 2010 construction began - $4.8B, one of the largest
water projects in the nation
•Level of service goal: return to service in 24 hours after
an earthquake
47
WATER SUPPLY COST DRIVERS
•WSIP spending 98.9% complete as of September 2021
•“Upcountry” system in the Sierra still needs work.
•Wholesale customers (via BAWSCA) advocating for
improvements in long-term capital planning
•Necessary and improves reliability, but supply costs will
increase in the future as a result
48
Preliminary Water Projections
Cost/Revenue
* Includes changes due to commitments/reappropriations and funds transferred to the CIP Reserve
3%1%0%0%5%5%9%9%10%9%5%
$0
$10
$20
$30
$40
$50
$60
$70
$80
FY
20
1
9
FY
20
2
0
FY
20
2
1
FY
20
2
2
FY
20
2
3
FY
20
2
4
FY
20
2
5
FY
20
2
6
FY
20
2
7
FY
20
2
8
FY
20
2
9
Actuals Projected
M
i
l
l
i
o
n
s
Capital*
Opera�ons
Water Supply
Debt Service
Revenue
Rate Changes
49
WATER OPERATIONS RESERVE PROJECTIONS
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
FY 2023
Actual
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
M
i
l
l
i
o
n
s
Reserve
Maximum/Minimum
Reserve Target
Reserve (Year-End)
Risk Assessment
50
WATER CIP RESERVE PROJECTIONS
0
2
4
6
8
10
12
14
16
18
20
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
M
i
l
l
i
o
n
s
($)
Capital
Reserve
Ending
Balance
Min/Max
Guideline
51
WATER RESERVE PROJECTIONS
$0
$5
$10
$15
$20
$25
$30
$35
$40
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Actual Projec�ons
M
i
l
l
i
o
n
s
Unassigned
Rate Stabiliza�on
Reserve
Opera�ons
Reserve
Capital Reserve
Commitments
(Non-CIP)
CIP
Reappropria�ons
& Commitments
52
WATER SUPPLY RATES FORECAST
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
20
0
9
20
1
0
20
1
1
20
1
2
20
1
3
20
1
4
20
1
5
20
1
6
20
1
7
20
1
8
20
1
9
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
SF
P
U
C
W
h
o
l
e
s
a
l
e
W
a
t
e
r
R
a
t
e
($/CC
F
)
Fiscal Year
Actual/Projected SFPUC Wholesale Rates
Palo Alto Redwood
City Menlo Park
(Cal Water)
Mountain
View Hayward Santa Clara
0
50
100
150
200
250
300
M
o
n
t
h
l
y
B
i
l
l
s
($)
Low (4 CCF)Med (8 CCF)High (18 CCF)Average at 8 CCF
Bold indicates 100% of Water Supply from SFPUC
53
MONTHLY WATER BILL COMPARISON
Single-Family Residential
Palo Alto is 8% above
comparison city average
Palo Alto Redwood
City
Menlo Park
(Cal Water)Mountain
View Hayward Santa Clara
0
500
1000
1500
2000
2500
3000
3500
4000
M
o
n
t
h
l
y
B
i
l
l
s
($)
12 CCF 64 CCF 300 CCF Average at 64 CCF
Bold indicates 100% of Water Supply from SFPUC
54
MONTHLY WATER BILL COMPARISON
Commercial Palo Alto is 2% above
comparison city average
WASTEWATER COLLECTION
www.cityofpaloalto.org
56
Wastewater Alternatives
•Staff Recommendation: 15% rate increase in FY 25, $7.29 per residential customer per
month
•Continue with planned sewer replacement with $1M in FY 25 and $2M in FY 26
•$2M Pump station retrofit in FY 28
•Alternative: 9% rate increase in FY 25, $4.37 per residential customer per month
•Defer FY 25 and FY 26 of planned sewer replacement
•Defer pump station retrofit
•Both alternatives resume 2.5 miles per year of sewer main replacement in FY 28
Alternative Rate Projections:
57
Wastewater Alternatives & Residential Bill Impacts
58
Wastewater Projections
•FY 2023 Year End Ops Reserve below minimum guideline and below zero ($0.7M) due to
o $3M – higher CIP-related (including admin costs)
o $0.5M – revenue lower than forecasted
o $0.3M – higher transfers out to capital projects
•Sanitary Sewer Replacement 31 moved up a year from FY 2024 to FY 2023 due to coordination with
CalTrans; $9.3M in the reappropriations reserve for this project
•Current year revenue projected to be $0.7M below projection due to non-residential revenue
declines as a result of wet weather and reductions in winter water usage
•Defer construction in FY 25 and FY 26 of planned sewer replacement and pump station retrofit;
•Reductions are temporary as the fund increases revenues to sustainable level
59
Wastewater Utility Basics
•Treatment Plant has five partners: Stanford, East Palo Alto, Los Altos
Hills, Los Altos, and Mountain View
•Wastewater drains from partner systems through the City of Palo
Alto Collection System, and into the City of Palo Alto Regional Water
Quality Control Plant (RWQCP) for treatment
•City of Palo Alto Utilities Department manages collection system,
Public Works manages the RWQCP
Treatment
$10,784 M
(43%)
Collec�on
$14,269 M
(57%)
Treatment Collec�on
60
Wastewater Utility Cost Structure
Palo Alto’s share of the cost
to treat sewage at Palo Alto’s
Regional Water Quality
Control Plant
Cost to collect sewage within
Palo Alto, including: maintaining
and replacing sewer
infrastructure, customer service,
billing, administration, etc.
