HomeMy WebLinkAbout2000-11-20 City CouncilC ty
City of Palo Alto
Manager’s Report
TO:
ATTENTION:
HONORABLE CITY COUNCIL
FINANCE COMMITTEE
REVISED
3
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:NOVEMBER 20, 2000 CMR:399:00
SUBJECT:APPROVAL OF A BUDGET AMENDMENT ORDINANCE AND
RESOLUTION ADOPTING A GAS RATE INCREASE
RECOMMENDATION
The Utilities Advisory Commission and staff recommend that the City Council:
1.Approve the attached resolution authorizing revised rate schedules to incorporate a
25 percent system average retail gas rate increase effective January 1, 2001, in order
to partially offset the higher cost of delivered natural gas.
To implement this rate increase, Staff further recommends that the City Council:
Approve a Budget Amendment Ordinance (BAO) providing an additional
appropriation in the amount of $1.1 million for Gas fund commodity purchases;
adjusting gas sales revenue by a net $500,000 and transferring $3.2 million from the
Distribution Rate Stabilization Reserve (DRSR) to the Supply Rate Stabilization
Reserve (SRSR).
Approve raising the cap of the commodity portion of the Large Commercial Core Gas
Service rate schedule G-3 to $1 to reflect the gas market conditions.
DISCUSSION
The City of Palo Alto Gas Utility has experienced a dramatic rise this year in the purchase
cost of gas. This has had a tremendous impact on the financial condition of the Gas Utility.
On July 17, 2000, the City Council approved a 15 percent retail gas rate increase effective
August 1, 2000, and withdrawals of $3.5 million from the SRSR and $1.7 million from the
DRSR (CMR:330:00). Staff informed Council that.subsequent retail gas rate increases would
CMR:399:00 Page 1 of 3
likely be necessary in January 2001 and July 2001 to achieve full cost recovery. Achievement
of full cost recovery is not limited to purchase gas costs, but also includes operating and
capital costs incurred on the distribution side of the business.
As whole gas prices have continued to rise, the Gas Utility has executed supply agreements
to hedge against future price escalation. Based on these agreements, the cost of gas to the
City for fiscal year 2000-01 is expected to increase by $1.1 million. A 25 percent rate
increase in January 2001 is proposed to provide the additional revenue needed to cover the
cost to purchase gas and to deliver it to customers. Staff will evaluate the need for an
additional rate increase effective fiscal year 2001-02, based on updated information related
to commodity prices, sales revenues, and the need to replenish reserve levels.
Funds from the RSRs are used to stabilize rates. Due to the dramatic rise in commodity
prices and the subsequent use of SRSR funds to mitigate the revenue shortfall, staff
recommends transferring an additional $3.2 million from the DRSR to the SRSR. In
addition, staff proposes that the cap on the commodity portion of the Large Commercial Core
Gas Service rate schedule G-3 be raised to one dollar. The commodity portion of the gas rate
schedule is a market-based charge and the current cap of sixty-five cents does not reflect
market conditions.
UTILITIES ADVISORY COMMISSION REVIEW
The proposed gas rate increase was reviewed by the UAC on November 1, 2000. The UAC
recommended that the City Council approve the 25 percent rate increase effective January
1, 2001. In addition, the UAC recommended that staff consider another rate increase
effective April 1, 2001, instead of waiting until July.l, 2001, as proposed. The reason for
the UAC recommendation is to offset the increase in the purchase cost of gas and mitigate
risk that the Gas Fund may face if the reserves are insufficient to meet unanticipated events,
such as severe weather that might necessitate purchase of a larger quantity of gas at a higher
price.
RESOURCE IMPACT
This proposed 25 percent gas rate increase is expected to generate an additional $4.8 million
in revenue on an annual basis. For the six months of fiscal year 2000-01 during which the
rate increase will be in effect,- the revenue increase will be approximately $2.1 million.. Of
this amount, $1.1 million will be used to cover the increased commodity costs, and $1 million
will be added to reserves. The proposed BAO will appropriate this $1.1 million for increased
CMR:399:00 Page 2 of 3
commodity costs and will also adjust revenue. The $2.1 million in additional revenue due
to the rate increase will be partially offset by a downward adjustment in the amount of $1.6
million in projected gas sales revenue. This adjustment is necessary due to an overstatement
in gas sales revenue in the 2000-01 adopted budget. Consequently, the BAO reflects a net
increase in revenue of $500,000. The need for a revised forecast of gas usage was discussed
in CMR:330:00 when Council approved the prior gas rate increase (July 17, 2000).
For informational purposes, a summary of the BAOs approved to date in 2000-01 that impact
the Utilities Rate Stabilization Reserves will be attached when this item returns to Council.
This attachment also estimates future year ongoing costs associated with BAOs approved to
date to provide a projection for the future resource needs from the Utility Funds for those
programs approved after the adoption of the 2000-01 budget.
ATTACHMENTS
A:
B:
C:
D:
E:
F:
Resolution
Gas Rate Schedules, G-l, G-2, G-3, G-4, and G-7 _
Budget Amendment Ordinance (to follow when item returns to Council)
Utilities Advisory Commission Report dated November 1, 2000
Summary of Budget Amendment Ordinances Impacting the Utilities Rate Stabilization
Reserves Approved to Date in 2000-01 (to follow when item returns to Council)
CMR:330:00, "Proposed Budget Amendment Ordinance and Resolution Adopting a
Gas Rate Increase"
PREPARED BY: Lucie Hirmina, Rates Manager
DEPARTMENT HEAD
of Utilities
CITY MANAGER APPROVAL
AUDREY
Assistant to the City Manager
CMR:399:00 Page 3 of 3
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OFPALO
ALTO AMENDING UTILITY RATE SCHEDULES G-I,G-2,
G-3, G-4, and G-7 OF THE CITY OF PALOALTO
UTILITIES RATES AND CHARGES PERTAINING TO
GAS RATES
The Council of the City of Palo Alto does hereby
RESOLVE as follows:
SECTION I.PursUant to Section 12.20.010of the Palo
Alto Municipal Code, Schedules G-I (Residential Core Gas
Service), G-2 (Commercial Core Gas Service), G-3 (Large
Commercial Core Gas Service), G-4 (Large Commercial Core Gas
Transportation Service) and G-7 (Large Commercial Core Gas
Service) of the Palo Alto Utilities Rates and Charges are hereby
amended to read in accordance with Sheets G-l-!, G-2-1, G-3-1,
G-3-2, G-4-1, G-7-1 and G-7-2, respectively, attached hereto and
incorporated herein by reference. The foregoing Utility Rate
Schedules, as amended, shall become effective on
January i, 2001.
