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Home My WebLink AboutStaff Report 227-08City City of Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL ATTN:FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT: UTILITIES DATE: SUBJECT: MAY 13, 2008 CMR: 227:08 UTILITIES ADVISORY COMMISSION RECOMMENDATION TO APPROVE PROPOSED INCREASES IN UTILITY ELECTRIC, WATER, GAS, AND WASTEWATER CONNECTION FEES AND WATER AND WASTEWATER CAPACITY FEES RECOMMENDATION Staff and the Utilities Advisory Commission (UAC) recommend that the Finance Committee recommend that the City Council adopt the attached resolution to: a) Approve utility connection fee increases in electric schedule E-! 5, gas schedule G-5, water schedule W-5, and wastewater schedule S-5 effective August 1, 2008; b) Approve 100% capacity fee increases in water schedule W-5 and wastewater schedule S- 5 effective August 1, 2008 and;. c) Approve a 50% increase in capacity fees in water schedule W-5 and wastewater schedule S-5 to take effect on July 1, 2009 for FY 2009-10, and a 40% increase in capacity fees in schedule W-5 and S-5 to take effect on July 1, 2010 for FY 2010-11. BACKGROUND The Water, Gas, Wastewater and Electric Utilities have established fees to recover the costs associated with the connection of new customers to the existing systems. There are two fees charged, a connection fee and a capacity fee. The connection fee recovers the capital cost of building new facilities to connect the customer to the system. These fees are collected for electric, water, gas, and wastewater utilities. In addition to the connection fees, the water and wastewater utilities collect capacity fees for adding new water and wastewater loads to existing water distribution and wastewater collection systems. The capacity fees are calculated as an equity (buy-in) charge for adding the new loads and help pay for improving the water distribution and wastewater collection systems to meet current and future demands. CMR: 227:08 Page 1 of 4 Per the April 25, 2005 Finance Committee’s recommendation to periodically review the capacity fees, the Utilities Department contracted with the consulting firm of Black and Veatch to perform a study of the City’s water and wastewater capacity fees. Black and Veatch has completed its study of the City’s capacity fees and compared the City’s existing fees to other similarly sized public utilities. DISCUSSION Capaci~ Fees On July 1,2005, the City instituted utility capacity fees for connecting to the water distribution and wastewater collection systems in conformance with California Government Code Section 66000. The capacity fees were set up for new developments to buy into existing water distribution and wastewater collection systems, and to recover the proportionate cost of system improvements required to serve the new customer or increased loads of existing customers. These are one time fees paid before the water or wastewater services are upgraded or installed. Utility capacity fees received are placed in a special fund and used exclusively for water and sanitary sewer capital improvement projects. The equity method (buy-in method) of calculating capacity fees is widely accepted for cities with nearly built out utility systems such as Palo Alto. Black and Veatch’s study (see Attachment I) determined that current capacity fees should be increased by $15,150 for a typical new single family house. However, staff recommends a phase-in of calculated capacity fee increases over several years to manage the impact of the increase to developers (see table below). Staff proposes an initial increase of the capacity fees of 100%, followed by a 50% increase in the second year and an approximately 40% increase in the third year to reach the Black and Veatch capacity fee recommendations. Staff also recommends setting up a long term contract with Black and Veatch to update the capacity fees study prior to each capacity fee increase. Residential capacity fees for water and sewer are proposed to increase as follows: Typical new single family home Typical single family home remodel FY2008-09 FY2009-10 FY2010-11 Current lStyear 2nayear 3rdyear $4,750 $9,500 $14,250 $19,900 $1,050 $2,!00 $3,150 $4,127 These larger capacity fees will mainly impact developers of new residential single-family and multi- family dwellings, and hotel construction. Commercial construction is impacted to a far lesser extent than residential construction because the number of fixture units (sinks, toilets bathtubs, showers), which is a factor in determining the amount of the fee, are fewer per square foot of development. All property owners are given capacity fee credits for any existing water and sewer services connected to their properties. The Black and Veatch capacity fee study looked at implementing capacity fees for new gas services. In its review of gas distribution companies, Black and Veatch could not find other gas utilities charging capacity fees for new gas services, therefore, staff recommends against charging gas capacity fees at this time. CMR: 227:08 Page 2 of 4 Connection Fees The Utilities Department provides new service connections to its distribution network to meet new customers’ needs for gas, water, wastewater and electric services. Staff periodically performs a cost of service study to determine if connection costs (service installation, inspection and engineering) of these new connections are fully recovered by the connection fees. The recent staff review of these costs indicates that current fees do not fully recover Utilities’ direct and indirect costs for installing services and an increase in fees is necessary to more fully achieve total cost recovery. The connection fees were updated to include the increased costs associated with wages, material, and transportation. Connection fees increased, on average, 8% over the previous fees established in 2005. In addition to updating the connection fees to take into account inflation and wage increases, staff recommends charging 1.5 times the standard fee for work required to be performed outside of regular work hours. To implement these fee increases, Council needs to adopt a resolution in a public meeting. Gov. Code 66016 requires that prior to increasing the fee, the City must hold at least one public meeting to listen to any oral or written presentation on the fee. After the resolution is adopted by Council, the City must wait no less than 60 days before putting the new fees into effect. RESOURCE IMPACT The estimated first year increase in annual capacity fee revenues is approximately $500,000 in the Water Fund and $200,000 in the Wastewater Fund. The estimated increase in annual connection fee revenues is approximately $90,000 in the Gas Fund, $50,000 in the Water Fund, $20,000 in the Wastewater Fund and $12,000 in the Electric Fund. POLICY IMPLICATIONS These recommendations do not represent a change in current City policies. ENVIRONMENTAL REVIEW Approval of this contract does not require review under the California Environmental Quality Act (CEQA) because it does not meet the definition of a "project" pursuant to California Public Resources Code Section 21065. CMR: 227:08 Page 3 of 4 ATTACHMENTS Attachment A: Proposed Utility Rate Schedule G-5 Attachment B: Proposed Utility Rate Schedule W-5 Attachment C: Proposed Utility Rate Schedule S-5 Attachment D: Proposed Utility Rate Schedule E-15 Attachment E: Redlined Utility Rate Schedule G-5 with Proposed Changes Attachment F: Redlined Utility Rate Schedule W-5 with Proposed Changes Attachment G: Redlined Utility Rate Schedule S-5 with Proposed Changes Attachment H: Redlined Utility Rate Schedule E-15 with Proposed Changes Attachment I: Development of Water, Wastewater, and Gas Capacity Fees; report prepared by Black and Veatch Attachment J: Draft Resolution Amending Utility Rate Schedules E-15, G-5, W-5, AND S-5 Attachment K: Draft Utilities Advisory Committee Meeting Minutes of April 2, 2008 PREPARED BY:Roland Ekstrand, Senior Project Engineer ~ Patrick Valath, Senior Electric Project Engineery Roger Cwiak, WGW Engineering Manager REVIEWED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: , Assistant Director, Utilities Engineering Director of Utilities Deputy City Managers CMR: 227:08 Page 4 of 4 ATTACHMENT GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE O-5 TERRITORY: Inside the incorporated limits of the City of Palo Alt0 and on land owned or leased by the City of Palo Alto. FEES: All fees must be paid prior to the scheduling of any construction. Depending on material availability and scheduling constraints, utility service will be installed between 30 and 40 days following receipt of full payment. Any work required to be done outside of regular work hours due to traffic, existing conditions or applicants requirements shall be charged at 1.5 times the stated fee. The following fees are regularly updated, therefore all billings are only valid for 90 days from date of billing. 1. DISTRIBUTION SYSTEM EXTENSION CHARGE: Charge per lineal foot ............................................................................$93.00/ft. 2. CONNECTION CHARGE FOR SERVICE INSTALLED ON EXISTING MAIN: Size 1-inch connection ..............................................................................................................$2,766.00 2-inch connection ................................................................................................................4,!56.00 Above 2-inch connection .........................................................................................Utility Estimate Excess Length Fee: An additional charge ($20.00/foot for a 1-inch connection and $22.00/foot for a 2- inch connection) will apply to an extension greater than forty feet from the street property line to the gas meter location, measured along a line perpendicular to the street property line. This fee also applies when contractor provides trenching and backfill for new 1" and 2" gas piping installed by City crews. Service Location: The service line will be installed along the shortest, most practical route, as determined by The Utilities Department (from the gas main in the adjoining street, alley, lane road, or easement to the nearest suitable meter location at the building or structure). 3. METER CHARGES: 250 CFH House meter .........................................................................................................$ 347.00 250 CFH Curb meter ...........................................................................................................$ 813.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. G-5-4 dated 7-1-2006 CiTY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No. G-5-1 GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE G-5 400 CFH House meter .........................................................................................................$ 468.00 400 CFH Curb meter ...........................................................................................................$ 934.00 630 CFH House meter .........................................................................................................$ 697.00 630 CFH Curb meter ...........................................................................................................$ 975.00 1000 CFH Diaphragm - Commercial house meter ............................................................1,665.00 1100-1500 CFH Rotary-Commercial House meter ............................................................1,735.00 2000 CFH Rotary-Commercial ...........................................................................................1,999.00 3000 CFH Rotary-Commercial ...........................................................................................2,140.00 5000 CFH Rotary-Commercial ...........................................................................................2,983.00 7000 CFH Rotary-Commercial ...........................................................................................3,625.00 11000 CFH Rotary-Commercial .........................................................................................4,997.00 16000 CFH Rotary-Commercial .........................................................................................6,300.00 Electronic Volume Corrector System .................................................................................5,808.00 AM_R Encoder Receiver Transmitter- diaphragm meter .................................................................81.00 AMR Encoder Receiver Transmitter- rotary meter ......................................................................130.00 Vent line for gas regulator ...............................................................................108.00 Bollard (to protect gas meter) installation Fee .............................................................................162.00 Other Meter Sizes .....................................................................................................Utility Estimate ADDITIONAL METERS ON CONNECTION: (Applies to small meters up to 400 SCFH)Per Meter With new connection .............................................................................................................$86.00 On existing metered connection .............................................................................................286.00 Charges for meters above 400 SCFH, will be based on the Utility’s estimate. SERVICE RELOCATION: Service riser relocation .........................................................................................................$834.00 Service riser relocations will only be performed on one inch (1") and larger polyethylene (PE) pipe services. All "other material pipe" services must be replaced from the main to the meter at the fees listed in Section B (2) of this rate schedule. Curb Meter- Riser relocation on existing 1" pe pipe ...........................................................$594.00 Curb Meter- Riser relocation on same alignment of existing service ....................................965.00 Curb Meter- New service from main to house ....................................................................1,408.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. G-5-4 dated 7-1-2006 CITY OF F~ALO ALTO UTILITIES Effective 7-1-2008 Sheet No. G-5-2 GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE 0-5 6. RELOCATION OF FACILITIES: Approved relocation of service and other facilities will be done at the cost of the person requesting the re-location. Deposit of estimated cost is required before relocation work begins. After the City completes the work, a final billing based on actual costs wil! be sent to the person requesting the relocation of facilities. C. OTHER CONDITIONS: 1. SERVICE CHARGES: Additional service connections are available with payment of additional service connection charges shown in Section B. 03)Replacement of service connections made necessary because of ordinary wear and deterioration will be made without charge. However, if the need for replacement arises due to meeting an increase in load, the new service will be charged as a new service under Section B. (c)In commercial or industrial areas where a surface meter installation is impractical, meters may be placed in underground vaults. Vaults must be provided and installed by the owner in accordance with the gas utility’s specifications. The vault lid sections shall not exceed 70 pounds. All lids shall be centered above the gas meter to allow visibility of the meter face for meter reading purposes. 2. UNDER UNUSUAL CONDITIONS: A condition which, in the opinion of the Engineering Manager, Water-Gas- Wastewater will result in a cost higher than the fees in Section B, will be classified as unusual. The charge for an unusual installation wiil be based on the Engineering Manager, Water-Gas-Wastewater estimate of the total costs of all materials, labor, and other costs incidental to the installation. In the event gas service to a premises is requested and insufficient capacity exists to provide such service, the applicant shall bear the total cost for designing and enlarging the distribution system to accommodate serving the applicant. The Engineering Manager, Water-Gas-Wastewater may require the applicant to make arrangements for the design and CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No.G-5-4 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No. G-5-3 GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE G-5 construction of said expansion in accordance with City standards and specifications. Alternatively, the Engineering Manager may elect for City forces or contractors to design and install respectively such facilities at the applicant’s expense. Full credit to the applicant will be provided for any over sizing or extra facilities insta!led to meet service demands above the specific capacity needs of the applicant as defined in the Utility’s Rules and Regulations. 3. MASTER METERED GAS SERVICE For master meter services using high volumes of gas, the applicant must provide all required meters, sending units, regulators, and other necessary flow control equipment as specified by the City and approved by the Engineering Manager, Water-Gas-Wastewater. D. OTHER SERVICE CHARGES: 1. OTHER SERVICE FEES: The following fees will apply to utility work performed by outside contractors: (A)Engineering Service Fee .......................................................................................$132.00/hr 03)Inspection Service Fee .........................................................................................$102.00/hr CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No, G-5-4 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No. G-5-4 ATTACHMENT B WATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 A. TERRITORY: Inside the incorporated limits of the City of Palo Alto and on land owned or leased by the City of Palo Alto. B. FEES: All fees must be paid prior to the scheduling of any construction. Depending on material.availability and scheduling constraints, utility service will be installed between 30 and 40 days following receipt of full payment. Any work required to be done on outside of regular work hours due to traffic, existing conditions or applicants requirements shall be charged at 1.5 times the stated fee. The following fees are regularly updated, therefore all billings are only valid for 90 days from date of billing. 1. DISTRIBUTION SYSTEM EXTENSION CHARGE o For City Standard 6" Main, charge per foot ................................................................ SERVICE CONNECTION CHARGES: Category 1 - Domestic Water Service $111.00 Size Amount 1-inch connection 1-1/2 inch connection 2-inch connection 4-inch connection 6-inch connection Category_ 2 - Fire Service Size 4-inch connection 6-inch connection 8-inch connection $3,797.00 4,535.00 5,681.00 8,381.00 9,379.00 Amount $7,176.00 7,941.00 8,564.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-’I dated 7-’1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No. W-5-1 WATER SERVICE CONNECTION FEES UT!LITY RATE SCHEDULE W-5 Category. 3 - Additional Domestic or Irrigation Services For service installations connecting to a pre-existing, larger service. 