-
5
10
15
20
25
30
35
40
2019 2025 (Projec�on)2029 (Projec�on)
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Collec�on Treatment
61
Long Term Cost Trends
Annualized
Increase
FY 19-25
Treatment:
4.6%/yr
Collection:
7.1%/yr
Annualized
Increase
FY 25-29
Treatment:
3.2%/yr
Collection:
15.1%/yr
Note: Collection
Capital reflects
Two-Year
Average
62
Treatment Cost Drivers
•Regional Water Quality Control Plant needs rehabilitation
•Long Range Facilities Plan completed in 2012, currently being
updated including partner cost-share re-evaluation
•Near Term Major Projects:
•Sedimentation Tank ($19.4M)
•Outfall Pipeline ($17.8M)
•Laboratory/Operations Center ($48.5M)
•Secondary Treatment Upgrades ($193M)
•Applying for grant funding from Valley Water (estimated
$11.2M available to Palo Alto from 2024 through 2033);
•Forecast assumes $7.4M available from FY 26 – FY 29
63
Wastewater Collection Costs
Collec�on
Opera�ons
$7,823 M
(55%)
Collec�on
Capital
$6,446 M
(45%)
Collec�on Opera�ons
Collec�on Capital
-
5
10
15
20
25
2019 2025 2029
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Collec�on Opera�ons
64
Wastewater Collection Cost Trends
Annualized
Increase
FY19-25
Annualized
Increase
FY25-29
Collection
Capital:
0.8%/yr
Operations:
6.0%/yr
Collection
Capital:
32.4%/yr
Operations:
2.6%/yr
Reflects Reduced-
Size Sewer
Replacement in FY
2025 and FY 2026
Note: Capital &
Debt Service
reflects two-year
average
65
OPERATIONS/CAPITAL COST DRIVERS
Operational Costs
•Salary and benefit costs for existing staff
•3-4% annual inflation for other operating costs
•Revenue reduction expected in current year $700K,
estimated recovery by FY 2027
•Lower connection, capacity fees and interest income
Capital Costs
•Underground construction cost increases
•Allocated cost increases
•Sanitary Sewer Replacements at the rate of 2.5 miles per
year after fund recovers
66
Wastewater Reserve Projections
-$2
$0
$2
$4
$6
$8
$10
$12
$14
2022 2023 2024 2025 2026 2027 2028 2029
Actual Projected
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Rate Stabiliza�on
CIP
Reappropria�ons &
Commitments
CIP Reserve
Opera�ons Reserve
11%7%0%
3%3%9%15%9%
9%
8%7%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Actual Projected
Co
s
t
/Re
v
e
n
u
e
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Collec�on Capital & Debt *
Collec�on Opera�ons
Treatment Capital & Debt
Treatment Opera�ons
Revenue
67
Preliminary Wastewater Cost and Revenue Projections
* Includes changes due to
commitments/reappropriations
and funds transferred to the CIP
Reserve
68
Wastewater Operations Reserve Projections
-$2
$0
$2
$4
$6
$8
$10
$12
2022 2023 2024 2025 2026 2027 2028 2029
Actual Projected
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Reserve (Year-End)
Reserve Min/Max
Reserve Target
Risk Assessment
69
Wastewater CIP Reserve Projections
$-
$2
$4
$6
$8
$10
$12
2025 2026 2027 2028 2029
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
CIP Reserve (Year-End)Reserve Min/Max
11%7%0%
3%3%9%9%9%
9%9%
9%
$0
$5
$10
$15
$20
$25
$30
$35
$40
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Actual Projected
Co
s
t
/Re
v
e
n
u
e
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Collec�on Capital & Debt *
Collec�on Opera�ons
Treatment Capital & Debt
Treatment Opera�ons
Revenue
70
ALTERNATIVE Preliminary Wastewater Projections
* Includes changes due to
commitments/reappropriations
and funds transferred to the CIP
Reserve
9% in FY25
71
ALTERNATIVE: Wastewater Operations Reserve Projection
9% in FY25
-$2
$0
$2
$4
$6
$8
$10
$12
2022 2023 2024 2025 2026 2027 2028 2029
Actual Projected
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
Reserve (Year-End)
Reserve Min/Max
Reserve Target
Risk Assessment
72
ALTERNATIVE: Wastewater CIP Reserve Projection
9% in FY25
$-
$2
$4
$6
$8
$10
$12
2025 2026 2027 2028 2029
$ (M
i
l
l
i
o
n
s
)
Fiscal Year
CIP Reserve (Year-End)Reserve Min/Max
73
WASTEWATER MONTHLY RESIDENTIAL BILL ($) NOVEMBER 2023
Palo Alto is 26% below
comparison city average
74
WASTEWATER MONTHLY NON-RESIDENTIAL BILL ($)
NOVEMBER 2023
Commercial: Palo Alto is 9% higher than
comparison city average
Restaurant: Palo Alto is 7% below
comparison city average
75
Summary of Proposal and Alternative Residential Bill Impacts