SECTION 2. The Council finds that the revenue derived
from the authorized adjustments of the several gas 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.
SECTION 3. 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:
ATTEST:APPROVED:
Cit.y Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Mayor
City Manager
Director of Utilities
Director of Administrative
Services
001025 syn 0071937
RESIDENTIAL CORE GAS SERVICE
UTILITY RATE SCHEDULE G-1
A.APPLICABILITY:
This schedule applies to core natural gas service to individually metered single family premises,
including those separately metered in a multi-family complex.
B. TERRITORY:
Within the service area of the City of Palo Alto and on land owned or leased by the City.
C. RATES:Per Meter
Per Month
(A)Summer Rates (May 1 to October 31):
0-20 therms per therm .......................................................................$0.612
Over 20 therms per therm .......................................................................$0.858
(B)WinterRates (Nov. 1 to April 30):
0-96 therms per therm
Over 96 therms per therm
.......................................................................$0.612
.......................................................................$0.858
SPECIAL NOTES:
Seasonal rate changes: The summer period is effective May 1 to October 31 and the winter
period is effective from November 1 to April 30. When the billing period is partly in the
summer period and partly in the winter period, the billing will be computed by prorating the
total therm usage and the applicable rates thereto between the two seasonal periods,
according to the ratio of the number of days in each seasonal period to the total number of
days in the billing period.
Service under this schedule is subject to discontinuance in whole or in part, for operational
reasons or if the City experiences supply or capacity shortages. The City will exercise
reasonable diligence and care to furnish and deliver continuous service and a sufficient
quantity of gas to customers, but does not guarantee continuity of service or sufficiency of
quantity. The City shall not be liable for any damage caused by interruption of service, if the
interruption of service is caused by an act of God, Fire, Strikes, riots, war, or any other cause
that is beyond the City’s control.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.G-l-1 dated 8-1-00 CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-l-1
COMMERCIAL CORE GAS SERVICE
UTIL1TY RATE SCHEDULE G-2
Be
Co
APPLICABILITY:
This schedule applies to non-residential customers who use less than 250,000 therms per year at a
single address.
TERRITORY:
Within the service area of the City of Pale Alto and on land owned or leased by the City.
RATES:
All year-round delivered commodity:Per Meter
Per Month
Per Therrn .......................................................................................................................$0.640
De SPECIAL CONDITIONS:
Service under this schedule is subject tO discontinuance in whole or in part, for operational
reasons or if the City experiences supply or capacity shortages. The City will exercise
reasonable diligence and care to furnish and deliver continuous service and a sufficient
quantity of gas to customers, but does not guarantee continuity of service or sufficiency of
quantity. The City shall not be liable for any damage caused by interruption of service, if the
interruption of service is caused by an act of God, Fire, Strikes, riots, war, or any other cause
that is beyond the City’s control.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. G-2-1 dated 8-1-00 CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-2-1
LARGE COMMERCIAL CORE GAS SERVICE
UTILITY RATE SCI-]~EDULE G-3
APPLICABILITY:
This schedule applies to service for large commercial customers who use at least 250,000 therms per
year at one site.
TERRITORY:
Within the service area of the City of Palo Alto and on land owned or leased by the City.
RATES:
Monthly Market-based Power Supply Charge:Cents
Per Therm
Supply Charges:
1.Commodity Charge ................................................................................$0.10-$1.00
2.Administrative Fee ........................................................................................$0.004
3.PG&E Local Transportation ...........................................................................$0.016
Distribution Charge:
1. Palo Alto Local Distribution .......................................................................... $0.237
D. SPECIAL CONDITIONS:
Service under this schedule is subject to discontinuance in whole or in part, for operational
reasons, or if the City experiences supply or capacity shortages. The City will exercise
reasonable diligence and care to furnish and deliver continuous service and a sufficient
quantity of gas to customers, but does not guarantee continuity of service or sufficiency of
quantity. The City shall not be liable for any damage caused by interruption of service, if the
interruption of service is caused by an act of God, Fire, Strikes, riots, war, or any other cause
that is beyond the City’s control.
The commodity charge is equal to the City’s bidweek price of the natural gas paid at the
PG&E City Gate for the month immediately preceding the month in which the customer is
billed. The commodity charge will fall within the minimum/maximum range set forth in
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.G-3-1 dated 7-1-00
CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-3-1
LARGE COMMERCIAL CORE GAS SERVICE
o
°
o
o
UTILITY RATE SCHEDULE G-3
(Continued)
C. 1.and include the cost of transporting the gas to the PG&E City Gate.
A customer who elects to be served under this rate will pay an administrative fee equal to the
allocable administrative costs incurred by the City in providing the gas service.
PG&E Local transportation charge is equal to the cost of transporting gas from the PG&E’s
City Gate to the Palo Alto City Gate.
The total monthly charge = therms used during the month X (commodity charge +
administrative fee + PG&E local transportation charge + Palo Alto local distribution
c.harge).
A customer may request service under this schedule for more than one account or meter if
the accounts are located on one site. A site shall be defined as one or more utility accounts
serving contiguous parcels of land with no intervening public right-of- ways (e.g. streets) and
have a common billing address.
Customers may request a rate schedule change at any time, but only once during a twelve-
month period if the change is between City of Palo Alto full-service rate schedules. The 12
months limitation does not apply if a customer elects a Gas Direct Access rate schedule and
is served by another Gas Service Provider. Qualified customers may elect Gas Direct Access
at any time.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.G-3-2 dated 7-1-00
CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-3-2
LARGE COMMERCIAL CORE GAS TRANSPORTATION SERVICE
UTILITY RATE SCHEDULE G-4
APPLICABILITY:
Bo
This schedule applies to gas transportation service for large commercial customers who use at least
250,000 therms per year for one account.