1-inch connection 1-1/2 inch connection 2-inch connection 4-inch connection $1,747.00 2,095.00 2,383.00 5,043.00 Category 4 - Combination Domestic Water Service and Fire Service For requests of combination domestic and fire water services, two service connection charges will apply: the charge for connection of a fire service and the charge for domestic service installation connection to a larger service. Category 5 - Master Water Service Approval by the Director of Utilities is required for a connection that serves domestic water service and fire protection through a detector meter. The charge for master water service will be based on the Engineering Manager’s, Water-Gas-Wastewater, estimate of the total costs of all materials, metering not listed in Section B(4), labor and other costs incidental to the installation. For service connections of 4-inch through 8-inch sizes and meter sizes of 3-inch through 8-inch, the new owner must provide and install a concrete vault with meter reading lid covers to house meters and other required control equipment in accordance with the Water Utility’s specifications. An approved bacldlow prevention device with bypass assemblies must be provided by owner on all fire services. 3. METER CHARGES: 5/8 Inch x 3/4 Inch ..............................................................................................................$222.00 1 Inch .................................................................................................................................276.00 1 ½ Inch .................................................................................................................................492.00 2 Inch disk .................................................................................................................i .......601.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-2 WATERSERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 2 Inch turbine (irrigation only) ..........................................................................................724.00 3 Inch compound ............................................................................................................!,882.00 3 Inch turbine (irrigation only) .......................................................................................1,163.00 4 Inch ..............................................................................................................................2,429.00 4 Inch turbine (irrigation only) .......................................................................................1,487.00 6 Inch ..............................................................................................................................4,138.00 AMR Encoder Receiver Transmitter .........................................................................................108.00 4.ADDITIONAL METERS ON CONNECTION: With new connection .......................................................................................................$321.00 On existing connection .........................................................................................................783.00 5. RELOCATION OF FACILITIES: Approved relocation of service, hydrants, or other facilities will be done at the cost of the person requesting the re-location. Deposit of estimated cost is required before relocation work begins. After the City completes the work, a final billing based on actual costs will be sent to the person requesting the relocation of facilities. 6.CAPACITY FEES: Domestic: 5/8 Inch x 3/4 Inch ...........................................................................................................$2,400.00 1 Inch ..............................................................................................................................4,500.00 1 ½ Inch ..............................................................................................................................9,000.00 2 Inch ............................................................................................................................18,000.00 3 Inch ........................................................................................................By estimate at $60/FU 4 Inch ........................................................................................................By estimate at $60/FU 6 Inch ........................................................................................................By estimate at $60~U Note: FU is fixture unit (1 FU=I 5gpd) Fire Service Capaci _ty Fees: 2 Inch ...............................................................................................................................$750.00 4 Inch ............................................................................................................................$9,000.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-3 WATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 6 Inch ..........................................................................................................................$22,530.00 8 Inch ..........................................................................................................................$43,080.00 10 Inch ..........................................................................................................................$69,510.00 If a customer is upgrading the capacity of an existing service, then the capacity charge wi!l be the difference between the new service size and the existing service size. C. OTHER CONDITIONS 1.SERVICE CHARGES: (A)Additional Service connections are available with payment of additional service connection charge as shown in Section B. (B)Replacement of service connection made necessary because of ordinary wear and deterioration will be made without charge. Replacement due to inadequacy because of additional demand or load will be charged as a new service connection. 2. INSTALLATION UNDER UNUSUAL CONDITIONS: (A) (B) Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater will result in a cost higher than the charges set forth in Section B will be classified as unusual. The charge for an unusual installation will be based on Engineering Manager, Water-Gas- Wastewater’s estimate of the total costs ofalI materials, labor, and other costs incidental to the installation. In the event water service to a premises is requested and insufficient capacity exists to provide such service, the applicant shall bear the total cost for enlarging the distribution system to accommodate serving the applicant. The Engineering Manager, Water-Gas-Wastewater may require the applicant to make arrangements for the design and construction of said expansion in accordance with City standards and specifications. Alternatively, the Engineering Manager, Water-Gas-Wastewater may elect for City forces or contractors to design and install respectively such facilities at the applicants’ expense, 3. EXCEPTIONS: (A)Water Service Areas 3 & 4, connections served directly from supply main: The distribution system charges (Section B) will be based on a maximum frontage of 660 feet. This exception CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-4 WATERSERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 applies to single applications for service and does not apply to subdivisions or tracts. The subdivision developer will furnish and install the water system at his or her expense and in accordance with City’s specifications. D. OTHER SERVICES: 1. MANIFOLD: (A) 2 Inch ...........................................................................................................................$612.00 2.ABANDONMENT: (A) Small service less than 2 Inch ......................................................................................$952.00 (B) Large service more than 2 Inch ...................................................................................1,383.00 3. METER INSTALLATION: Charges for meter installations by third parties, i.e. contractors, homeowners, etc. 5/8 Inch to 2 Inch ...................................................................................................................$76.00 3 Inch to 6 Inch .......................................................................................................................228.00 4. FIRE HYDRANT: (A) Install New Hydrant without Lateral .........................................................................$2,830.00 (B) Install New Hydrant with Lateral ................................................................................9,785.00 (C) Relocation behind curb (up to 5 feet) .........................................................................4,261.00 Relocations more than 5 feet will require a New Lateral and the existing Lateral will be disconnected and abandoned at the main. 5. OTHER FEES:Per Hour The following fees will apply to utility work performed by outside contractors: (A) Engineering Fee ...........................................................................................................$132.00 (B) Utility Inspection Fee .....................................................................................................I02.00 lena} CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-5 WASTEWATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE S-5 TERRITORY: Inside the incorporated limits of the City of Palo Alto and on land owned or leased by the City of Palo Alto. B8 FEES: All fees must be paid prior to the scheduling of any construction. Depending on material availability and scheduling constraints, utility service will be installed between 30 and 40 days following receipt of full payment. Any work required to be done outside of regular work hours due to traffic, existing conditions or applicants requirements shall be charged at 1.5 times the stated fee. The following fees are regmlarlv updated, therefore all billings are only valid for 90 days. from date of billing. 1.COLLECTION SYSTEM EXTENSION CHARGE: For City Standard 8" Main Charges Per Foot Wastewater Service Areas 1 & 2 ......................................................................................$119.00 Wastewater Service Areas 3 & 4 ........................................................................................140.00 2.CONNECTION CHARGES: 4-inch connection ...........................................................................................................$5,876.00 6-inch cormection .............................................................................................................6,388.00 4-Inch lateral depth more than 6 feet but less than 10 feet ..............................................6,476.00 6-inch latera! depth more than 6 feet but less than 10 feet ...............................................7,332.00 Sewer laterals over 25 feet in length will be charged for the additional footage at a rate of$106/Ln, Ft. for 4 inch connections and $110/Ln. Ft for 6 inch connections. Specia! arrangements must be made to provide for the cost of a connection larger than six-inch, The City will estimate the cost which will serve as the basis for a customer deposit. Upon receipt of this deposit the City will install the connection and the customer shall pay the actual cost net of the deposit. o RELOCATION OF FACILITIES: Approved relocation of service, and other facilities will be done at the cost of the person requesting the re-location. Deposit of estimated cost is required before relocation work begins. After the City CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. S-5-3 dated 7-1-2005 CITY OF PALO ALTOUTILITIES Effective 7,1-2008 Sheet No. S-5-1 WASTEWATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE S-5 completes the work, a final billing based on actual costs will be sent to the person requesting the relocation of facilities. 4.CAPACITY CHARGES: 4-inch connection .................................................$5,000.00 for first 50 FU, $100/FU additional 6-inch connection .....................................................................................By estimate at $100/FU 8-inch connection .....................................................................................By estimate at $100FFU Note: FU is fixture unit (1 FU = 15 gpd). If a customer is upgrading the capacity of an existing service, then the capacity charge will be the difference between the new service size and the existing service size. OTHER CONDITIONS 1. SERVICE CHARGES: (A)Additional service connections are available with payment of additional service connection charge as shown in Section B2. Replacement of service connections made necessary because of ordinary wear and deterioration will be made without charge. Replacement due to inadequacy because of increased demand or load will be charged as a new connection. 2.INSTALLATION UNDER UNUSUAL CONDITIONS: (A)Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater will result in a cost higher than the charges set forth in B above will be classified as unusua!. The charge for an unusual installation will be based on the Engineering Manager’s estimate of the total costs of all materials, labor, and other costs incidental to the installation. In the event wastewater service to a premises is requested and insufficient capacity exists to provide such service, the applicant shall bear the total cost for flow monitoring the existing main to determine remaining capacity, design .of new sewer main and construction cost for enlarging the collection system to accommodate serving the applicant. The Engineering Manager, Water-Gas-Wastewater may require the applicant to make arrangements for the design and construction of said expansion in accordance with City standards and CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. S-5-3 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No. S-5-2 WASTEWATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE S-5 specifications. Alternatively, the Engineering Manager, Water-Gas-Wastewater may elect for City forces or contractors to design and install respectively such facilities at the applicants expense. 3.PUMPING PLANTS: Where pumping facilities are needed to drain wastewater into the wastewater collection system, the capital cost of construction of the pumping plant and the on-going plant operation and maintenance costs wilt be at the expense of the developer. D.OTHER SERVICE CHARGES: 1.INSTALL MANHOLE: (A) Depth less than 6 feet ............................................................................................$6,011.00 (B) Depth more than 6 feet ............................................................................................7,889.00 2. ABANDONMENT: (A) Sewer Lateral ........................................................................................................$!,270.00 3. OTHER SERVICE FEES: The following fees will apply to utility work performed by outside contractors: (A) Engineering Service Fee (Per Hour) ........................................................................$132.00 (B) Inspection Service Fee (Per Hour) .............................................................................102.00 {End} CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. S-5-3 dated 7-’1-2005 C}TY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No. S-5-3 ELECTRICSERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 A. APPLICABILITY: This schedule applies to all connections, expansions, and upgrades to the City’s electric distribution system except those that serve street lighting or traffic signals. B. TERRITORY: All territory within the incorporated limits of the City and land owned or leased by the City. C. ADVANCE ENGINEERING FEES Advance engineering fees must be paid to start the engineering process and are non-refundable. The engineering fees will be credited against the estimated job cost prior to the collection of construction fees. Advance engineering fees will not be collected for service connections that do not require a job estimate. ESTIMATED CONSTRUCTION AND SERVICE CONNECTION FEES All estimated on-site, off-site distribution system, and service connection fees must be paid prior to the scheduling of any construction or connections to the City’s electrical distribution system. E. SUMMARY OF FEES: The following schedule is for summary purposes. Section F herein describes the specific fee and conditions in detail. 1. UNDERGROUND SYSTEMS: (A) Service Cormections Which Do Not Require an Estimate Service Connection Fees (1) Residential .....................................................................................................$450 (2) Residential: Rear Easement .............................................................................$940 (3) Multi-Family/Commercial/Industrial 200A, Single Phase or Less .................$720 (4) Multi-Family/Commercial/Industrial Greater Than 200A .........By Estimate CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-’15-1 dated 7-’1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-1 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 (Continued) (B)Service Connections That Require Estimates Advance Engineering Fees (1) Residential ...................................................................................................$300 (2) Multi-Family/Commercial/Industrial 200A or Less .......................................$600 (3) Multi-Family/Commercial/Industrial Greater Than 200A .................By Estimate On-Site (1) (2) Distribution System Fees Residential ...................................................................................................N/A Multi-Family/Commercial/Industrial ............................................By Estimate Off-Site Distribution System Fees (!) Residential .........................................................................................By Estimate (2) Multi-Family/Commercial/Industrial ............................By Estimate OVERI~AD SYSTEMS: All service connection fees are based on a 100-foot service length. If additional service length is required there may be additional fees. Service Connection Fees (!) Residential ...................................................................................................$620 (2) Multi-Family/Commereial/Industria! 200A or Less ..............................$900 (3) Multi-Family/Commercial/Industrial Greater Than 200A .................By Estimate 3. TEMPORARY SERVICES: Temporary service charges 200A maximum, 250 V maximum, 3-wire services 100’ in length are shown in the following table. Fees for services requiring greater voltage or capacity will be determined by estimate. Overhead Service Connection Fees (1) Residential ...................................................................................................$840 (2) Multi-Family/Commercial/Industrial 200A or Less $840 (3) Multi-Family/Commercial!industrial Greater Than 200A ...................By Estimate CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-2 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-2 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E- 15 (Continued) F.FEES: 1. Underground Service Connection Fees (1) Residential ...................................................................................................$675 (2) Multi-Family/Commercial/Industrial 200A or Less ................................