TERRITORY:
Co
Within the service area of the City of Palo Alto and on land owned or leased by the City.
RATES:Cents
Per Therm
Supply Charge:
PG&E Local Transportation .......................................................................................$0.016
Distribution Charge:
Palo Alto Local Distribution ......................................................................................$0.237
SPECIAL CONDITIONS:
Qualifying customers may request a change to this rate schedule at any time.
Specific terms and conditions shall be covered by separate agreement between the City and
Gas Service Provider.
o
°
PG&E local transportation charge is equal to the cost of transporting natural gas from the
PG&E City Gate to Palo Alto City Gate. Customers who elect this service must have the gas
delivered to PG&E City Gate.
Total monthly charge = therms used x (PG&E local transportation charge + P.A. distribution
charge).
A customer may request service under this schedule for more than one account or meter if
every account meets the minimum usage requirement of 250,000 therms per year.
[End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.G-4-1 dated 7-1-00 CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-4-1
LARGE COMMERCIAL CORE GAS SERVICE
UTILITY RATE SCHEDULE G-7
A. APPLICABILITY:
This schedule applies to service for large commercial customers who use at least 250,000 therms per
year at one site.
B. TERRITORY:
Within the service area of the City of Palo Alto and on land owned or leased by the City.
RATES:Per Therm
Supply Charges:
1.Commodity Charge .......................................................................................$0.304
2.Administrative Fee ........................................................................................$0.004
3.PG&E Local Transportation ..........................................................................$0.016
Distribution Charge:
1.Palo Alto Local Distribution .........................................................................$0.237
D.SPECIAL CONDITION:
Service under this schedule is subject to discontinuance in whole or in part, for operational
reasons or if the City experiences supply or capacity shortages. The City will exercise
reasonable diligence and care to furnish and deliver continuous service and a sufficient
quantity of gas to customers, but does not guarantee continuity of service or sufficiency of
quantity. The City shall not be liable for any damage caused by interruption of service, if the
interruption of service is caused by an act of God, Fire, Strikes, riots, war, or any other cause
that is beyond the City’s control.
A customer who elects to be served under this rate will pay an administrative fee equal to the
allocable administrative costs incurred by the City in providing the gas service.
PG&E Local transportation charge is equal to the cost of transporting gas from the PG&E’s
City Gate to the Palo Alto City Gate.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. G-7-1 dated 8-1-00 CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-7-1
LARGE COMMERCIAL CORE GAS SERVICE
UTILITY RATE SCHEDULE G-7
(Continued)
The total monthly charge = therms used during the month X (commodity charge +
administrative fee + PG&E local transportation charge + Palo Alto local distribution charge).
A customer may request service under this schedule for more than one account or meter if
the accounts are located on one site. A site shall be defined as one or more utility accounts
serving contiguous parcels of land with no intervening public right-of- ways (e.g. streets) and
have a common billing address.
Customers may request a rate schedule change at any time, but only once during a twelve-
month period if the change is between City of Palo Alto full-service rate schedules. The 12
months limitation does not apply if a customer elects a Gas Direct Access rate schedule and
is served by another Gas Service Provider, or if ~ customer elects to be served under a term
contract. Qualified customers may elect Gas Direct Access at any time.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. G-7-2 dated 8-1-00 CITY OF PALO ALTO
UTILITIES
Effective 1-1-2001
Sheet No. G-7-2
TO:UTILITIES ADVISORY COMMISSION
FROM:UTIITIES DEPARTMENT
DATE:NOVEMBER 1, 2000
SUBJECT: PROPOSED GAS RATE INCREASE
RECOMMENDATION
This report requests the Utilities Adxiisory Commission (UAC) recommend that the City Council
approve a 25% percent system average retail gas rate increase effective January 1, 2001 ’in order to
partially offset higher natural gas costs.
BACKGROUND
The Gas Utility’s revenue requirement consists of a number of components including the cost to
purchase gas, operate and maintain a reliable system, finance an appropriate capital improvement
program from current operating revenues, fund prudent reserve levels and provide a transfer to the
General Fund. Any change in one or more of these components as well as a change in sales level car
trigger a need for a rate adjustment. Staff reviews the Gas Utility’s financial situation periodically
to insure that the Utility is financially sound. Recent increases in the cost to purchase gas have
dramatically altered the financial condition of the Gas Fund. Current rates are not sufficient to
recover the cost to buy (supply) and deliver (distribution) gas to customers.
The fiscal year 00/01 budget was based on a gas price forecast made in December 1999. In early
May 2000, however, natural gas prices began an uncharacteristic rise because of nationwide supply
and demand issues. On July 17, 2000, the City Council approved a 15 percent retail gas rate increase
effective August 1, 2000 to partially offset rising gas prices (CMR:330:00). This summer, wholesale
gas prices continued to rise and the Palo Alto Gas Utility executed supply agreements with suppliers
to hedge against further price escalations. This action has helped to stabilize the Gas Fund. Since the
Gas Utility locked into fixed price supply contracts, the wholesale price of gas has continued to rise
another 20 percent.
DISCUSSION
Staff has developed a financial plan to redover higher gas purchase costs contingent upon timely
Council approval of a series of rate increases in combination with the withdrawal of funds from the
Rate Stabilization Reserves (RSR). This financial plan recognizes the need to (1) cushion the rate
shock of escalating natural gas prices to Palo Alto residents and businesses, (2) recover rising
wholesale gas costs and, (3) use and replenish reserves. While an abrupt one-time rate increase
could recover the rapid increase in gas prices, it is also feasible to transition to full cost recovery
through a series of rate adjustments while simultaneously drawing down. on reserves. This is
Page 1 of 4
consistent with the Utilities Reserve Policy and reinforces the underlying rationale for the existence
of reserves, namely, providing some rate stability. Upon depletion of the reserves, a portion of the
retail gas rate will be used to gradually build up the reserves above the minimum guideline levels.