$675 (3) Multi-Family/Commercial/Industrial Greater Than 200A ...................By Estimate UNDERGROUND SYSTEMS Connection fees for new or replacement services to the underground electrical system consist of one or more of the following: Service Connection Fee, On-site Distribution System Fee and!or Off-site Distribution System Fee. (A)Service Connection Fees: Where the City connects any Customer to the electrica! distribution system, a service connection fee shall be charged. A one-time waiver of this fee is granted for services connected during the construction of an underground conversion district. (1) Residential - Single Family These fees apply to development in which electric metering will be on a single-family basis. (a) For a 250 volt maximum, 200 ampere maximum service ............................... $450 (b) For any connection requiring greater capacity the fee shal! be the estimate of the installation cost or $450 whichever is greater. (c) For a 250 volt maximum, 200 ampere max service from a rear easement $940 (d) For any connection requiring greater capacity the fee shall be the estimate of the installation cost or $720, whichever is greater. (2) Commercial/Industrial These fees apply to commercial, industrial, multi-family residential services. (a)For a 250 volt maximum, 200 ampere maximum service ............................... $720 (b)For any connection requiring greater capacity, the fee shall be the estimate of the installation costs or $720, whichever is greater. CITY.OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-3 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-3 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 (Continued) Where the City installs, or will install, electric meters in a new development (single family, multi-family, or commercial!industrial inclusive) consisting of 30 (thirty) units or more, the connection fee shall include the estimate of the cost to furnish all electric meters with AMR-ERTs. (B) On-site Distribution System Fees: Where the City installs or will install the underground conductors (primary or secondary), switches or transformers in and on facilities provided by the developer within the boundaries of a sub-division or other development, an on-site distribution system fee shall be charged. The fee shall be the estimate of the installation costs. (C) Off-Site Distribution System Fees: Where the City installs or will install an elecWic distribution system, system extension, or system reinforcement outside the boundaries of a sub-division or other development to be served, an off-site distribution system fee shall apply. The fee shall be the estimate of the installation costs. 2. OVERHEAD SYSTEMS Connection fees shall apply for all new services or for service upgrades exceeding 200 amperes. Overhead services that do not require the addition of poles to the system will be the standard service for residential areas not in Underground Districts. Underground Service will be required for a!! new industrial, commercial, and multi-family residential construction. No new construction that wi!! require new poles to be added to the system shall be permitted except with the approval of the Electrical Engineering Manager and only after a finding that an underground service is not feasible. Replacement of existing overhead services with new overhead services wil! be allowed so long as the new service does not exceed the size of the existing service or 200 Amperes for single-family residential or 400 amperes for all other, whichever is greater. Replacement of 250 volt, 200 ampere maximum, 3-wire overhead residential service drops to existing structures will be done by the City at no cost to the customer providing such a replacement does not require relocation of the connection at the pole or mid-span, does not require relocation at the house by more than 10 feet, and does not exceed 100 feet in length. CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-4 dated 7-~1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-4 ELECTRIC SERVICE CONNECTION FEES (A)Overhead Service Connection Replacement Fees: (1) (2) UTILITY RATE SCHEDULE E-15 (Continued) Residential -Singie Family These fees apply to development in which electric metering will be on a single-family basis. (a)For a 250 Volt, 200 ampere, 3 wire, 100 feet in length Maximum services .......................................................$620 Commercial/Industrial These fees apply to commercial, industrial, multi-family residential services. (a)For a 250 Volt, 200 ampere, 3 and 4 wire services, 100 feet in length maximum service ....................................................$900 Replacement of Overhead Services of greater voltage, other than described above when done for the customer benefit, or when required due to damage by customer, shall be the estimate of the installation costs. 3.TEMPORARY SERVICE A fee shall be charged to connect temporary service. The Customer shall furnish all equipment up to the designated point-of-service. This point-of-service will usually be the weatherhead for overhead temporary services in overhead distribution areas or the secondary connection box for underground temporary services in underground distribution system areas. The City wil! not supply overhead temporary services in underground service areas or underground temporary services in overhead distribution system areas. The City will supply: overhead conductors and meter for overhead temporary services; and meter only for underground temporary services. The City will connect both overhead and underground services to the City’s electrical distribution system. Any additional off-site facilities or work required shall be provided and removed by the utility at the customer’s expense. (A) Overhead Temporary Service Fees: (1)For a 250 volt, 200 ampere, 3 wire service, 100 feet in length maximum service ................................................................$840 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-5 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-5 ELECT~C SER~CE CONNECTION FEES UTILITY RATE SCHEDULE E- 15 (Continued) (2)The fees for a temporary service of greater length and capacity or voltage shall be the estimate of the installation and removal costs or $840, whichever is greater. (B)Underground Temporary Service Fees: (1)For a 250 volt, 200 ampere, 3-wire maximum service, If a service box is available at the property ...................................................$675 (2)If a service box is not available at the property, the charges to provide a service box will be at the customer’s expense. (3)The fees for a temporary service of greater length and capacity or voltage shall be the estimate of the installation or removal costs or $675, whichever is greater. G. NOTES: 1. These fees apply to all vacant land except where the fees are recorded as previously paid. The Customer is responsible for the installation of all equipment from the facility to the designated point-of-service. For underground systems, this includes conduit and conductors. For overhead systems, because the point-of-service is the weatherhead or point of attachment to the facility, this includes the mast or riser and all conductors therein. When the City replaces a service, the Customer is obligated to accept a shutdown of service during regular working hours. The time of the shutdown shall be agreed upon as mutually acceptable. When, for the convenience of the Customer, the shutdown is during other than regular working hours, it shall be done entirely at the Customer’s expense. The Customer shall pay the entire cost of the overtime labor, not the incremental cost. 4.The City can generally provide service availability from 30 to 45 days after all fees are paid except when long lead-time equipment or materials are required. Consult the City for estimated lead-times. o The City cannot be held liable for delays in service connection caused by conditions beyond its control, including, but not limited to, delays in the arrival of equipment such as transformers, switches and cable. ~nd} CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-6 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-6 ATTACHMENT GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE G-5 A. TERRITORY: Inside the incorporated limits of the City of Palo Alto and on land owned or leased by the City of Palo Alto. B. FEES: All fees must be paid prior to the scheduling of any construction. Depending on material availability and scheduling constraints, utility service will be installed between 30 and 40 days following receipt of full payment. An,(work required to be done outside of regular work hours due to traffic, existing conditions or applicants requirements shall be charged at 1.5 times the stated fee. The following fees are regularly updated, therefore all billings are only valid for 90 days from date of billing. 1. DISTRIBUTION SYSTEM EXTENSION CHARGE: Charge per lineal foot ............................................................................$93~86.00/ft. 2. CONNECTION CHARGE FOR SERVICE INSTALLED ON EXISTING MAIN: Size 1-inch connection .........................................................................................................$2,.76696g.00 2-inch connection ........................................................................................................4 l_d~56-3-,gSg.00 Above 2-inch connection .........................................................................................Utility Estimate Excess Length Fee: An additional charge ($20gg.00/foot for a 1-inch connection and $22g0.00/foot for a 2- inch connection) will apply to an extension greater than forty feet from the street property line to the gas meter location, measured along a line perpendicular to the street property line. This fee also applies when contractor provides trenching and backfill for new 1" and 2" gas piping installed by City crews. Service Location: The service line will be installed along the shortest, most practical route, as determined by The Utilities Department (from the gas main in the adjoining street, alley, lane road, or easement to the nearest suitable meter location at the building or structure). 3. METER CHARGES: 250 CFH House meter .........................................................................................................$ 347.00 250 CFH Curb meter ............................................................................................................$ 813.00 400 CFH House meter .........................................................................................................$ 468.00 400 CFH Curb meter ....................................................................................................... .....$ 934.00 630 CFH House meter .........................................................................................................$ 697.00 630 CFH Curb meter ............................................................................................................$ 975.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. G-5-3 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. G-5-3 GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE 0-5 i000 CFH Diaphragm - Commercial house meter .............................................................1,665.00 1100-1500 CFH Rotary-Commercial Mouse meter .......................................................1,735.___~.00 2000 CFH Rotary-Commercial ......................................................................................1,999~.00 3000 CFH Rotary-Commercial ...................................................................................21404--,746.00 5000 CFH Rotary-Commercial ......................................................................................2,983~4-74.00 7000 CFH Rotary-Commercial ...................................................................................3,625~7444.00 11000 CFH Rotary-Commercial .................................................................................~M-6.00 16000 CFH Rotary-Commercial .................................................................................6 3_~__00-37766.00 Electronic Volume Corrector System ............................................................................5,808~-g.00 A_LM~ Encoder Receiver Transmitter - diaphragm meter .................................................................81 ................................................................. 75.00 AMR Encoder Receiver Transmitter - rotary meter ...................................................................... 130-140.00 Vent line for gas regulator ............................................................................... 108-1-00.00 Bollard (to protect gas meter) installation Fee ............................................................................. 162440.00 Other Meter Sizes ....................................................................................................Utility Estimate ADDITIONAL METERS ON CONNECTION: (Applies to small meters up to 400 SCFH)Per Meter With new colmection ..........................................................................................................$8~6g0.00 On existing metered connection ........................................................................................28644-5.00 Charges for meters above 400 SCFH, will be based on the Utility’s estimate. 5. SERVICE RELOCATION: Service riser relocation ....................................................................................................$834-7~.00 Service riser relocations will only be performed on one inch (1") and larger polyethylene (pe) pipe services. All "other material pipe" services must be replaced from the main to the meter at the fees listed in Section B(2) of this rate schedule. Curb Meter- Riser relocation on existing 1" pe pipe ......................................................$59~4g40.00 Curb Meter- Riser relocation on same alignment of existing service ...............................965g-7g.00 Curb Meter- New service from main to house ...............................................................1,408___~.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No.G-5-3 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. G-5-3 GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE G-5 6. RELOCATION OF FACILITIES: Approved relocation of service and other facilities will be done at the cost of the person requesting the re-location. Deposit of estimated cost is required before relocation work begins. After the City completes the work, a final billing based on actual costs will be sent to the person requesting the relocation of facilities. C. OTHER CONDITIONS: 1. SERVICE CHARGES: Additional service connections are available with payment of additional service connection charges shown in Section B. Replacement of service connections made necessary because of ordinary wear and deterioration will be made without charge. However, if the need for replacement arises due to meeting an increase in load, the new service will be charged as a new service under Section B. (c)/_n commercial or industrial areas where a surface meter installation is impractical, meters may be placed in underground vaults. Vaults must be provided and installed by the owner in accordance with the gas utili~s specifications. The vault lid sections shall not exceed 70 pounds. AII lids shall be centered above the gas meter to allow visibility of the meter face for meter reading purposes. 2. UNDER UNUSUAL CONDITIONS: A condition which, in the opinion of the Engineering Manager, Water-Gas- Wastewater will result in a cost higher than the fees in Section B, will be classified as unusual. The charge for an unusual installation will be based on the Engineering Manager, Water-Gas-Wastewater estimate of the total costs of all materials, labor, and other costs incidental to the installation. In the event gas service to a premises is requested and insufficient capacity exists to provide such service, the applicant shall bear the total cost for designing and enlarging the distribution system to accommodate serving the applicant. The Engineering Manager, Water-Gas-Wastewater may require the applicant to make arrangements for the design and construction of said expansion in accordance with City standards and specifications. Alternatively, the Engineering Manager may elect for City forces or contractors to design and install respectively such facilities at the applicant’s expense. Full credit to the applicant will be provided for any over sizing or extra facilities installed to meet service demands above the specific capacity needs of the applicant as defined in the Utility’s rules and Regulations. CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. G-5-3 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. G-5-3 GAS SERVICE CONNECTION FEES UTILITY RATE SCHEDULE G-5 ~MASTER METERED GAS SERVICE For master meter services using high volumes of gas, the applicant must provide all required meters, sending units, reg’ulators, and other necessary flow control equipment as specified by the City and approved by the Engineering Manager, Water-Gas-Wastewater. D. OTHER SERVICE CHARGES: !. OTHER SERVICE FEES: The following fees will apply to utility work performed by outside contractors: (A)EnNneering Service Fee ..................................................................................$13286.00/hr (B)Inspection Service Fee .....................................................................................$102___~.00/hr CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. G-5-4 dated 7-1-200~CITY OF PALO ALTO UTILITIES Effective 7-1-2008g006 Sheet No. G--5-44 ATTACHMENT F WATERSERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 A. TERRITORY: Inside the incorporated limits of the City of Palo Alto and on land owned or leased by the City of Palo Alto. B. FEES: All fees must be paid prior to the scheduling of any construction. Depending on material availability and scheduling constraints, utility service will be installed between 30 and 40 days following receipt of full payment. Any work required to be done on outside of regular work hours due to traffic, existing conditions or applicants requirements shall be charged at 1.5 times the stated fee. The followin~ fees are regularly updated, therefore a!l billings are only valid for 90 days from date of billing. 1.DISTRIBUTION SYSTEM EXTENSION CHARGE For City Standard 6" Main, charge per foot SERVICE CONNECTION CHARGES: Category_ 1 - Domestic Water Service ................................................................ $1114-~.00 Size Amount 1-inch connection 1-1/2 inch connection 2-inch connection 4-inch connection 6-inch connection .................................................................................................. $3,797(~48.00 .................................................................................................. 4,535___~.00 .................................................................................................. 5,6814~7-1-5.00 Categor~ 2 - Fire Service Size 4-inch connection 6-inch connection 8-inch connection Amount .................................................................................................. 7,94__Z044.00 CITY OF PALO ALTO UTILITIES Issued by the City Counci! Supersedes Sheet No. W-5-1 dated 7-1-2006-20~CITY OF PALO ALTO UTILITIES Effective 7-1-2008g006 WATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 Catego _ry 3 - Additional Domestic or Irrigation Services For service installations connecting to a pre-existing, larger service. 1-inch connection 1-1/2 inch connection 2-inch connection 4-inch connection .................................................................................................. $1,.747M~9.00 ..................................................................................................2,3834-,-,-,-,-,-,-,-,-~0.00 ..................................................................................................5.0434¢N4-.00 Catego .ry 4 - Combination Domestic Water Service and Fire Service For requests of combination domestic and fire water services, two service connection charges will apply: the charge for connection of a fire service and the charge for domestic service installation connection to a larger service. Category 5 - Master Water Service Approval by the Director of Utilities is required for a connection that serves domestic water service and fire protection through a detector meter. The charge for master water service wil! be based on the Engineering Manager’s, Water-Gas-Wastewater, estimate of the total costs of all materials, metering not listed in Section B(4), labor and other costs incidental to the installation. For service connections of 4-inch through 8-inch sizes and meter sizes of 3-inch through 8-inch, the new owner must provide and install a concrete vault with meter reading lid covers to house meters and other required control equipment in accordance with the Water Utility’s specifications. An approved backflow prevention device with bypass assemblies must be provided by owner on all fire services. 3. METER CHARGES: 5/8 Inch x 3/4 Inch ..........................................................................................................$2226-3.00 1 Inch ...........................................................................................................................276444-.00 ! ½ Inch ...........................................................................................................................492996.00 2 Inch disk ..............................................................................................................................601 500.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-2g WATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 2 3 3 4 4 6 AMR 108-14t0.00 Inch turbine .....................................................................................................................724.00 Inch compound .................................................................................................................1,882 2,272.00 Inch turbine (irrigation onl?) .......................................................................................1,!63.00 Inch .....................................................................................................................2 4_~_9_29~80.00 Inch turbine (irrigation only) .......................................................................................1,487.00 Inch ........................................................................................................................4,13__~894N-.00 EncoSer Receiver Transmitter ......................................................................................... 4.ADDITIONAL METERS ON CONNECTION: With new connection On existing connection ................................................................................................. $321998.00 ................................................................................................... 7837g-5.00 5.RELOCATION OF FACILITIES: Approved relocation of service, hydrants, or other facilities will be done at the cost of the person requesting the re-location. Deposit of estimated cost is required before re!ocation work begins. After the City completes the work, a fial billing based on actual costs will be sent to the person requesting the relocation of facilities. 6.CAPACITY FEES" Domestic: 5/8 Inch x 3/4 Inch ..................................................................................................$2 4_,_@~004@00.00 1 Inch .....................................................................................................................4,500gr240.00 1 ½ Inch ..............................................................................................................................a,,500.00 2 Inch .......................................................................................................................... 9,000.00 2 Nch ............................................................................................................................18,000.00 3 ~ch ..................................................................By est~ate at $60~U 4 Inch ................................................................By estimate at $60~U 6 Inch ................................................................By est~ate a $60~U CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-3g WATERSERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 Note: FU is fixture unit (1 FU=15gpd) Fire Service Capacity Fees: 2 Inch ...............................................................................................................................$750.00 4 Inch ...................................................................................................................$ 9 0__~008r~50.00 6 Inch ...............................................................................................................$22 5304-9070.00 8 Inch ...............................................................................................................$43_L9~0~ 0~00.00 10 Inch ..........................................................................................................................$69,510.00 If a customer is upgrading the capacity of an existing service, then the capacity charge will be the difference between the new service size and the existing service size. C. OTHER CONDITIONS 1. SERVICE CHARGES: (A) (B) Additional Service connections are available with payment of additional service connection charge as shown in Section B. Replacement of service connection made necessary because of ordinary wear and deterioration will be made without charge. Replacement due to inadequacy because of additional demand or load will be charged as a new service connection. 2.INSTALLATION UNDER UNUSUAL CONDITIONS: (A)Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater will result in a cost higher than the charges set forth in Section B will be classified as unusual. The charge for an unusual installation will be based on Engineering Manager, Water-Gas- Wastewater’s estimate of the total costs of all materials, labor, and other costs incidental to the installation. In the event water service to a premises is requested and insufficient capacity exists to provide such service, the applicant shall bear the total cost for enlarging the distribution system to accommodate serving the applicant. The Engineering Manager, Water-Gas-Wastewater may require the applicant to make arrangements for the design and construction of said expansion in accordance with City standards and specifications. Altematively, the Engineering Manager, Water-Gas-Wastewater may elect for City forces or contractors to design and install CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-4g WATERSERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 respectively such facilities at the applicants’ expense. 3. EXCEPTIONS: Water Service Areas 3 & 4, connections served directly from supply main: The distribution system charges (Section B) will be based on a maximum frontage of 660 feet. This exception applies to single applications for service and does not apply to subdivisions or tracts.(B) The subdivision developer will furnish and install the water system at his or her expense and in accordance with City’s specifications. D. OTHER SERVICES: 1.MANIFOLD: (A) 2 Inch .....................................................................................................................$612g6-7-.00 2.ABANDONMENT: (A) Small service less than 2 Inch ................................................................................$95288g.00 (B) Large service more than 2 Inch .............................................................................1,3839g-t-.00 3. METER INSTALLATION: Charges for meter installations by third parties, i.e. contractors, homeowners, etc. 5/8 Inch to 2 Inch ...................................................................................................................$76.00 3 Inch to 6 Inch .......................................................................................................................228.00 4. FIRE HYDRANT: (A) Install New Hydrant without Lateral .............................................................. (B) Install New Hydrant with Lateral .....................................................................9,785.0006t=8g (C) Relocation behind curb (up to 5 feet) ...........................................................4,261.003,945.15 Relocations more than 5 feet will require aNew Lateral and the existing Lateral will be disconnected and abandoned at the main. CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-5g WATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE W-5 5.OTHER FEES:Per Hour The following fees will apply to utility work performed by outside contractors: (A) Engineering Fee .......................................................................................................$13286.00 03) Utility Inspection Fee .................................................................................................1028-3-.00 {End} CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. W-5-5 dated 74-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No. W-5-6g ATTACHMENT G WASTEWATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE S-5 Ao TERRITORY: Inside the incorporated limits of the City of Palo Alto and on land owned or leasedby the City of Palo Alto. FEES: All fees must be paid prior to the scheduling of any construction. Depending on material availability and scheduling constraints, utility service will be installed between 30 and 40 days following receipt of full payment. Any work required to be done outside ofre~mlar work hours due to traffic, existing conditions or applicants requirements shall be charged at 1.5 times the stated fee. The following fees are regularly updated, therefore all billings are only valid for 90 days from date of billing. 1.COLLECTION SYSTEM EXTENSION CHARGE: For City Standard 8" Main Charges Per Foot Wastewater Service Areas 1 & 2 ................................................................................$! 1944-0.00 Wastewater Service Areas 3 & 4 ..................................................................................!404-30.00 2.CONNECTION CHARGES: 4-inch connection .....................................................................................................$5,87__f!6470.00 6-inch connection ....................................................................................................6,388gO6g.O0 4-Inch lateral depth more than 6 feet but less than 10 feet ..................................... ..............6,476 5,997.00 6-inch lateral depth more than 6 feet but less than !0 feet ....................................................7,332 6,789.00 Sewer laterals over 25 feet in length will be charged for the additional footage at a rate of $106-14N)/Ln. Ft. for 4 inch connections and $110-1404/Ln. Ft for 6 inch connections. Special arrangements must be made to provide for the cost of a connection larger than six-inch. The City will estimate the cost which will serve as the basis for a customer deposit. Upon receipt of this deposit the City will install the connection and the customer shall pay the actual cost net of the deposit. 3.RELOCATION OF FACILITIES: CITY OF PALO ALTO UTILITIES Issued by the City Counci! Supersedes Sheet No. S-5-3 dated 7_9-1-20052002 CITY OF PALO ALTO UTILITIES Effective 7-1-2008g00g Sheet No. S-5-1g WASTEWATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE S-5 Approved relocation of service, and other facilities wil! be done at the cost of the person requesting the re-location. Deposit of estimated cost is required before relocation work begins. After the City completes the work, a final billing based on actual costs will be sent to the person requesting the relocation of facilities. 4.CAPACITY CHARGES: 4-inch connection .....................................$5.000gg00.00 for first 50 FU, $100g0 ~U additional 6-inch connection .................................................................................By estimate at $100g0~U 8-inch connection .................................................................................By estimate at $100g0/FU Note: FU is fixture unit (1 FU = 15 gpd). Ifa customer is upgrading the capacity of an existing service, then the capacity charge will be the difference between the new service size and the existing service size. C. OTHER CONDITIONS 1. SERVICE CHARGES: (A)Additional service connections are available with payment of additional service connection charge as shown in Section B2. Replacement of service connections made necessary because of ordinary wear and deterioration will be made without charge. Replacement due to inadequacy because of increased demand or load will be charged as a new connection. 2.INSTALLATION UNDER UNUSUAL CONDITIONS: (A)Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater will result in a cost higher than the charges set forth in B above will be classified as unusual. The charge for an unusual installation will be based on the Engineering Manager’s estimate of the total costs of all materials, labor, and other costs incidental to the installation. (B)In the event wastewater service to a premises is requested and insufficient capacity exists to provide such service, the applicant shall bear the total cost for flow monitoring the existing main to determine remaining capacity, design of new sewer main and Construction cost for CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. S-5-3 dated 79-1-2005200-3 CITY OF PALO ALTO UTILITIES Effective 7-1-2008900-5 Sheet No. S-5-2g WASTEWATER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE S-5 enlarging the collection system to accommodate serving the applicant. The Engineering Manager, Water-Gas-Wastewater may require the applicant to make arrangements for the design and construction of said expansion in accordance with City standards and specifications. Alternatively, the Engineering Manager, Water-Gas-Wastewater may elect for City forces or contractors to design and install respectively such facilities at the applicants expense. 3.PUMPING PLANTS" Where pumping facilities are needed to drain wastewater into the wastewater collection system, the capital cost of construction of the pumping plant and the on-going plant operation and maintenance costs will be at the expense of the developer. D.OTHER SERVICE CHARGES: 1.INSTALL MANHOLE: (A) Depth less than 6 feet ...................................................................................$6.01 lg-,-,-,-,-,-,-,-,-,~6.00 03) Depth more than 6 feet ......................................................................................7,889g0-5.00 2. ABANDONMENT: (A) Sewer Lateral ..................................................................................................$1,270~4-74.00 3.OTHER SERVICE FEES: The following fees will apply to utility work performed by outside contractors: (A) Engineering Service Fee (Per Hour) ....................................................................$132____~.00 (B) Inspection Service Fee (Per Hour) .........................................................................1028-3.00 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. S-5-3 dated Z9-1-20052-002 CITY OF PALO ALTO UTILITIES Effective 7-1-2008g00g Sheet No. S-5-3~ A I I AL;I’IMI"NI rl ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E- 15 APPLICABILITY: This schedule applies to all connections, expansions, and upgrades to the City’s electric distribution system except those that serve street lighting or traffic signals. B. TERRITORY: All territory within the incorporated limits of the City and land owned or leased by the City. C.ADVANCE ENGINEERING FEES Advance engineering fees must be paid to start the engineering process and are non-refundable. The engineering fees will be credited against the estimated job cost prior to the collection of construction fees. Advance engineering fees will not be collected for service connections that do not require a job estimate. D. ESTIMATED CONSTRUCTION AND SERVICE CONNECTION FEES All estimated on-site, off-site distribution system, and service connection fees must be paid prior to the scheduling of any construction or connections to the City’s electrical distribution system. E. SUMMARY OF FEES: The following schedule is for summary purposes. Section F herein describes the specific fee and conditions in detail. 1. UNDERGROUND SYSTEMS: (A) Service Connections Which Do Not Require an Estimate Service Connection Fees (1) Residential .....................................................................................................$4t-0450 (2) Residential: Rear Easement .............................................................................$6-7-0940 (3) Multi-Family/Commercial/Industrial 400A200A, Single Phase or Less ........ (4) Multi-Family/Commercial/Industrial Greater Than 400A .................200A CITY OF PALO ALTO UTILITIES Issued by the City Council ~Sutoersedes Sheet No. E-15-1 dated 7-1-CITY OF PALO ALTO UTILITIES Effective 7-1--2-0062008 Sheet No.E-15-1 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 (Continued) (B)Service Connections That Require Estimates Advance Engineering Fees (1) Residential ...................................................................................................$300 (2) Multi-Family/Commercial/Industrial 40OA4O0200A or Less ........................$600 (3) Multi-Family/Commercial/Industrial Greater Than 400A-400200A .. By Estimate On-Site Distribution System Fees (1) Residential ...................................................................................................N/A (2) Multi-FamiIy/Commercial!Industrial ~ ............................By Estimate Off-Site Distribution System Fees (1) Residential .........................................................................................By Estimate (2) Multi-Family/Commercial/Industrial ~ ............................By Estimate 2. OVERHEAD SYSTEMS: All service connection fees are based on a !00-foot service length. If additional service length is required there may be additional fees. Service Connection Fees (1) Residential ...................................................................................................$gg0620 (2) Multi-Family/Commercial!Industrial 400A~00200A or Less ........................ (3) Multi-FamiIy/Commercial!industrial Greater Than 400A-400200A .. By Estimate 3. TEMPORARY SERVICES: Temporary service charges 200A maximum, 250 V maximum, 3-wire services 100’ in length ,oA44 are shown in the following table. Fees for services requiting greater voltage or capacity will be determined by estimate. Overhead Service Connection Fees (1) Residential ...................................................................................................$7-90840 (2) Multi-Family/CommercialfIndustrial-40OA4g0200A or Less.,.~ ............ (3) Multi-Family/CommercialfIndustrial Greater Than 400A--400200A .. By Estimate CITY OF PALO ALTO UTILITIES Issued by the City Council ~.~=.’q.n,=r~,=n’~,~ Sheet No. E-15-2 dated 7-1-CITY OF PALO ALTOUTILITIES Effective 7-1-g0062008 Sheet No.E-15 -2 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 (Continued) FEES: 1. Underground Service Connection Fees (1) Residential ...................................................................................................