The first step to execute this financial plan was taken by the City Council on July 17, 2000. At this
meeting a 15 percent retail rate increase was approved effective August 1, 2000. In addition, Council
approved withdrawals of $3.5 million from the Supply Rate Stabilization Reserve (SRSR) and $1.7
million from the Distribution Rate Stabilization Reserve (DRSR) to partially offset the increased
purchase costs. Also, staff informed Council that subsequent retail gas rate increases would likely
be necessary in January 2001 and July 2001 (CMR:330:00). All gas customers were notified through
the August bill insert that subsequent gas rate increases would likely be necessary. The notice also
encouraged customers to invest in energy conservation solutions and, for qualifying customers, to
seek financial assistance through the Residential Rate Assistance Program.
This report recommends approximately a 25 percent retail rate increase effective Janu~y 1, 2001.
If approved, Gas Fund sales revenue is projected to increase approximately $2.1 million for the
remaining six months of fiscal year 2000-01. The size of this rate increase is based upon achieving
two objectives: (t) continue to transition retail rates towards full distribution and supply cost
recovery and (2) increase sales revenue enough to enable the Gas Fund reserves to end this fiscal
year with a positive balance.
It is expected that a third retail rate increase of approximately 25 percent will be proposed for July
1,2001. The objectives of the third rate increase will be to achieve full cost recovery in the Gas Fund_.
and to begin to build up the DRSR and the SRSR. Achievement of full cost recovery is not limited
to purchase gas costs, but also includes operating and capital costs incurred on the distribution side
of the business. The size of the third rate increase may be adjusted based on new supply contracts
for FY20001-02 and the projected ending balances in the RSR’s for the current fiscal year.
This rate increase has been spread among customer classes based on the results of a cost-of-service
study. The cost of service study allocates all distribution and supply costs to customer classes. The
results indicate that large industrial distribution rates are insufficient to recover their allocated share
of costs. Consequently, while the system average rate increase is 25 percent, the largest proposed rate
increase is 37 percent applicable to large industrial users served on Rate Schedule G-7. Residential
customers would experience a 25 percent rate increase, while small and medium commercial
customers would receive a 19 percent increase (Table 1).
The following table indibates the impact of this rate proposal on a typical monthly bill for the various
customer classes.
Page 2 of 4
TABLE 1
Impact of Rate Increase on Customer Bills
Customer
Residential/Winter G- 1
Residential/Winter
Residential/Summer
Residential/Summer
Usage
Therms
lO0
150
26
40
Monthly
Bill
$ 62.23
105.13
17.40
29.41
Amount of
Increase
$ 12.67
21.25
3.53
5.93
Percent
Increase
25.6
25.3
25.4
25.2
PercentPA
Below
PG&Eas of
9/22/00
(35.5)
(30.1)
(29.8)
(26.2)
Commercial G-2 500 320.11 51.01 19.0 (34.3)
Industrial G-2 10,000 6,402.20 1,020.20 19.0 (21.1)
Industrial G-3 60,000 33,660.00 9,096.00 37.0 (22.5)
Industrial G-7 30,000 16,830.00 4,548.00 37.0 (24.4)
Despite the August 2000 rate increase and this proposed January 2001 rate increase, Palo Alto retail
gas. rates remain below PG&E gas rates in nearby communities. The primary reason is because
customers of PG&E have already experienced the abrupt rise in wholesale gas prices this year.
PG&E employs an automatic cost pass through mechanism mandated by the California Public
Utilities Commission. For PG&E customers, rates change monthly to reflect the actual commodity
cost for the month. This approach has the advantage of automatic cost recovery for the utility, but
can result in abrupt changes in customer bills from month to month.
As a municipally-owned utility, Palo Alto can choose a monthly gas cost tracking approach or
continue to utilize a reserve approach to provide some rate stability to Palo Alto residents and
businesses. For now, staff proposes to continue withdrawal of reserves to the benefit of all customer
classes until the Distribution RSR and the Supply RSR are depleted near the end of this fiscal year.
In July 2001, staff plans to propose that residentialand small and medium commercial customers
rates contribute to build up the reserves and use the reserves to directly benefit these customer
classes. However, large industrial customers (9 customers eligible for Direct Access) may be
required to select one of the following: (1) Palo Alto’s Gas Rate Schedule G-3 whereby, the
commodity price changes monthly (PG&E approach), or (2) enter into a fixed term contract with the
Page 3 of 4
Palo Alto Gas Utility or (3) elect Direct Access whereby the customer would buy gas under contract
with an outside energy supplier. If Palo Alto provides service, rates for large industrial customers
would be designed to retain a minimal contribution to the RSR and industrial customers would only
be entitled to minimal withdrawals of the RSR. Staff plans to recommend a modification to the
current reserve guidelines during the budget process next spring.
RESOURCE IMPACT
Approval of this proposed rate increase will increase the Gas Fund revenues by approximately $2.1
million from January 2001 through June 2001. On an annualized basis, the rate adjustment is
projected to increase revenues approximately $4.8 million.
POLICY IMPLICATIONS
These recommendations do not represent a change in current City policies.
TIMELINE
The effective date of the proposed rates is effective January 1,2001.
ENVIRONMENTAL REVIEW
The adoption of the resolution does not constitute a project under the California Environmental
Quality Act, therefore, no environmental assessment is required.
ATTACHEMENTS:
Gas Rate Schedules, G-l, G-2, G-3, G-4, and G-7
PREPARED BY:Lucie Hirmina, Rates Manager
REVIEWED BY:Girish Balachandran, Manager Supply Resources
Randy Baldschun, Assistant Director of Utilities
APPROVED BY:
tor of Utilities
Page 4 of 4
City
City of Palo Alto
Manager’s Report
TO:
ATTENTION:
HONORABLE CITY COUNCIL
FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT:UTILITIES
DATE:JULY 17, 2000 CMR:330:00
SUBJECT:PROPOSED BUDGET AMENDMENT ORDINANCE AND
RESOLUTION ADOPTING A GAS RATE INCREASE
RECOMMENDATION
Staff recommends that Council:
1. Approve the attached resolution authorizing revised rate schedules to incorporate a 15
percent systemwide retail rate increase effective August 1, 2000.