$6-30675 (2) Multi-Family/Commercial!Industrial 400A400200A or Less .............. (3) Multi-Family/Commercial/Industrial Greater Than 400&-4O0200A .. By Estimate UNDERGROUND SYSTEMS Connection fees for new or replacement services to the underground electrical system consist of ............. Distribution Systemone or more of the following: Service Connection Fee, On-site r~-~,,,÷:~ ¯¯¯ Fee and/or Off-site Distribution System Fee. (A) Service Connection Fees: Where the City cormects any Customer to the electrical distribution system, a service connection fee shall be charged. A one-time waiver of this fee is granted for services connected during the construction of an underground conversion district. (1) Residential - Single Family These fees apply to development in which electric metering will be on a single-family basis. (a) For a 250 volt maximum, 200 ampere maximum service ............................... $4-t-045___Q0 Co) For any connection requiring greater capacity the fee shal! be the estimate of the installation cost or $450 44G-whichever is greater. (c)For a 250 volt maximum, 200 ampere max service from a rear easement $67-094___Q0 (d)For any connection requiring greater capacity the fee shal! be the estimate of the installation cost or $720 ~ whichever is greater. (2) Commercial/Industrial These fees apply to commercial, industrial, multi-family residential services. (a)For a 250 volt maximum, 200_400-ampere maximum service ......................... (b)For any connection requiring greater capacity, the fee shall be the estimate of the installation costs or $720 670, whichever is greater. CITY OF PALO ALTO UTILITIES Issued by the City CounciI ~Supersedes Sheet No. E-15-3 dated 7-’f-CITY OF PALO ALTO UTILITIES Effective 7-1-g0062008 Sheet No.E-IS-3 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 (Continued) Where the City installs, or will instal!, electric meters in a new development (sinRle family, multi-family, or commercial/industrial inclusive) consisting of 30 (thirty) units or more, the connection fee shall include the estimate of the cost to furnish all electric meters with AMR-ERT’ s. (B) On-site Distribution System Fees: Where the City installs or will install the underground conductors (primary or secondary), switches or transformers in and on facilities provided by the developer within the boundaries of a sub-division or other deve!opment, an on-site distribution system fee shall be charged. The fee shall be the estimate of the installation costs. (C) Off-Site Distribution System Fees: Where the City installs or will install an electric distribution system, system extension, or system reinforcement outside the boundaries of a sub-division or other development to be served, an off-site distribution system fee shall apply. The fee shall be the estimate of the installation costs. 2. OVERHEAD SYSTEMS Connection fees shall apply for al! new services or for service upgrades exceedin~ 200 amperes. Overhead services that do not require the addition of poles to the system will be the standard service for residential areas not in Underground Districts. Underground Service will be required for all new industrial, commercial, and multi-family residential construction. No new construction that will require new poles to be added to the system shall be permitted except with the approval of the Electrical Engineering Manager and only after a finding that an underground service is not feasible. Replacement of existing overhead services with new overhead services will be allowed so long as the new service does not exceed the size of the existing service or 200 Amperes for single-family residential or 400 amperes for all other, whichever is greater. Replacement of 250 volt, 200 ampere maximum. 3-wire overhead residential service drops to existing structures will be done by the Ci_ty at no cost to the customer providing such a replacement does not require relocation of the connection at the pole or mid-span, does not require relocation at the house by more than 10 feet. and does not exceed 100 feet in length. CITY OF PALO ALTO UTILITIES Issued by the City Counci! Supersedes Sheet No. E-15-4 dated 7-7-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-4 ELECTRIC SERVICE CONNECTION FEES (A)Overhead Service Connection Replacement Fees: (1) UTILITY RATE SCHEDULE E-15 (Continued) Residential - Single Family These fees apply to development in which electric metering will be on a single-family basis. (a)For a 250 Volt, 200 ampere, 3 wire, 100 feet in length Maximum services .......................................................$gg0620 CITY OF PALO ALTO UTILITIES Issued by the City Council Supercedes Sheet No. E-15-4 dated 7-1-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No.E-15-4 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E- 15 (Continued) (2) Commercial/Industrial These fees apply to commercial, industrial, mOil-family residential services. (a)For a 250 Volt, 200-400 ampere, 3 and 4 wire services, 100 feet in length maximum service ....................................................$840900 (3)Replacement of Overhead Services of greater voltage, other than described above when done for the customer benefit, or when required due to damage by customer, shall be the estimate of the installation costs. 3. TEMPORARY SERVICE A fee shall be charged to connect temporary service. The Customer shall furnish all equipment up to the designated point-of-service. This point-of-service will usually be the weatherhead for overhead temporary services in overhead distribution areas or the secondary connection box for underground temporary services in underground distribution system areas. The City will not supply overhead temporary services in underground service areas or underground temporary services in overhead distribution system areas. The City will supply: overhead conductors and meter for overhead temporary services; and meter only for underground temporary services. The City will connect both overhead and underground services to the City’s electrical distribution system. Any additional off-site facilities or work required shal! be provided and removed by the utility at the customer’s expense. _(A) Overhead Temporary Service Fees: (1)For a 250 volt, 200 ampere, 3 wire service, 100 feet in length maximum service ................................................................$7-90840 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-5 dated 7-1-2006 CITY OF PALO ALTO UTILITIES Effective 7-1-2008 Sheet No.E-15-5 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E- 15 (Continued) (2)The fees for a temporary service of greater length and capacity or voltage shall be the estimate of the installation and removal costs or $840 7-90, whichever is greater. CITY OF PALO ALTO UTILITIES Issued by the City Council Supercedes Sheet No. E-’15-5 dated 7-!-2005 CITY OF PALO ALTO UTILITIES Effective 7-1-2006 Sheet No.E-15-5 ELECTRIC SERVICE CONNECTION FEES UTILITY RATE SCHEDULE E-15 (Continued) I (B)Underground Temporary Service Fees: (t)For a 250 volt, 200 ampere, 3-wire maximum service, If a service box is available at the property ...................................................$6-3067___~5 (2)If a service box is not available at the property, the charges to provide a service box will be at the customer’s expense. (3)The fees for a temporary service of greater length and capacity or voltage shall be the estimate of the installation or removal costs or $675 6-34, whichever is greater. G. NOTES: 1. These fees apply to all vacant land except where the fees are recorded as previously paid. The Customer is responsible for the installation of all equipment from the .facility to the designated point-of-service. For underground systems, this includes conduit and conductors. For overhead systems, because the point-of-service is the weatherhead or point of attachment to the facility, this includes the mast or riser and all conductors therein. When the City replaces a service, the Customer is obligated to accept a shutdown of service during regular working hours. The time of the shutdown shall be agreed upon as mutually acceptable. When, for the convenience of the Customer, the shutdown is during other than regular working hours, it shall be done entirely at the Customer’s expense. The Customer shall pay the entire cost of the overtime labor, not the incremental cost. 4.The City can generally provide service availability from 30 to 45 days after all fees are paid except when long lead-time equipment or materials are required. Consult the City for estimated lead-times. o The City cannot be held liable for delays in service connection caused by conditions beyond igsit__fis control, including, but not limited to, delays in the arrival of equipment such as transformers, switches and cable. CITY OF PALO ALTO UTILITIES Issued by the City Council ~Supersedes Sheet No. E-15-6 dated 7-1-CITY OF PALO ALTO UTILITIES Effective 7-1-g0!362008 Sheet No.E-15-6 Development of Water, Wastewater, and Gas Capacity Fees City of Palo Alto Utilities BLACK & VEATCH Building a world of differenc~September 2007 Table of Contents INTRODUCTION .......................................................................................................................................................1 BACKGROUND ...........................................................................................................................................................1 PURPOSE ....................................................................................................................................................................1 DISCLAIMER ..............................................................................................................................................................2 CAPACITY FEES .......................................................................................................................................................3 BASIC METHODOLOGIES ............................................................................................................................................3 ASSET VALUATION METHODS ...................................................................................................................................4 Original Cost .......................................................................................................................................................4 Reproduction Cost ................................................................................................................................................4 Depreciation ........................................................................................................................................................5 CAPACITY FEE DETERMINATION METHODS ..............................................................................................................5 System Buy-In Method .........................................................................................................................................5 Incremental Cost-Pricing Method ........................................................................................................................5 Value-of-Service Method. .....................................................................................................................................6 LEGAL CONSIDERATIONS ..........................................................................................................................................6 Proper Authorization under Existing Law ...........................................................................................................7 Uniformity of Application ....................................................................................................................................7 Equitability ...........................................................................................................................................................8 Administrat~e Issues ...........................................................................................................................................8 PROPOSED WATER AND WASTEWATER METHODOLOGY .........................................................................................10 WATER AND WASTEWATER CAPACITY FEE COMPARISONS .....................................................................................12 PROPOSED OAS CAPACITY FEE METHODOLOGY .....................................................................................................13 Growth of the City’s Gas Utility ........................................................................................................................]4 Capital Improvement Program ..........................................................................................................................15 Determination of Reproduction Cost Less Depreciation ...................................................................................15 Calculation of Base Equity Component .............................................................................................................17 Calculation of Incremental Cost ........................................................................................................................18 GAS CAPACITY FEE COMPARISONS .........................................................................................................................20 UTILITIES INTRODUCTION Introduction Background The City of Palo Alto Utilities (City) is a municipally owned utility providing water, wastewater, fiber optic, natural gas, and electric services to almost 60,000 residents. Deeply ingrained in the founding of the City’s utilities is the principal that a City-owned utility should be able to provide services at fees significantly lower than those charged by private companies. To this day, the City continues to operate under this philosophy and contributes to the City’s community services. Consequently, it is a natural outcome for the City to embrace a "growth-pays-for-growth" approach to development. A prudent balance of revenue sources, capacity fees, and user charges, is necessary for the City’s long-term financial stability. The Silicon Valley is beginning to see reinvestment in technology, and the City’s economy is benefiting from this recovery. In order for the City to attract developers, the capacity fees must also be reasonable, defensible, and competitive compared to neighboring communities. They must also be sufficient to help support the City’s growth needs. Finally, all developed capacity fees must comply with the Mitigation Fee Act and demonstrate a clear relationship between use and cost. In the past few years, the City underwent an examination of existing capacity fees and determined that the City’s fees were substantially lower than neighboring utilities. As a result, the City decided to hire a qualified and experienced consultant to conduct a capacity fee studies on its water, wastewater and gas utilities. Through the study, the City anticipates developing fees that allow the City to recover a proportionate cost of service and remain fair and equitable to its customers. Purpose The purpose of this report is to document the results of a water, wastewater and gas capacity fee study to fund system upgrades and expansion. The specific goals of the study were to: Review and evaluate existing policies and procedures affecting water, wastewater, and gas capacity fees; Establish a methodology for deriving capacity fees that assists the City in recuperating the cost of expanding the water, wastewater and gas systems; Evaluate the City’s Capital Improvement Program (CIP), in particular those projects identified as Growth and Capacity Enhancements; Review the City’s projected number of residential water, wastewater, and gas customers, in particular those who contribute to the need for those projects identified as Growth and Capacity Enhancements Benchmark recommended water, wastewater, and gas capacity fees to neighboring utilities. GAPACITY FEE STUDY 1 SEPTEMBER 2007 UTILITIES INTRODUCTION The proposed water, wastewater, and gas capacity fees recognize customer costs of service, contractual agreements, and local policy considerations. Disclaimer In conducting our studies, we reviewed the books, records, agreements, capital improvement programs, and customer sales and financial projections of the City’s utilities, as we deemed necessary to express our opinion of the City’s water, wastewater, and natural gas’ operating results and projections. While we consider such books, records, documents, and projections to be reliable, Black & Veatch has not verified the accuracy of these documents. The projections set forth in this report below are intended as "forward-looking statements". In formulating these projections, Black & Veatch has made certain assumptions with respect to conditions, events, and circumstances that may occur in the future. The methodology utilized in performing the analyses follows generally accepted practices for such projections. Such assumptions and methodologies are reasonable and appropriate for the purpose for which they are used. While we believe, the assumptions are reasonable and the projection methodology valid, actual results may differ materially from those projected, as influenced by the conditions, events, and circumstances that actually occur. Such factors may include the City’s ability to execute the capital improvement program as scheduled and within budget, regional climate and weather conditions affecting the demand for water and gas, a downturn in the housing market, and adverse legislative, regulatory or legal decisions (including environmental laws and regulations) affecting the City’s ability to manage the water, wastewater, and natural gas systems and meet regulatory requirements. CAPACITY FEE STUDY 2 SEPTEMBER 2007 CAPACITY FEES Capacity Fees Many utilities assess capacity fees to help offset costs for increased system capacity. Generally levied at the time building permits are required, the capacity fees are assessed for increased demand or loadings which result from either (1) changes in use of a structure served by an existing connection to the system, or (2) a new connection to the system. Capacity fees are based on the premise that new customers or developers should pay for required system capacity, to the extent that user .charges do not support the investment for the required capacity. Similar charges are termed by other utilities as capital recovery fees, system development charges, system capacity charges, impact fees, system equity charges, connection fees, or other names. These charges represent the current demand requirement of each property and are not transferable to any other property located within the service area. The cost of providing such capacity in system facilities for new customers can contribute significantly to the need for capital financing and service rates and/or taxes to support the financing. Collection of connection fees to partially or wholly finance new customer capacity requirements can, over time, significantly reduce the amount of financing and the magnitude of rate increases that otherwise might be needed. Ideally, capacity fees should generate sufficient revenues to meet future expansion requirements so that existing users are not burdened by the costs of expansion caused by growth in system use by new users. Basic Methodologies Capacity fees are traditionally assessed to new development to recover the value of system capacity constructed for new customer service. There is no single established method for the determination of capacity fees that is both appropriate for all situations and perfectly equitable to all new customers. There are, however, various approaches which are currently recognized and utilized, some to a greater extent than others, by utilities. These methods can be categorized as follows: 1.System Buy-In. Capacity fees are designed to derive from the new customer an mount per connection equal to the "equity" in the system attributable to similar existing cus- tomers. (Note: The word "equity" refers to that portion of system value for which there is no offsetting debt. It does not imply ownership of, or title to, utility facilities.) 2. Incremental Cost-Pricing. Capacity fees are designed to derive from the new customer the marginal, or i~cremental cost of system expansion associated with new customer growth. TNs method is based on the premise that new connections to the systems should be responsible for those costs which they cause to be incurred for the most recent or next increment of required system capacity, except as such costs are recovered from user fees or other u~ility charges. 3. Value of Service. Capacity fees are based on non-direct cost based considerations such as the fees that other area utilities charge, estimated opportunity or substitute costs, et al. Unlike the system buy-in or incremental cost-pricing methods, this method does not require extensive analyses in valuation and cost determination. CAPACITY FEE STUDY 3 SEPTEMBER 2007 UTILITIES" CAPACITY FEES Revenues derived from capacity fees are commonly used to offset part or all capital costs to accomplish any of the foIlowing objectives: 1.To pay the capital costs of future capacity provided for growth. 2.To provide rate relief to existing system users by recovering that portion of the annual existing and future capacity capital costs associated with growth~ including debt service requirements and direct asset purchases from current revenues. 3. To accumulate reserves to finance system improvements and expansions required to meet growth needs. Since the system buy-in method for developing capacity fees requires the selection of a basis for determining plant value, a discussion of asset valuation methods follows. Asset Valuation Methods Various methods are employed to estimate the value of utility facilities required to furnish service to new users. The two principal methods commonly used to value a utility’s properties are original cost and reproduction cost. Original Cost The principal advantages of the original cost method lie in its relative simplicity and stability, since the recorded costs of tangible property are heId constant. The major criticism levied against original cost valuation pertains to the disregard of changes in the value of money over, which are attributable to inflation and other factors. As evidenced by history, prices have tended to increase rather than to remain constant. Because the value of money varies inversely with changes in price, monetary values in most recent years have exhibited a definite decline; a fact not recognized by the original cost approach. This situation causes further problems when it is realized that most utility systems are developed over time on a piecemeal basis as demanded by service area growth. Consequently, each property addition was paid for with dollars of different purchasing power. When these outlays are added together to obtain a plant value the result can be seriously misleading. Reproduction Cost Changes in the value of the dollar over time, at least as considered by the impact of inflation, can be recog-nized by reproduction cost property valuation. The reproduction cost represents the cost of duplicating the existing utility facilities (or duplicating its function) at current prices. Unlike the origina! cost approach, the replacement cost method recognizes price level changes that may have occurred since plant construction. The most accurate reproduction cost valuation would involve a physical inventory and appraisal of plant components in terms of their reproduction costs at the time of valuation. However, with original cost records available, a reasonable approximation of reproduction cost plant value can most easily be ascertained by trending historical original costs. This approach employs the use of cost indices to express actual capital costs experienced by the utility in terms of current dollars. An obvious advantage of the reproduction cost approach is that it gives consideration to changes in the value of money over time. CAPACITY FEE STUDY 4 SEPTEMBER 2007 UTILITIE£" CAPACITY FEES Depreciation Considerations of the current value of utility facilities may also be materially affected by the effects of age and depreciation. Depreciation takes into account the anticipated losses in plant value caused by wear and tear, decay, inadequacy, and obsolescence. To provide appropriate recognition of the effects of depreciation on existing utility facilities, both the original cost and reproduction cost valuation measures can also be expressed on an original cost less depreciation (OCLD) and a reproduction cost less depreciation (RCLD) basis. These measures are identical to the aforementioned valuation methods, with the exception that accumulated depreciation is computed for each asset account based upon its age or condition, and deducted from the respective total original cost or reproduction cost to determine the OCLD or RCLD measures of plant value. Recognition of depreciation in establishing value for purposes of capacity fee under the system buy-in approach is appropriate in consideration of the fact that, once the new connector has "bought into" the system, he assumes the same status as similar existing customers. This includes assumption of the same responsibilities for future replacement of worn out or obsolete facilities. Capacity Fee Determination Methods Three methods of developing connection fees which are currently employed by utilities were introduced in a preceding section of this report. These include the system buy-in, incremental cost- pricing, and value-of-service methods, which are further described in the following paragraphs. System Buy-In Method Under this method, capacity fees are based upon the "buy-in" concept that new customers, at the time of connection, should pay an amount per connection equal to the equity in the system attributable to existing customers. To recover this equity, capacity fees should be designed to recover the cost or current value of applicable service facility capacity associated with each new customer coimection. An appropriate basis for calculating a capacity fee would include consideration of the total capital investment value less depreciation, less any outstanding utility debt in excess of available debt service reserves and unused construction funds, less any applicable grants or funding from non-utility sources, divided by the facility service capacity. As previously discussed, there are two principal methods of determining the value of utility system investment: OCLD and RCLD. Unless the City desires to recover only the historical costs of investment, the RCLD value approach is considered to be the most appropriate valuation method because it recognizes the current value of plant investment. It is noted that under the RCLD method, it is necessary to revise capacity fees periodically to account for construction cost escalation and depreciation. The system buy-in method typically tends to be best suited for application when there is adequate capacity available in existing facilities to serve new customers. Incremental Cost-Pricing Method This method is based on the premise that new system users should be responsible for the value of the latest or next increment of capacity which they cause to be incurred. Accordingly, capacity fees would CAPACITY FEE STUDY 5 SEPTEMBER 2007 UTILITIES CAPACITY FEES be designed to derive the marginal or incremental cost of system expansion as may be determined by recent construction cost experience or planned furore improvements. In order to determine the true incremental cost of system expansion, it is necessary to conduct a detailed engineering analysis to establish the facilities required to increase the design capacity to a specific level to accommodate additional new customers. Depending upon circumstances, the capacities of existing facilities which are available for new customers and their associated current value (RCLD) may also need to be recognized. The incremental cost of these specific facilities is then divided by the associated capacity provided to determine the incremental unit cost of additional capacity. In deriving capacity fees using the incremental cost-pricing method, appropriate reductions in rates should be made to credit any obligation or debt which will eventually be recovered from future users through the payment of ongoing user fees or other utility charges. Use of this method is generally considered to be most appropriate when a significant portion of the capacity required to serve new customers must be provided by the construction of new facilities. Value-of-Service Method The value-of-service method is sometimes employed to develop capacity fees for utilities. Though often simpler to employ than the system buy-in or incremental cost-pricing methods, it does not typically recognize the direct cost or value of utility facilities required to provide service for the particular utility facilities involved. Rather, under this method, capacity fees are based on considerations such as the rates charged by other communities, the cost of service from available alternative facilities, or other similar measures. Because value of service measures are not typically based on the direct costs or value of facilities of the utility actually providing service, this method is not as readily supportable in adversary proceedings. Legal Considerations The use of system development charges to finance new customer service facilities has generally been concentrated in those areas experiencing moderate to rapid rates of growth and with respect to water utilities, or in areas of scarce water supply such as Florida, Colorado, California, Texas and Arizona. Accordingly, many of the legislative and judicial requirements and precedents currently recognized in the water industry have their origins in these areas. A common standard for assessing the reasonableness of capital recovery charges is the "rational nexus" or reasonable relationship test. This test requires that: 1.There is a reasonable connection between the need for additional facilities and the growth resulting from new deveIopment, i.e., new users have created the need for new capital facilities. 2.The capital recovery charges must not exceed a proportionate share of the cost incurred or to be incurred to accommodate the new users paying the fee, i.e., the fee must not exceed a new user’s p)oportionate share of costs. CAPACITY FEE STUDY 6 SEPTEMBER 2007 UTILITIES CAPACITY FEES 3.There is a reasonable connection between the expenditure of the fees collected and the benefits received by the new users paying the fe~s, i.e., all fees collected from new users actually, but not exclusively, benefit the new users. Before applying the rational nexus test, courts have typically reviewed the municipality’s statutory authority to levy a capital recovery charge. Some suggest that this review should be considered as the first criteria of a four-part rational nexus test. However, the establishment of legal authority to implement capital recovery charges is generally considered to be a separate issue and not part of the rational nexus test. While there are no universally accepted industry standards governing the proper derivation and application of utility capital recovery charges, following is a brief discussion of certain common criteria that need to be recognized. Proper Authorization under Existing Law A first step in implementing a system development charge is to ascertain whether the utility has the proper legal authority for its enactment and enforcement. Challenges to established or proposed fees typically tend to center on three questions: First, do existing statutes, charters, grants of authority, etc. provide for, or at least allow, the utility to administer such a fee? Second, does the fee constitute an unlawful tax, in which case it may not be properly implemented without enabling legislation or approval by the electorate? Third, was the enacting ordinance properly drawn and adopted in accordance with applicable procedural requirements? Numerous system development charges have been challenged as an unlawful tax, in some in- stances successfully. Although laws and their interpretation may differ significantly among various states, it may be significant to note that court decisions have, in varying degrees, ruled that capital recovery charges are not taxes so long as they do not exceed the reasonable cost of providing the service for which the fee is charged. Uniformity of Application Much of the criticism raised by developers and others across the nation regarding utility requirements for front end contributions and capital recovery charge payments for required service facilities, concerns allegations that utilities have adopted no uniform policy concerning the bases for such payments. The absence of such policies, some critics contend, can result in inconsistent treatment and in perceived, if not actual, financial discrimination among contributors. To provide assurance that all con- tributors are treated fairly and consistently and to reduce the potential threat of litigation or adverse legislation, some utilities have devoted considerable effort to the establishment of formal policies, rules and regulations, ordinances, etc. which set forth a system of uniform procedures and criteria to be recognized in establishing each new contributor’s share of financial responsibility for utility development. Such policies can provide valuable ground rules to contributors and help assure them that a!l contribution mounts will be equitably determined and applied to their benefit. CAPACITY FEE STUDY 7 SEPTEMBER 2007 UTILITIES CAPACITY FEES Equitability There appears to be considerable agreement in the utility industry and among legislators and the courts that system development charges must be based on clearly defined needs and costs, and derived in a manner which fairly apportions costs in accordance with benefits provided. This is reflected both in court decisions and in manuals of practice published by the American Water Works Association (AWWA) and the Water Environment Federation (WEF). Generally, AWWA and WEF refrain from citing specific procedures to be used in formulating capital recovery charges, thereby allowing utilities some latitude in meeting these two requirements. The manual Financing and Charges for Wastewater Systems briefly addresses two "most prominent" methods, including the "system buy-in" and "marginal~incremental cost" approaches. The _Principles of Water Rates, Fees and Charges devotes an entire chapter to System Development Charges, including discussion of the equity (buy-in) method and the incremental cost method. Irrespective of the specific methodology employed, it is important that such fees recognize only those costs associated with the provision of facility capacity required for growth and development, exclusive of both operation and maintenance expense and the costs of new or replacement facilities designed to meet the needs of existing utility customers. Further, in order to avoid overcharges, it is essential in deriving and applying capital recovery charges to recognize the effect of other possibly overlapping contributions, and facilities financed through general service charges, so that the eontributor’s total payment responsibility does not exceed his share of the total cost or value of facilities required for service. Administrative Issues Procedures to administer the capital recovery charge program must be established, including a process for hearing appeals. Because capita! recovery charges are assessed to recover the costs associated with new customers, it is important that receipts and expenditures be properly documented. Receipts should be accounted for in a manner similar to contributed facilities, rather than included as part of general operating revenues. Capital recovery charge funds should only be used for capital related purposes, i.e., construction of facilities or retirement of debt associated with facilities related to system growth. Legal Requirements in California Many states have established specific laws regarding the establishment, calculation, and implementation of capacity fees. For most states, the primary objective of these laws is to assure that the charges are established in such a manner that they are fair, equitable, and cost-based. Mitigation Fee Act The laws governing the establishment, accounting, and reporting of capacity fees in the State of California are found in the "Mitigation Fee Act". A sum_mary of the relevant statutes required in the calculation of a capacity fee is as follows: CAPACITY FEE STUDY 8 ~EPTEMBER 2007 UTILITIES CAPACITY FEES "66013 (a) Notwithstanding any other provision of law, when a local agency imposes fees for water connections or sewer connections, or imposes City charges, those fees or charges shall not exceed the reasonable cost of providing the service for which the fee or charge is imposed, unless a question regarding the amount of the fee or charge imposed in excess of the estimated reasonable cost of providing the services or materials is submitted to, and approved by, a popular vote of two-thirds of those electors voting on the issue." "66013 ( t~)(3) "City charge" shall mean a charge for facilities in existence at the time a charge is imposed or charges for new facilities to be constructed in the future that are of benefit to the person or property being charged. " In addition to the specific elements for the determination of proportionate cost sharing under California law, the Mitigation Fee Act also requires the following: *Funds are maintained in a separate account; ,Annual accounting requirements on fee collections and expenditures; o A public heating to adopt or modify the fee; and ,A protest mechanism for the fees. Proposition 218 In !996, California voters passed Proposition 218 ("Prop 218"), which required the imposition of certain fees and assessments by municipal governments to require a vote of the public to change or increase the fee or assessment. The applicability of Prop 218 to connection fees is established the Third City Court of Appeals decision in Richmond v. Shasta Community Services District, which states that water impact fees are development fees and as such, are not subject to the procedural or substantive requirements of Prop 218. Furthermore, the decision states that local agencies can enact the fee by either ordinance or resolution. Assembly Bill 1600 The City has broad authority to charge users for capital facilities. The main limitation of that authority is that fees on new developments must have a rationale nexus to the needs created by, and the benefits accruing to that development. In 1988, the