2.Approve a Budget Amendment Ordinance providing an additional appropriation in the
amount of $6,607,307 for Gas Fund Commodity Purchases.
BACKGROUND
The gas utility’s revenue requirement includes the cost to purcfiase gas, operate and maintain
a reliable system, finance an appropriate capital improvement program from current
operating revenues, fund prudent reserve levels and provide a transfer to the General Fund..
Any change in one or more of these components or a change in sales level can trigger a need
for a rate adjustment.
The Gas Fund’s fiscal year 2000-01 budget was based on forecasted gas prices as of
December 1999. At that time, the forecast anticipated commodity purchase costs that were
similar to historical prices. In early May 2000, however, prices began an uncharacteristic
rise. The resulting wholesale prices are higher than the highest historical prices since the
inception of the gas futures contract at the New York Mercantile Exchange (NYMEX).
Attachment A, Figure 1 shows the price of gas for rolling twelve-month periods from
October 1997 through July 6, 2000. Attachment A, Figure 2 shows the pi:ojected natural gas
market prices for fiscal year 2000-01. This projection was made in December 1999 and was
CMR:330:00 Page 1 of 6
used to prepare the proposed 2000-01 budget for purchases cost. Also shown on Figure 2
is a projection made on June 6, 2000 which covered the same 2000-01 fiscal year. In six
months, gas prices had risen approximately 57 percent higher than in December 1999,
particularly escalating since April 2000.
In order to shield the Palo Alto Gas Utility from further significant gas price escalations, staff
began an eight-week purchasing strategy in June 2000 to lock-in wholesale gas prices. The
gas purchase plan includes buying gas at fixed prices as well as purchasing gas with a price
cap for FY2000-01.
Several factors related to supply and demand account for the unprecedented rise in natural
gas prices. The factors identified are: increased reliance on natural gas-fired power
generation across the country; 2) a forecast for a worse-than-normal hurricane season that
shortens supplies coming from the Gulf coast region; 3) low gas storage inventory in the East
and in the producing regions that may contribute to a future gas shortage; and 4) the effect
of investors transferring funds from the slumping stock market to the commodity markets.
The Palo Alto Gas Utility is not the only gas utility facing the unexpected rise in prices.
Many other gas utilities in the West are proposing rate increases this summer, while others
are allowing the gas commodity prices to change automatically each month based on the
market. This is Palo Alto’s first retail gas rate increase in six years. During that six-year
period, Palo Alto actually reduced retail gas rates 12 percent in 1996 and an additional 7
percent in 1998. With regard to notification of Palo Alto consumers, in anticipation of the
need to raise gas rates this year, the July 2000 utility bill insert on Palo Alto’s water rate
increase also notified customers that a gas rate increase may be necessary this summer.
DISCUSSION
In order to provide some rate stability to customers, Palo Alto has traditionally charged fixed
gas Hates that do not fluctuate on a monthly basis with the wholesale cost of gas. Instead, the
utility uses its reserves to cushion the impact of sudden price changes and typically adjusts
rates annually upon Council approval, with an effective date of on July 1 to coincide with the
beginning of a fiscal year.
In 1993, the City Council adopted a Utility Reserve Policy and established a Rate
Stabilization Reserve (RSR) for each utility (CMR:263:93). In June 1999, the formula for
the minimum and maximum level was further modified and separate reserves were
established for the supply and distribution units of the gas and the electric funds. Minimum
and maximum reserve levels for the Gas Fund were set based on anticipated normal natural
gas market price and usage swings. However, the recent increase in natural gas market
prices is so dramatic that the Supply RSR level is not adequate to absorb the increase.in the
revenue requirement.
CMR:330:00 Page 2 of 6
For fiscal year 2000-01, the PoSsibility that commodity prices could rise during the fiscal
year was identified on page 10 of the Utilities Department proposed budget, and staff
indicated that ifa price change was substantially above or below projected commodity costs,
staff may propose a rate change to Council during the year.
Based on an updated market price forecast, gas purchase costs are projected to exceed the
2000-01 budget by 59 percent or approximately $6.8 million. While it is necessary to
increase rates to offset this increase in wholesale gas prices, it is undesirable to impact
customer bills with one dramatic rate increase. In consideration of the bill impact on
customers and given the volatility of gas prices, staff recommends accommodating the
unexpected rise in gas prices with one to three rate adjustments over a 12 month cycle while
drawing heavily upon the Gas Fund cash reserves.
Therefore, staff proposes to:
¯Enact a 15 percent retail rate increase on August 1, 2000;~
¯Transfer $1.7 million from the Distribution RSR to the Supply RSR;
¯Withdraw all funds from the Supply RSR;
¯Implement approximately a 20 percent rate increase on January 1, 2001, and
¯Evaluate the need for an additional rate increase effective in FY2001-02, based on
updated information related to commodity prices, sales revenues, and the need to
replenish reserve levels.
The Supply RSR may become depleted to zero in FY 2000-01. The ending reserve levels
of the Supply and Distribution RSR’s depend on the following key factors: 1) actual 1999-
2000 year-ending balances in the Gas Fund RSR’s; 2) Council approval of a subsequent rate
increase of approximately 20 percent in January; and 3) actual gas consumption (sales)
levels during 2000-01. Because of these uncertainties, it is difficult to state what the ending
balance will be in the RSR’s at the end ofFY2000-01. However, since the purpose of the
RSR is to help stabilize rates, it is appropriate to reduce the reserve now, avoid an
unacceptably high bill impact on customers, and gradually build up the reserve to its target
guideline. Staff believes this approach balances the customers’ interests with the utility’s
need to recover costs in a timely manner. As more information becomes known, _better
projections for the RSR balances at year-end will become available enabling staffto modify
its proposals as necessary.
If the January 1, 2001 rate increase is not enacted, the Gas Fund Supply RSR is projected
to end with a negative balance of approximately $1.6 million. If a January 1, 2001 rate
increase of 20 percent is approved, the combined Supply and Distribution RSR’S are
expected to be depleted to near zero. Staff plans to monitor consumption, sales, costs, and
reserve levels each month to establish a rate proposal for January 1, 2001 that will enable
the reserves to avoid depletion by June 30, 2001. It may be noted that despite under-
recovery of purchased gas costs, overall the proposed retail rates will cover all variable
CMR:330:00 Page 3 of 6
costs and make a partial contribution towards recovery of fixed costs.
The gas sales forecast used for FY2000/01 budget was done in December 1999. At that time,
the gas consumption level for the recently completed FY 1998/99 was 40.7 million therms
which indicated a much higher level than previous years. It was not clear if the higher usage
in 1998-99 was reflective of a permanent trend or was a one-time anomaly due to possible
weather variations and other factors. In the past 7 months, actual gas usage has not supported
an annual forecast of 40.7 million therms. Rather, recent trends indicate that consumption
will be 10.6 percent lower. On this basis, staffbelieves that the adopted budget sales revenue
amount of $19,669,000 is overstated and a more realistic estimate is approximately
$16,462,000. This represents a 1613 percent reduction in sales revenue. On a percentage
basis the revenue decline is higher than the consumption decline because of the two-tier
inverted rate structure for residents. If sales are reduced, the usage primarily drops within
the second tier. The second tier is priced higher than the first tier, accounting for the
disproportionately higher decline in revenue.
Application of 15 Percent Rate Increase
The proposed rate increase will be applied to the supply portion of the total gas rate while
distribution rates will remain unchanged. The rate increase will be spread equitably among
customer classes based on a system average increase of approximately 15 percent. Table 1
indicates the impact of this rate proposal on a typical monthly bill for the various customer
classes.
Customer
Residential/Winter
Residential/Winter
Residential/Summer
Residential/Summer
Small Commercial G-2
Small Commercial G-2
Large Commercial G-7
Proposed Bill Impact
Usage
Therms
100
150
30
40
5OO
10,000
30,000
TABLE 1
Proposed
Monthly Bill
$49.60
83.95
16.63
23.50
269.00
5,380.00
12,270.00
Amount of
Increase
$6.50
11.00
2.18
3.08
35.00
700.00
1,590.00
Percent
Increase
15%
15
15
15
15
15
15
Even with consecutive rate increases of 15 percent and 20 percent in FY2000-01, Palo Alto’s
commodity gas rates will remain below the market during this period, unless wholesale
natural gas prices decline. Table 2 is a comparison between CPAU’s proposed rates and an
estimate of PG&E’s comparable rates. CPAU’s market forecast was used to calculate the
estimated PG&E rates. PG&E’s rates are actually a monthly pass-through of PG&E’s
weighted average cost of gas and therefore reflect current market prices. On the other hand,
Palo Alto’s retail commodity rates, despite the proposed increase, remain below the
wholesale market price. This difference in tracking costs on a monthly basis (PG&E) or
CMR:330:00 Page 4 of 6
over a longer period of time (CPAU), accounts for the principal rate differential in the table.
Table 2 illustrates bills for a summer month (August) and winter month (December)
because rate structures change between seasons.
PG&E AND PROPOSED PALO ALTO BILL COMPARISON
Usage
Customer in
Therms
Residential
August 2000
December 2000
Small Commercial Go2
August 2000
December 2000
Medium Commercial G-2
August 2000
December 2000
Large Commercial G-7
August 2000
December 2000
TABLE 2
Palo .Alto
Proposed
Monthly Bill
30 $16.63
100 49.60
500 269.00
500 269.00
10,000 5,380.00
10,000 5,380.00
30,000 12,270.00
30,000 12,270.00
PG&E
Expected
Bill
$26
87
394
442
6,603
7,216
18,569
19,922
Dollar
Difference
[Rounded]
($10)
(38)
(125)
(173)
(1,223)
(1,836)
(6,299)
(7,652)
Percent
Palo Alto
Below PG&E
-37%
-43
-32
-39
-19
-25
-34
-38
Staff is investigating the possibility of changing the current rate structure to avoid the
disparity which arises when commodity prices change dramatically (up or down). One
strategy under consideration is to convert all commodity rates to a cost pass-through structure
similar to PG&E, Southern California Gas Company, and the City of Long Beach. The new
structure, would result in varying monthly commodity rates based on CPAU’s actual cost of
gas. However, converting to this pricing methodology should be gradual to avoid major bill
impacts on customers and provide adequate time for businesses to plan their budgets. Finally,
since this rate structure would expose customers to market volatility, fixed-price, fixed-term
rates may be available to customers as well.
UTILITIES ADVISORY COMMISSION REVIEW
On July 5, 2000, staff presented this proposal to the Utilities Advisory Commission (UAC)
as an information item. No action was requested. The UAC understood the reasons for the
rate proposal. They suggested that energy efficiency and conservation program information
be provided that could help customers reduce gas usage. The UAC also suggested that the
residential gas rate schedule be shown on the bill insert so consumers could understand that
prices escalate for increased usage.
RESOURCE IMPACT
The proposed 15 percent rate increase is expected to generate an additional $2.3 million on
an annual basis but will appear as only a $340,000 revenue increase above the adopted
budget. The reason is that the F¥ 2000-01 adopted budget gas sales revenue is overstated and
the $340,000 amount takes into account a revised forecast for gas usage. If usage trends are
CMP,.:330:00 Page 5 of 6
confirmed, the adopted budget sales revenue will be revised during the mid-year adjustment
process.
For informational purposes, attached is a summary of the BAOs approved to da~e in 2000-01
that impact the Utilities Rate Stabilization Reserves. This attachment also estimates future
year ongoing costs associated with BAO’s approved to date to provide a projection for the
future resource needs from the Utility Funds for those programs approved after the adoption
of the 2000-01 budget.
POLICY IMPLICATIONS
These recommendations do not represent a change in current City policies.
TIMELINE
The proposed gas rates will be effective August 1,. 2000.