California Legislature added sections to the Government Code that codified constitutional and decisional law related to fees imposed on new developments. Assembly Bill ("AB") 1600 enacted Government Code §66000-66003 related to developer fees. In general, AB 1600 contains three requirements: Local agencies must fo!iow a process set forth in the statutes and establish a nexus between a development project and the public improvement being financed with the fee. Local agencies must segregate the fee revenues from the General Fund to avoid commingling of funds. CAPACITY FEE STUDY 9 SEPTEMBER 2007 UTILITIES CAPACITY FEES ¯If a local agency has unspent or uncommitted developer fees for five years or more, then it must make annual findings describing the continuing need for that money, or it must refund the fees. Since its original passage in 1988, the California Legislature has added and modified various code sections to fi.u-ther clarify and expand the requirements related to developer fees. In particular, Government Code §66013 contains requirements specific to water and wastewater capacity charges. Specifically, §66013 states that "Notwithstanding any other provision of law, when a local agency imposes fees for water connections or sewer connections, or imposes capacity charges, those fees or charges shall not exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed...". The fundamental issue of this statutory requirement is that a maximum is set for capacity charges - the estimated reasonable cost of providing the service. With respect to the City’s gas utility, Chapter 5, of the California Government Code pertains to fees charged for development projects. Specifically, Government Code §66002 (c) (5) includes "facilities for the generation of electricity and the distribution of gas and electricity" as part of its definitions of facilities. As such, there are requirements in the development of and implementation of gas capacity fees. The statutory requirements pertaining to capacity charges in California continue to evolve. In 1998, the California Legislature passed Senate Bill ("SB") 1760. SB 1760 amends and expands Government Code §66013 to subject capacity charges collected after January 1, 1999 to certain accounting, expenditure, and reporting requirements. Proposed Water and Wastewater Methodology Since the City strongly believes that capacity fees should cover the proportionate cost of system improvements required to serve the new customer, Black & Veatch utilized the buy-in methodo!ogy to derived water and wastewater capacity fees. As a City that is almost fully built-out, using the buy-in method (or equity method) is appropriate. The collected capacity fees will be separated from rate revenue and used exclusively for water, sanitary sewer and gas-related capital improvement projects. In addition, to maintain some level of consistency and enhance public acceptance, Black & Veatch paralleled to the extent possible, the approach currently used which basis the capacity fee on the number of fixture units. A fixture unit is equal to one cubic foot of water per minute. A fixture unit is not a flow rate unit per se but a design unit. In applying the buy-in methodology, Black & Veatch used the RCLD to arrive at the appropriate facilities cost. Based on the City’s fixed asset listing and starting with the original service date and original cost, the estimated replacement cost for each in-service asset was calculated. Cost escalation factors used were obtained from Engineering News Record (ENR) Index for the San Francisco Bay Area and the Handy-Whitman Index for the Pacific Region. To arrive at RCLD, the replacement cost was multiplied by the estimated remaining service life percentage. The net replacement cost is then, the RCLD plus any additional asset costs placed into service in FY 06/07. We note that by using an ENR and Handy-Whitman indices, the capacity fee calculation may be updated yearly if desired to more accurately reflect current construction cost conditions. CAPACITY FEE STUDY 10 SEPTEMBER 2007 UTILITIES CAPACITY FEES Once the RCLD is determined for the water and wastewater utilities, the outstanding utility debt in excess of available debt service reserves and unused construction funds was subtracted to arrive at the total system value for the given utility. For the water utility, there remained outstanding debt due to the 1999 and 2001 Utility Revenue Bonds. For the wastewater utility, there remained outstanding debt due to the 1999 Utility Revenue Bond. Using the consumption records provided by the City for FY 00/01 to icY 05/06, Black & Veatch was able to forecast the average water consumption and wastewater production, in gallons per day, for FY 06/07. By dividing the total system value by the average consumption or production, the charge per fixture unit was determined. A summary of these calculations are summarized below. Description Trended Odginal Depreciation Net Reproduction Depreciation Not Less Than Cost Reserve Plant Cost New Reserve RCLD $$$$$ Water Building - General Plant 191.138 101,299 89,839 305,543 135,942 169,601 Building - Pumping Plant 187,462 58,648 128,814 703,953 430,909 273,044 Building - Transmission & Distribution 214,674 28,208 186,466 320,089 80,970 239,119 Building - Reservoirs & Tanks 2,506,148 817,016 1,689,132 19,944,327 10,766,173 9,178,154 Building - Source of Supply 110,102 61,216 48,886 630,621 464,791 165,831 Equipment - Source of Supply - Wells 579,437 433,908 145,529 225,839 45,418 180,421 Equipment - Pumping Plant 696,605 478,105 218,500 1,106,205 687,082 419,123 Equipment - Water Treatment 237,705 127,841 109,864 513,254 308,292 204,962 Equipment - Mains 35,574,792 10,843,100 24,731,691 147,148,376 77,318,813 69,829,563 Equipment - Non-Customer Valves 2,335,727 991,700 1,344,027 3,517,587 1,704,613 1.812,974 Equipment - Pressure Regulating 200,470 123,656 76,814 171,126 67,551 103,575 Equipment - Instrumentation 125,945 98,135 27,810 161,047 100,349 60,698 Equipment-Meters 3,103,345 925,821 2,177,524 4,499,425 1,511,554 2,987,871 Equipment - Hydrants 2,639,898 612,271 2,027,627 4,593,822 1,861,501 2,732,321 Equipment - Miscellaneous - Gen Plant 349,289 302,099 47,190 114,748 66,093 48,656 Equipment - Miscellaneous 1,202,566 653,471 549,095 1 ~482,504 735,179 747~325 Total 50,255,301 16,656,494 33,598,807 185,438,467 96,285,230 89,153,237 Plus: Construction Work In Progress Less: Outstanding Principal on Debt 12,335,181 (4,445,888) Total Value $ 97,042,530 Total Water Demand (gpd) Charge per gpd Charge per Fixture Unit (1 FU = 15 gpd) 11,929,733 $8.13 $ 122.00 CAPACITY FEE STUDY 11 SEPTEMBER2007 Description Wastewater Treatment Building - Building & Structures Equipment - Treatment & Disposal Trended Original Depreciation Net Reproduction Depreciation Not Less Than Cost Reserve Plant Cost New Reserve RCLD $$$$$$ 27,501,t74 15,974,138 11,627,036 73,292,975 42.544,676 30,748,297 34,696,530 22,682,104 12,014,427 29,731,354 15,055,667 14,675,687 Wastewater Collection Building - Collection Plant 183,017 45,974 137,043 Equipment - Miscellaneous 731,041 437,572 293,469 Equipment - Gravity Mains 39,978,695 15,696,724 24.281,971 Equipment - Manholes 5,626,384 2,018,061 3,608,322 Equipment- Electric Pumping Equip 103,~016 54,741 48~275 Total !08,819,857 56,909,315 51,910.542 248,474 62,529 185,945 579.204 245.311 333,893 91,151,425 53,638,074 37,513,352 8,469,027 3,655,500 4,813,528 101.200 30,228 70,971 203,573,660 115,231,987 88,341,672 Plus: Construction Work In Progress Less: Outstanding Principal on Debt Total Value Total Residential Sewer Discharge (gpd) at 90% of Wa[er Consumed Total Measured Water Discharge (gpd) Charge per gpd Charge per Fixture Unit (1 FU = 15 gpd) 22.770,261 (11,302,280) $ 99,809.654 5,261,642 1,695,833 $ 14.35 $ 215.00 Table 1 represent the capacity charge for a single family residential household with approximately 50 fixture units. While the City is transitioning away from the typical 5/8" meter to a 1" meter, the calculation is stil! based on the 5/8" meter in order to compare to neighboring utilities. Table 1 Proposed Capacity Fee Water Capacity Fee $6,100 Wastewater Capacity Fee $10,750 Water and Wastewater Capacity Fee Comparisons The timely adoption of the proposed capacity fees in Table ! will provide for full recovery of the water and wastewater utility’s estimated costs of service. Based on the proposed capacity fees per fixture unit, the typical water residential with a standard 1" meter will pay a total of $9,150 plus any fees associated with the connection fee. The connection fee is charge imposed on the developer for physically connecting to the system. This fee does not account for additional capacity in the system. Similarly the typical wastewater residential with a standard 4" connection will pay a total of $10,750 plus any connection fees. Added together, a typical residential developer will pay roughly $19,900 per household. Presented in Table 2 are the proposed capacity fees compared to fees of neighboring cities, for a residential customer with a 5/8" meter. Similar to the rates, the capacity fees could employ an annual indexed adjustment to account for inflation. Unlike the rates, the capacity fees have a greater fluctuation due to large capital improvement projects and build-out. Based on the table below, the proposed capacity fee is at the highest tier of fees. As neighboring utilities make adjustments to their fees in the coming CAPACITY FEE STUDY 12 SEPTEMBER 2007 UTILITIES CAPACITY FEES months and years, we anticipate that the proposed rates for the City will shift towards the lower end of the spectrum. All surveyed utility fees are current as of July 2007. Table 2 Proposed Capacity Fee Comparison Residential City, District, Or Agency 5/8"1"1-1/2" Mountain View $3,900 City of Napa $3,800 $6,300 $12,500 Redwood City $1,787 $4,468 $8,935 Menlo Park $2,570 $4,111 $8,486 Alameda County Water District $5,546 $11,829 $17,335 Santa Cruz $6,530 $16,325 $32,650 Dublin San Ramon Services Dist.$6,541 $16,353 $32,706 City of Benicia $7,635 $8,047 $18,084 EBMUD (Zone 1)$6,380 $9,570 $15,980 Contra Costa Water DisL $15,962 $39,905 $79,810 Average Fee $6,065 $12,990 $25,165 Palo Alto (Proposed)$6,100 $9,150 Meter Size 2"3"4"6" $20,000 $400,000 $62,500 $124,900 $14,296 $26,805 $44,675 $89,350 $13,627 $24,929 $38,556 $85,598 $21,177 $35,054 $58,220 $85,627 $52,240 $104,180 $163,250 $326,500 $52,330 $114,475 $327,063 $654,125 $32,144 $72,336 $128,577 $31,960 $127,696 $255,392 $399,050 $798,100 $40,608 $129,t46 $152,736 $309,t71 City, District, Or Agency Unit 4" Mountain View Lot Frontage $3,350 Central Contra Costa Sanitary Dist."1 EDU $4,524 West Bay Sanitary Dist 1 EDU $6,022 Los Altos 1 EDU $5,274 Redwood City 1 EDU $1,676 Dublin San Ramon Services Dist.1 EDU $11,367 East Bay Municipal Utility District 1 EDU $1,125 City of Benicia 1 EDU $7,500 Santa Cruz 1 EDU $1,200 SFPUC 1 EDU $2,907 Union Sanitary District 1 EDU $3,459 Average Fee 1 EDU $4,400 Palo Alto (Proposed)1 EDU $10,750 Proposed Gas Capacity Fee Methodology After discussions with the City and review of available methodologies a combination of the equity method (or system buy-in approach) and the marginal or incremental approach was found to be the best fit regarding the need for the City’s system expansion. The use of this methodology is appropriate when a portion of the capacity required to serve new customers is available in the current system, but new facilities will need to be constructed (or existing facilities enhanced) to fully meet capacity requirements. This is similar to the City’s circumstances with respect to its gas distribution system. The incremental cost method recognizes the costs associated with constructing specific individual increments of new capacity required to meet growth needs. It can often be more difficult to accurately ascertain that portion of capacity and associated value available to serve new customers from existing facility components. CAPACITY FEE STUDY 13 SEPTEMBER 2007 UTILITIES CAPACITY FEES By properly combining elements of each method, the value of system capacity that should be recovered can be established by recognizing the current value of applicable existing service facilities, together with the estimated or actual cost of any required new service facilities. By combining these values and dividing by the associated total applicable service capacity, a reasonable measure of the value of system capacity applicable to new customer requirements can be derived. Black & Veatch utilized the combination of the system buy-in and incremental cost approach to determine the system development charge for the City’s gas distribution system. Growth of the City’s Gas Utility The City of Palo Alto is a largely "built-out" community in the Silicon Valley and the greater San Francisco and San Jose areas. There has been no meaningful growth in the number of namra! gas customers over the past six years, as shown in Table 3. The number of natural gas customers served by City has remained at about 23,000 since 2001. Table 3 City of Palo Alto - Gas Division Historical Number of Customers Public Commercial City of Residmatial Multi Family Commercial Industrial Facilities Multi Family Palo Alto Total 2001 14,490 5,806 1,399 179 30 744 38 22,686 2002 14,515 5,733 1,331 168 30 733 38 22,547 2003 14,604 5,790 1,356 173 30 745 36 22,734 2004 14,767 5,774 1,365 174 32 775 37 22,922 2005 14,735 5,775 1,373 171 34 775 35 22,896 2006 14,824 5,920 1,351 169 35 784 37 23,119 The City has, however, recently seen a trend where residential customers are renovating and upgrading existing single-familyhomes or building larger homes that are substantially increasing the demand on the City’s gas system.These renovated or new homes are substantially larger and are being built with heated swimming pools and tankless water heaters. This added load requires the City to increase its system’s capacity by reinforcing and replacing its mains and services. Over the next five years, the City projects adding about 100 natural gas customers per year connecting to the system with new, larger housing construction (or 500 new customers) and about 240 natural gas customers per year upgrading and enlarging their homes. This is projection consistent with the results of our review of the City’s recent meter additions and retirements. The City’s records and recent experience indicate that a typical City residential gas customer uses about 700 therms per year. A typical customer requires a 175-400 cubic feet per hour (cfla) meter. However, residential customers who are upgrading their homes or constructing new homes have increased gas demand that require a meter almost 2 to 3 times as larger(650-800 cfh). These larger residential customers will use about 2,500 therms armually. CAPACITY FEE STUDY 14 SEPTEMBER 2007 UTILITIES CAPACITY FEES Capital Improvement Program Because of the increased demand that these customers are placing on the City system, the City must increase its system’s capacity by reinforcing and replacing its mains and services. Table 4 presents the City’s gas utility’s capital improvement program (CIP) for the five-year period ending 2011. These projections were supplied by City staff. The City projects its spending for system improvements to be approximately $32.2 million over the five-year period for system improvements. The City estimates that a portion of these costs are attributable to growth and capacity enhancements. The City desires these costs be financed through gas capacity fees, or system development charges, so those customers who are responsible for the needed incremental capacity pay for that capacity. The remainder will be financed through rate revenues. The gas capacity charges that we develop herein are designed to recover the portion of the CIP cost used for growth and capacity enhancements. Table 4 City of Palo Alto - Gas Division Five Year Capital Improvement Program Distribution Syi~cm - Customer Design and Connectitm Services GS-80017 Gas System Extensioos Others Net Totzl Distribution System - Customer Design and Conr~ Services Distribution Sygern - S,~em Im~rovemen_~ GS-I I000 GMR - Project 21 563 580 597 615 633 2,988 457 457 GS-O31XI7 Directional Boring Equiprr~t 83 56 60 199 GS-02013 Direc-tional B oring Machin e 165 35 40 185 425 GS-80019 Gas Mete~ and Regulators x 252 270 278 286 297 1,393 GS~500 i GMR- Project 16 x 5,110 5,1!0 GS-07002 GMR- Project 17 x 408 5,259 5,667 GS-08011 GMR- Projtu:t 18 x 420 5,408 5,828 GS-09002 GMR- Project 19 x 432 5,556 5,988 GS-10001 GMR - Project 20 x 444 5,700 6,144 GS-03008 Polyehhylene Fusion Equipment 27 30 32 89 GS-030t39 SystemExtension~ -Unre~mbursed x 169 174 lg0 185 191 899 Net Total Dis’~ribution System - System Improvements 6,224 6,!58 6,384 6,511 6,922 32,199 To~al System Improvements 6,224 6,158 6,384 6,511 6,922 32,199 C~sts Atlributable to P~n forcement a.nd Replacement Activities (R&R)x 5,949 6,123 6,298 6,471 6,645 31,486 Costs Attributable to G-rowth and C~pacity Enhancements 50%2,975 3,062 3,149 3,236 3,323 15,743 Determination of Reproduction Cost Less Depreciation The first step in the capacity fee process is to adjust the original cost of assets to their reproduction cost levels an.d then reduce by the accumulated depreciation (RCLD) of the asset. For the purpose of this report, we apply the exist~g reserve ratio to the trended original cost to adjust for depreciation reserve to determine RCLD using the Handy-Whitman Index for the Pacific Region. In the process of determining an RCLD value for the gas distribution system, we begin by classifying the original cost of existing plant (as of December 31, 2006) into the asset classifications shown in Table 5. For the purpose of a system development charge, only "backbone" facilities are CAPACITY FEE STUDY 15 SEPTEMBER 2007 UTILITIES’ CAPACITY FEES included in the system equity calculation. As such, certain asset categories were excluded from the valuation including structures and improvements, general plant, and miscellaneous equipment. These categories are relatively unaffected by the size of customers served. Table 5 City of Palo Alto - Gas Division Asset Descriptions Asset Description Structures and Improvements Meters Services Regulators Mains Measuring and Regulating Station Equipment Miscellaneous Equipment General Plant The total RCLD of the assets applicable to the SDC are shown in Table 6. Table 6 City of Polo Alto - Gas Division Reproduction Cost Less Depreciation Equity in Existing System Trended Original Depreciation Net Reproduction Depreciation Description Cost Reserve Plant Cost New Reserve RCLD s s $$$s Meters 4,965,862 1,615,590 3,350,272 5,600,375 1,822,022 3,778,353 Services 22,867,425 4,313,641 18,553,783 30,191,907 5,695,309 24,496,598 Regulators 971,223 432,724 538,500 1,450,251 646,152 804,099 Mains 32,659,227 9,191,586 23,467,641 93,395,728 26,285,218 67,110,510 Meas.