ENVIRONMENTAL REVIEW
The adoption of the resolution does not constitute a project under the
Environmental Quality Act, therefore, no environmental assessment is required.
California
ATTACHMENTS
Attachment A:Figures 1 and 2
Budget Amendment Ordinance
Budget Amendment Ordinances Impacting the Utilities Rate Stabilization Reserves
Approved to Date in 2000-01
Resolution
Gas Rate Schedules G-l, G-2, and G-7
PREPARED BY:Karla Dailey, Resource Planner
Randy Baldschun, Assistant Director of Utilities
DEPARTMENT HEAD:
of Utilities
CITY MANAGER APPROVAE~--~~
EMILY HARRISON -"
Assistant City Manager
cc: Utilities Advisory Commission
CMR:330:00 Page 6 of 6
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR THE FISCAL YEAR 2000-01 TO
PROVIDE AN ADDITIONAL APPROPRIATION OF $6,607,307FOR GAS
FUND COM~ODITY PURCHASE AND TRANSMISSION COSTS.
WHEREAS, pursuant to the provisions of Section 12 of Article
III of the Charter of the City of Palo Alto, the Council on June 19,
2000 did adopt a budget for fiscal year 2000-01; and
~EREAS, the Gas Utility’s adopted budget for fiscal year
2000-01 is based on historically normal gas price forecasts as of
December 1999; and
WHEREAS, gas prices have increased more than ~fifty percent
since the December 1999 forecast due to several factors relating to
supply and demand; and
WHEREAS, an estimated $6,607,307 beyond the amount budgeted is
required for gas commodity purchases; and
WHEREAS, a 15 percent rate increase effective August i, 2000
will generate $2.3 million in gas sales revenue and offset a portion
of increasing gas commodity costs; and
WHEREAS, as a result of lower revised sales volume subsequent
to adoption of the budget, anticipated revenue in gas sales must be
reduced by $2.0 million; and
WHEREAS, City Council authorization is needed to amend the
2000-01 budget as hereinafter set forth.
NOW, THEREFORE,’ the Council of the City of Palo Alto does
ORDAIN as follows:
SECTION i. The sum of Six Million Six Hundred Seven Thousand
Three Hundred Seven Dollars ($6,607,307) is hereby appropriated to
commodity purchases expense in the Supply Resource Management
Functional Area in the Gas Fund, and the Supply Rate Stabilization
Reserve is correspondingly reduced.
SECTION 2. The sum of One Million Seven Hundred Thousand
Dollars ($1,700,000) is hereby transferred from the Gas Fund
Distribution Rate Stabilization Reserve to the Gas Fund Supply Rate
Stabilization Reserve.
SECTION 3. The transactions authorized by Section 1 and 2 will
reduce the Gas Fund Supply Rate Stabilization Reserve from’
$2,962,000 to ($1,605,307) and reduce the Gas Fund Distribution Rate
Stabilization Reserve from $3,509,000 to $1,809,000 for a net
balance of $203,693 in the Gas Fund.
SECTION 4. Gas Fund revenues are increasing by a net of Three
Hundred Forty Thousand Dollars ($340,000) as a result of this BAO.
SECTION 5. As specified in Section 2.28.080(a) of the Palo
Alto Municipal Code, a two-thirds vote of the City Council is
required to adopt this ordinance.
SECTION 6. The Council of the City of Palo Alto hereby finds
that this is not a project under the California Environmental
Quality Act and, therefore, no environmental impact assessment is
necessary.
SECTION 7. As provided in Section 2.04.350 of the Palo Alto
Municipal Code, this ordinance shall become effective upon adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:City Manager
Senior Asst. City Attorney Director of
Services
Administrative
Director of Utilities
City of Palo Alto
Budget Amendment Ordinances Impacting Utilities Rate Stabilization Reserves Approved To Date in 2000.01
07/14/00
~ted Electric Distribution Rate Stabilization Reserve
(RSR) Balance $5,276,000
[’otal BAOs
RSR Balance After BAO’s
Electric Fund
Estimated Electric Supply Rate Stabilization Reserve (RSR
Balance
$o $o $o $o
$5,276,O00
$16,409,000
$0 :
]’otal BAOs
Balance After BAO’s
;as Fund
Estimated Gas Distribution Rate Stabilization Reserve
(RSR) Balance
Gas Rate Increase BAO
$o $o
$16,409,o00
$3,509,000
3OO,O0O)
$o
Total BAOs
RSR Balance After BAO’s
$o ($1,700,000)
$1,809,000
Gas Fund
Estimated Gas Supply Rate Stabilization Reserve (RSR)
Balance
Gas Rate Increase BAO
$2,962,000
($4,567,307)
Total BAOs
RSR Balance After BAO’s
Estimated Net Gas Fund RSR Balance
Estimated Refuse Rate Stabilization Reserve (RSR)
Balance
$0 ($4,567,307)
($1,605,307)
$3,949,000
$203,693
Total BAOs
RSR Balance After BA O’s
$o $o $0
$3,949,000
$o
;
Budget Amendment Ordinances Impacting Utilities Rate Stabilization Reserves Approved To Date in 2000-01
07/14/00
~astewater CollecUon Fund
Estimated WWC Rate Stabilization Reserve (RSR) Balance
Total BAOs
RSR Balance After BAO’s
Wastewa~r Treatment Fund
Estimated WWT Rate Stabilization Reserve (RSR) Balance
I’otal BAOs
RSR Balance After BAO’s
Water Fund
Estimated Water Rate Stabilization Reserve (RSR) Balance
Total BAOs
RSR Balance After BAO’s
Vehicle Equipment Fund
Estimated Retained Earnings
$o $o
$o $o
$5,877,000
$o $o !