& Reg. Stn. Equip.609,853 269,488 340,365 1,858~102 821,076 1,037,026 Total 62,073,590 15,823,029 46,250,560 132,496,363 35,269,778 97,226,585 Less: Outstanding Principal on Debt ( 12,096,006)(12,096,006) Total Equity $ 34,154,555 $85,130,579 To determine equity in the existing system, we reduce the value by the amount of outstanding principal on the City’s bonds and other long-term debt associated with the gas distribution system. This amounts to a reduction of $12.1 million. With this adjustment, the total value of the gas distribution system applicable to the capacity fee is $85.1 million, based on an RCLD value base. The equity using an OCLD value base amounts to $34.2 million. For the purpose of the balance of this report, we use the RCLD value base. To determine the dollar amount applicable to each new customer, we calculated the number of residential meter equivalents in the system. As shown in Table 7, the City’s 23,119 customers amount to CAPACITY FEE STUDY 16 SEPTEMBER 2007 UTILITIES CAPACITY FEES 38,080 residential meter equivalent units. The weighting factors we use to develop these equivalent units are based on our experience with other gas distribution systems and review of use per customer for each of the City’s classes. Table 7 City of Palo Alto - Gas Division Residential Meter (Customer) Equivalents Weighted Number of Weighting Number of Customers Factor Customers Residential 14,824 1 14,824 Multi Family 5,920 1 5,920 Commercial 1,351 5 6,754 Industrial 169 30 5,065 Public Facilities 35 30 1,040 Commercial Multi Family 784 5 3,919 City of Palo Alto 37 15 559 Total 23,119 38,080 Calculation of Base Equity Component We show in Table 8 our development of the base equity component of the capacity fee. This equity component amounts to $2,235 per equivalent residential customer. Using the theoretical basis of the equity method, this can be translated to every retail customer currently using the system (on a residential meter equivalent basis) has invested $2,235 in replacement value for their share of capacity in the system. Therefore, by having future customers pay a fee to connect to the system, equal to this amount, future customers match the value base contributed by the current customers. Table 8 City of Palo Alto- Gas Division Determination of Base Equity Total Equity Equivalent Number of Residential Customers @ 2006 Base Equity - $ per customer 85,130,579 38,080 2,235.57 This base equity will be used as a credit (to reduce the required SDC) for those residential customers who have already "bought ha" to the existing system facilities. CAPACITY FEE STUDY 17 SEPTEMBER 2007 UTILITIES CAPACITY FEES Calculation of Incremental Cost As discussed earlier, the marginal or incremental approach is based on the principle that new system users should be responsible for the cost of the latest or next increments of capacity that they cause to be constructed. This fee recovers growth’s share of planned additions to the system. Table 9 shows the development of the base unit charge for the incremental capacity. We develop this base unit charge by dividing the capital improvement costs attributable to system expansion ($15.7 million over 5 years) by the projected number of customers who are responsible for the needed capacity expansion.. The City projects approximately 100 natural gas customers per year connecting to the system from new construction (500 new customers over the 5 years) and about 240 natural gas customers who upgrade and entarge their homes. In addition, City staff has seen the trend of these customers using natural gas to heat swimming pools and installing tankless water heaters. We estimate the average usage of these customers to be about 2,500 therms per year, or about 3.5 times larger than the average residential customer. We estimate the total volumes over a five-year period, which are attributable to customers who require this increased capacity to be 4,250,000 therms. The base unit charge to be applied to these customers for the increased capacity is determined by dividing the $15.7 million in CIP associated with Growth and Capacity Enhancements by these volumes. The resultant unit charge is $0.741 per therm. However, those City customers who are upgrading their service from a 175-400 cfh meter to at least a 650-800 cfh meter will be credited for their existing equity in the system. The total estimated base equity from these customers is approximately $537,000, which is 240 customers times $2,236 (Table 6). The volumetric credit to be applied to existing customers is then determined to be $0.036 per therm, or the adjusted volumetric charge is determined to be $0.705 per therm. It is intended that this system development charge for upgraded existing customers be applied for a 60 month period. In order to properly collect the full $!5.7 million and make up for this shortfall of $537,000, the base volumetric charge should also be adjusted for new system customers. The base charge for new customers should be adjusted $0.086 per therm, or the adjusted volumetric charge for new customers is determined to be $0.827 per therm. It is intended that this system development charge for new customers be applied for a 60 month period. CAPACITY FEE STUDY 18 SEPTEMBER 2007 UTILITIES" CAPACITY FEES CAPACITY FEE STUDY 19 SEPTEMBER 2007 UTILITIES CAPACITY FEES Gas Capacity Fee Comparisons At the request of the City, Black & Veatch conducted a survey of comparable utilities to establish a range of gas capacity fees charged. We can find no instance where a gas utility (municipal or investor- owned) has a system development charge. In many instances, gas utilities have a line extension policy, similar to the City’s existing policy. These policies typically require customers to pay an additional fee for increasing its service line capacity from 2-inch to a larger size, or increasing the size of its meter or for extending the distribution system in excess of a nominal length. In any event, these line extension policies are intended to offset increased cost directly incurred. In addition, most line extension policies provide for the partial reimbursement of the developer or builder if within a set period extended facilities are used to comaect other customers. CAPACITY FEE STUDY 20 SEPTEMBER 2007 NOT YET APPROVED ATTACHMENT J RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING UTILITY RATE SCHEDULES E-15, G-5, W-5, AND S-5 OF THE CITY OF PALO ALTO UTILITIES RATES AND CHARGES PERTAINING TO SERVICE CONNECTION FEES The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Schedule E-15 0Electric Service Connection Fees) of the Palo Alto Utilities Rates and Charges is hereby amended to read in accordance with Sheets E-15-1, E-15-2, E-15-3, E- 15-4, E-15-5, and E-15-6, respectively, attached hereto and incorporated herein by reference. The foregoing Utility Rate Schedule, as amended, shall become effective on August 1, 2008. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Schedule W-5 (Water Service Connection Fees) of the Palo Alto Utilities Rates and Charges is hereby amended to read in accordance with Sheets W-5-1, W-5-2, W-5-3, W-5- 4, and W-5-5, respectively, attached hereto and incorporated herein by reference. The foregoing Utility Rate Schedule, as amended, shall become effective on August 1, 2008. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Schedule G-5 (Gas Service Connection Fees) of the Palo Alto Utilities Rates and Charges is hereby amended to read in accordance with Sheets G-5-1, G-5-2, G-5-3, and G-5-4, respectively, attached hereto and incorporated herein by reference. The foregoing Utility Rate Schedule, as amended, shall become effective on August 1, 2008. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Schedule S-5 (Sewer Service Connection Fees) of the Palo Alto Utilities Rates and Charges is hereby amended to read in accordance with Sheets S-5-1, S-5-2 and S-5-3, respectively, attached hereto and incorporated herein by reference. The foregoing Utility Rate Schedule, as amended, shall become effective on August 1, 2008. SECTION 5. The Council finds that the revenue derived from the authorized adjustments of the several electric service rates shall be used only for the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. // // // // 080505jb0073021 NOT YET APPROVED SECTION 6. The Council finds that the adoption of this resolution does not constitute a project under the California Environmental Quality Act, California Public Resources Code section 21080, subdivision (b) (8). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATFEST:APPROVED: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney Mayor City Manager Director of Utilities Director of Administrative Services 080505 jb 0073021 ATTACHMENT K DRAFT UTILITIES ADVISORY COMMISSION MINUTES OF APRIL 2, 2008 CALL TO ORDER Chairman Rosenbaum Commission (UAC). called to order at 7:00 P.M. the scheduledmeeting of the Utilities Advisory Present: Commissioners George Bechtel, Dexter Dawes, John Melton, and Dick Rosenbaum Absent: Commissioner Marilyn Keller and Council Liaison Yiaway Yeh ORAL COMMUNICATIONS Bruce Hodge, Palo Alto resident, spoke to the Commission regarding carbon emissions. He asked for the utilities plan to reduce emissions over the next 20 years. Chair Rosenbaum directed him to recent memos updating the Commission on such efforts. APPROVAL OF THE MINUTES The minutes from the March 5, 2008, were unanimously approved. AGENDA REVIEW No changes to the agenda were requested. REPORT FROM COMMISSION MEETINGS/EVENTS There were no reports. UTILITIES DIRECTOR REPORT Utilities Director Valerie Fong gave the following updates: Utilities Advisory Commission Minutes Approved on:Page 1 of 7 Retail Rate: The UAC and staff recommendation for retail rates was unanimously approved by Finance Committee on March 18th and is expected to go to the full Council on June 9~. Fong also provided a quick update on past and upcoming customer communications regarding the rate increases including press releases, Frank’s Weekly memos, and notifications through customer bills, letters, postcards and customer meetings. Hydro Conditions: Northern Sierra precipitation is at 80% of average to date and because of low reservoir levels (about 80% of average), hydro electric generation is expected to be below average if precipitation resumes median levels for the rest of the season. New Lodi: NCPA’s 250MW new natural gas-fired Lodi project has been fully subscribed and permitting work has begun, however, Palo Alto declined to participate in the project as the City’s long term capacity needs require generation to be sited within the Great Bay Area. Local Cogen: Staff continues to explore customer-sited cogeneration options within the City. Earth Month Activities: Copies of Earth Month activities provided to the Commission, and also posted on the City’s website, indicate special presentations planned for April 3, April 12, and April 16 with the Greenlight Film Festival planned for Thursday April 17. Compact Fluorescent Lights: The City of Palo Alto Utilities (CPAU) is offering 5 for $1 compact fluorescent lights through Palo Alto Hardware and Peninsula Hardware. Commissioner Dawes noted that the supplies are quickly snapped up at these locations, and suggested better inventory management for the inevitable customer demand for the item. UNFINISHED BUSINESS Utilities Advisory Commission Minutes Approved on:Page 2 of 7 NONE NEW BUSINESS ITEM 1: INFORMATION ITEM: Ener.qy Risk Manaqement Report for the Second Quarter, Fiscal Year 2007-2008 Karl Van Orsdol, Energy Risk Manager, summarized the quarterly report. He noted that there were no exceptions to report and that all transactions were fully in accordance with the City Energy Risk Management Policies, Procedures and Guidelines. Van Orsdol noted that the overall credit exposure was approximately $7.5 million for gas and electricity combined. This exposure is significantly lower than from previous years. Van Orsdol also noted that the load resource balance is within limits and reflects the increasing importance of non-carbon sources of electricity in the City’s electricity purchases. He pointed out that all but one of the City’s counterparties maintains an excellent credit rating, but that the City has no exposure with that one outlier. ITEM 2: ACTION ITEM: Proposed Increase in Utility Water, Gas, Wastewater, and Electric Connection Fees and Water and Wastewater Capacity Fees Roland Ekstrand, Senior Engineer gave a short presentation explaining the methodology for calculating each of the two separate groups of one time charges (connection fees and capacity fees) for new or upgraded utility services. Eckstrand replied to questions regarding the impact of the capacity fees on low income housing, calculating the capacity fees for single family housing, and the completeness of the connection fees in capturing the City’s cost of installing new services. Utilities Advisory Commission Minutes Approved on:Page 3 of 7 Commissioner Rosenbaum requested that the connection fees and the capacity fees be voted on separately. The connection fees were approved unanimously. The capacity fees were approved 3 to 1 with Rosenbaum the dissenting vote. Action: Commissioner Dawes moved to approve the recommended connection fee increase. Commissioner Bechtel seconded the motion. The motion carried unanimously. Commissioner Dawes moved to approve the recommended capacity fee increases. Commissioner Melton seconded the motion. The motion carried by a vote of 3 to 1 with Commissioner Rosenbaum dissenting. ITEM 3: ACTION ITEM: Recommendation to Assiqn the Seattle City Li.qht Exchanqe Contract to Another NCPA Member A.qency Senior Resource Planner Shiva Swaminathan explained the rationale for the recommended assignment of the Seattle City Light (SCL) Contract. He noted that flows from the SCL exchange contract (Palo Alto receives energy in June through October and provides energy from November through March) do not fit with the electric portfolio since the hydro generation is highest in the spring and summer months and the portfolio has excess energy, but is deficit in the winter, when Palo Alto must return the energy. In addition, Swaminathan said that the value of the exchange is and is projected to be negative given the energy price differences between summer and winter. Commissioner Melton asked why others value the SCL Contract while Palo Alto does not. Swaminathan replied that other agencies have different portfolio profiles. Moreover, they might be able to achieve additional value by doing their own scheduling and trading, and the nature of their transmission assets may provide more pathways for buying and selling energy. Action: The UAC acted on a combined motion with Item 4 below. Utilities Advisory Commission Minutes Approved on:Page 4 of 7 ITEM 4: ACTION ITEM: Recommendation to Lay-off the City’s Share of the California-Oreqon Transmission Project Swaminathan explained that the primary justification for the recommended long-term lay-off of the California-Oregon Transmission Project (COTP) is that the cost of the asset is greater than its value. COTP, located within the Western Area Power Administration-Sacramento Municipal Utility District (SMUD) control area has more value to entities within the SMUD control area. Commissioner Dawes asked what the risks of the layoff are to Palo Alto. Fong responded that, as outlined in the report, the risks include: 1) Palo Alto’s access to resources in the northwest will be reduced and these resources could become valuable to meet the City’s Renewable Portfolio Standard (RPS) goals; and 2) the risk that the counterparties harvest some value from COTP, but do not pay the bills - this could conceivably occur for a maximum of two months. Action: Commissioner Dawes moved to approve both the recommended SCL assignment and the COTP layoff. Commissioner Bechtel seconded the motion. The motion carried unanimously. ITEIVl 5: INFORMATION ITEI~I: Utilities Report: Water, Gas, Electric, Fiber and Financial Issues Updates Staff offered no presentation on this item, but answered questions from Commissioners. On the water report, Commissioner Dawes asked about the likelihood of litigation on San Francisco Public Utilities Commission’s Program Environmental impact Report for the Water System Improvement Program Assistant Director Jane Ratchye responded that it depends on what alternative San Francisco selects. Commissioner Melton noted the grim progress on the new water contract negotiations. Utilities Advisory Commission Minutes Approved on:Page 5 of 7 There were no questions on the gas report. Regarding the electric report, Commissioner Bechtel asked what the definition of "local" means in terms of the local capacity requirements. Senior Resource Planner Shiva Swaminathan explained that this is defined by the California Independent System Operator and that not all of it needs to be in the Greater Bay Area load pocket. On the financial report, Commissioner Melton asked why the expenses are front loaded in the first half of the fiscal year. Utility Rates Analyst Eric Keniston responded that the amounts in the first half of the fiscal year include commitments as well as actual expenses. Commissioner Dawes remarked on the great profitability of the fiber fund. ITEIVl 6: INFORMATION ITEM: Ener,qy Policy Act (EPACT) Reporting Update on Time Based Metering and Pricinq Commissioner Melton stated that CPAU is not expanding its time-based metering options due to short-term software and hardware issues. However, the report also says that even if all the software and hardware were in place, this doesn’t make sense given CPAU’s portfolio costs and profile. Director Fong agreed that even if everything was in place, it still may not make sense to offer these rates, however we must study them under the EPACT of 2005 and make a decision whether we implement them or not. Commissioner Bechtel also noted that it would make sense when/if customers demanded it. Given that TOU rates have been in existence for six years and customers have not taken them suggests that they are not in demand. Commissioner Rosenbaum offered that another reason that this wouldn’t make sense at least for the Utilities Advisory Commission Minutes Approved on:Page 6 of 7 residential sector is the fact that the residential customer load is only 16% of the total load, which is not enough to provide much mutual benefit. He suggested that this should also be mentioned in the report. ITEM 7: INFORMATION ITEM: 2007 Statewide and Palo Alto Business Customer Satisfaction Survey Results Commissioner Dawes observed that it was mildly disappointing to see CPAU’s ratings fall from 2 years ago and be lower than other NCPA members. He wondered if staff has developed any programs to address the concerns raised on the report. Director Fong responded there were a few things to mention here. Unfortunately this year the number of major accounts surveyed was much smaller, and they usually provide more favorable evaluation of utility services. Second, there is greater focus on customer service to small (non key) accounts. We are somewhat restricted in terms of our customer service representatives for smaller accounts due to other projects, and that may have also impacted the results. We also know that the web site could be improved and we have plans to tweak the web site so that information is more easily accessible. Commissioner Melton perceived that the power delivery score declined and that reliability is always the customer’s most important issue. He said that he personally had not experienced power outages, but asked whether outages are more common in some areas of the city. Fong replied that capital improvement projects have been moved up to address problems in some targeted areas (e.g. California Avenue business district). In summary, we are disappointed that these are the results, we are not surprised, and we are taking action to address the issues raised in this survey. The next schedule meeting is set for May 7. Meeting adjourned at 8:45 P.M. Respectfully submitted, Marites Ward City of Palo Alto Utilities Utilities Advisory Commission Minutes Approved on:Page 7 of 7