$5,877,000
$4,270,000
$o $o $o $oi
$4,270,000
Retained Earnings Balance After BAO’s ($6,267,307)
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO AMENDING UTILITY RATE SCHEDULES G-l, G-2
AND G-7 OF THE CITY OF PALO’ALTO UTILITIES RATES
AND CHARGES PERTAINING TO GAS SERVICE
The Council of the City of Palo Alto does hereby RESOLVE
as follows:
SECTION I.Pursuant to Section 12.20.010 of the Palo
Alto Municipal Code, Schedules G-I (Residential Core Gas
Service), G-2 (Commercial Core Gas Service), and G-7 (Large
Commercial Core Gas Service) of the Palo Alto Utilities Rates
and Charges are hereby amended to read in accordance with Sheets
G-l-l, G-2-1, G-7-1, and G-7-2, respectively, attached hereto
and incorpgrated herein by reference. The foregoing Utility
Rate Schedules,as. amended, shall become effective~ -~on
August i, 2000.
SECTION 2. The Council finds that the revenue derived
from the authorized adjustments of the several gas 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.
SECTION 3. 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:
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Mayor
City Manager
Director of Utilities
Director of Administrative
Services
RESIDENTIAL CORE GAS SERVICE
UTILITY RATE SCHEDULE G- 1
A. APPLICABILITY:
This schedule applies to core natural gas service to individually metered single family premises,
including those separately metered in a multi-family complex.
B. TERRITORY:
Within the service area of the City of Palo Alto and on land owned or leased by the City.
C. RATES:
Fo~ individually metered residential customers
Per Meter
Per Month
(A). Summer Rates (May 1 to October 31):
0-20 therms per therm ..............................................................................................48.8¢
Over 20 therms per therm .......................................................................................... 68.7¢
(B)Winter Rates (Nov. 1 to April 30):
0-96 therms per therm ...............................................................................................48.8¢
Over 96 thermsper therm ............................................ .............................................68.7¢
D. SPECIAL NOTES:
Seasonal rate changes: The applicable residential rate structure will be prorated in the May and
November billing periods based on the rates of the number of days pribr to May 1 and subsequent
to October 31, respectively, to the total number of days in the billing period.
’2.Service under this schedule is st~bject to discontinuance in whole or in part, for operational reasons
or if the City experiences supply or capacity shortages. The City will exercise reasonable diligence
and care to furnish and deliver continuous service and a sufficient quantity of gas to customers, but
does not guarantee continuity of service or sufficiency of quantity. The City shall not be liable for
any damage causett by interruption of service, if the interruption of service is caused by an act of
God, Fire, Strikes, riots, war, or any other cause that is beyond the City’s control.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. G-1-1 dated 7-1-98 CITY OF PALO ALTO
UTILITIES
Effective 8-1-2000
Sheet No. G-l-1
COMMERCIAL CORE GAS SERVICE
UTILITY RATE SCHEDULE G-2
A. APPLICABILITY:
This schedule applies to non-residential core customers. Core customers include all customers using
less than 250,000 therms per year at a single address. In addition, this schedule applies to customers
who use more than 250,000 therms per year at a single address but elect to be core customers served
under this schedule.
B.TERRITORY:
Within the service area of the City of Pale Alto and on land owned or leased by the City.
C.RATES:
All year-round delivered commodity:Per Meter
Per Month
Per Therm ......................................................................................................................................53.8¢
D. SPECIAL CONDITIONS:
Service under this schedule is subject to discontinuance in whole or in part, for operational reasons
or if the City experiences supply or capacity shortages. The City will exercise reasonable diligence
and care to furnish and deliver continuous service and a sufficient quantity of gas to customers, but
does not guarantee continuity of service or sufficiency of quantity. The City shall not be liable for
any damage caused by interruption of service, if the interruption of service is caused by an act of
God, Fire, Strikes, riots, war, or any other cause that is beyond the City’s control.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheei No. G-2-1 dated 7-%98 CITY OF PALO ALTO
UTILITIES
Effective 8-1-2000
Sheet No. G-2-1
LARGE COMMERCIAL CORE GAS SERVICE
UTILITY RATE SCHEDULE G-7
A. APPLICABILITY:
This schedule applies to service for large commercial customers who use at least 250,000.therms per
year at one site.
B. TERRITORY:
Within the service area of the City of Palo Alto and on land owned or leased by the City.
C. RATES:Cents
Per Therm
Commodity Charge ......................................................i ..........................................................30.4¢
Administrative Fee ..................................................................................................................0.4¢
Transportation Charges:
PG&E Local Transportation .............................................................................................1.6¢
Palo Alto Local Distribution .............................................................................................8.5¢
D. SPECIAL CONDITION:
Service under this schedule is subject to discontinuance in whole or in part, for operational reasons
or if the City experiences supply or capacity shortages. The City will exercise reasonable diligence
and care to furnish and deliver continuous service and a sufficient quantity of gas to customers, but
does not guarantee continuity of service or. sufficiency of quantity. The City shall not be liable for
any damage caused by interruption of service, if the interruption of service is caused by an act of
God, Fire, Strikes, .riots, war, or any other cause that is beyond the City’s control.
2.A customer who elects, to be served under this rate will pay an administrative fee equal to the
allocable administrative costs incurred by the City in providing the gas service.
3.PG&E Local transportation charge is equal to the cost of transporting gas ~om the PG&E’s City
Gate to the Palo Alto City Gate.
4.The total monthly charge = therms used during the month X (commodity charge + administrative
fee + PG&E local transportation charge + Palo Alto local distribution charge).
5. A customer may request service under this schedule for more than one account or meter if the
CITY OF PALO ALTO UTILITIES
Issued by the. City Council
Supersedes SheetNo. G-7-’I dated 7-1-98 CITY OF PALO ALTO
UTILITIES
Effective 8-1-2000
Sheet No. G-7-1
accounts are located on one site. A site shall be defined as one or more utility accounts serving
contiguous parcels of land with no intervening public" right-of- ways (e.g. streets) and have a
common billing address.
Customers may request a rate schedule change at any time, but only once during a twelve-month
period if the change is between City of Palo Alto full-service rate schedules. The 12 months
limitation does not apply if a.customer elects a Gas Direct Access rate schedule and is served by
another Gas Service Provider, or if a customer elects schedule G-8. Qualified customers may elect
Gas Direct Access at any time.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. G-7-1 dated 7-1-98 CITY OF PALO ALTO
UTILITIES
Effective 8-1-2000
Sheet No. G-7-2