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Home My WebLink AboutStaff Report 2302-093928.Finance Committee Recommends Adoption of Four Resolutions: 1) Approving the Fiscal Year 2024 Wastewater Collection Utility Financial Plan, Proposed Reserve Transfers, and Increasing Wastewater Rates by Amending Wastewater Collection Rate Schedules S-1, S- 2, S-6 and S-7; 2) Approving the Fiscal Year 2024 Water Utility Financial Plan, Proposed Reserve Transfers, and Increasing Water Rates by Amending Water Rate Schedules W-1, W-2, W-3, W-4, and W-7; 3) Amending Utility Rate Schedules EDF-1 and EDF-2, to Increase Dark Fiber Rates by 4.9 Percent and amending Rate Schedule EDF-3 to make technical revisions with no rate change; and 4) Amending Utility Rate Schedule D-1 Increasing the Storm Water Management Fee by 4.9 Percent per Month per Equivalent Residential Unit for FY 2024; and CEQA Status: Not a project under CEQA Guidelines Section 15378(b)(4) and (5) and exempt under Public Resources Code Sec. 21080(b)(8) and CEQA Guidelines Section 15273(a) Item No. 28. Page 1 of 10 1 6 8 4 CITY COUNCIL STAFF REPORT From: City Manager Report Type: Action Lead Department: Utilities Meeting Date: June 19, 2023 Staff Report: 2302-0939 TITLE Finance Committee Recommends Adoption of Four Resolutions: 1) Approving the Fiscal Year 2024 Wastewater Collection Utility Financial Plan, Proposed Reserve Transfers, and Increasing Wastewater Rates by Amending Wastewater Collection Rate Schedules S-1, S-2, S-6 and S-7; 2) Approving the Fiscal Year 2024 Water Utility Financial Plan, Proposed Reserve Transfers, and Increasing Water Rates by Amending Water Rate Schedules W-1, W-2, W-3, W-4, and W-7; 3) Amending Utility Rate Schedules EDF- 1 and EDF-2, to Increase Dark Fiber Rates by 4.9 Percent and amending Rate Schedule EDF-3 to make technical revisions with no rate change; and 4) Amending Utility Rate Schedule D-1 Increasing the Storm Water Management Fee by 4.9 Percent per Month per Equivalent Residential Unit for FY 2024; and CEQA Status: Not a project under CEQA Guidelines Section 15378(b)(4) and (5) and exempt under Public Resources Code Sec. 21080(b)(8) and CEQA Guidelines Section 15273(a) RECOMMENDATION Finance Committee, the Utilities Advisory Commission (UAC) and staff recommend that the City Council adopt the following: 1. For the Wastewater Collection Utility, a Resolution1: a. Approving the Fiscal Year 2024 Wastewater Collection Financial Plan2, including a 9% wastewater rate increase; and b. Approving a transfer of up to $3.178 million from the Capital Improvement Projects Reserve to the Operations Reserve in FY 2023; and c. Approving a transfer of up to $342 thousand from the Rate Stabilization Reserve to the Operations Reserve in FY 2023; and d. Increasing the Wastewater Collection Utility Rates via the Amendment of Rate Schedules3 1 Wastewater Resolution https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/attachments/03-01-2023-id-2301-0798-ww-resolution.pdf 2 Fiscal Year 2024 Wastewater Financial Plan https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/attachments/03-07-2023-id-2302-0944-ww-financial-plan-lisa.pdf 3 Wastewater Rate Schedules https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/attachments/06-19-2023-id-2302-0939-wastewater-rate-schedules- fy24-combined.pdf Item No. 28. Page 2 of 10 1 6 8 4 S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) 2. For the Water Utility, a Resolution4: a. Approving the FY 2024 Water Utility Financial Plan5, including a 2% water distribution rate increase; and b. Approving a transfer of up to $3.746 million from the Capital Improvement Program (CIP) Reserve to the Operations Reserve in FY 2023; and c. Approving a transfer of up to $3.0 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2023; and d. Increasing Water Utility Rates via the Amendment of Rate Schedules6 W-1 (General Residential Water service), W-2 (Water Service from Fire Hydrants), W3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) 3. A Resolution Amending Utility Rate Schedules EDF-1 and EDF-27 to increase Dark Fiber Rates 4.9 percent, and amending Schedule EDF-3 to reflect minor edits with no rate change; 4. A Resolution Amending Utility Rate Schedule D-18 increasing the Storm Water Management Fee by 4.9 percent consistent with the applicable Consumer Price Index. EXECUTIVE SUMMARY In March and April 2023, the UAC, Finance Committee, and City Council reviewed the proposed rate changes recommended by Staff for Fiscal Year (FY) 2024. This report summarizes the meetings that occurred, including all staff recommendations. This utility rates report includes sections for wastewater collection, water, dark fiber, and storm water management. Estimates for retail revenue impacts are included in the FY 2024 budget assumptions. This report outlines the actions requested, transmits the resolutions from these reviews, and requests City Council approval and adoption. Approval of this item would result in implementation of the finalized rates for FY 2024, beginning July 1, 2023. 4 Water Resolution https://cityofpaloalto.primegov.com/meeting/attachment/791.pdf?name=Attachment%20A,%20Water%20Resolu tion%20FY%202024 5 Fiscal Year 2024 Water Financial Plan https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/attachments/06-19-2023-id-2302-0939-water-financial-plan-fy24- cc.pdf 6 Water Rate Schedules https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/attachments/06-19-2023-id-2302-0939-water-rate-schedules-fy24-combined.pdf 7 Dark Fiber Resolution https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/attachments/06-19-2023-id-2302-0939-dark-fiber-optic-resolution.pdf and Rate Schedules https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/attachments/06-19-2023-id-2302-0939-dark-fiber-rate-schedules-fy-24-combined.pdf 8 Storm Water Management Fee Resolution https://cityofpaloalto.primegov.com/meeting/attachment/668.pdf?name=Attachment%20B%20- %20Resolution%20Amending%20Utility%20Rate%20Schedule%20D- 1%20(DRAFT%20Storm%20&%20Surface%20Water%20Drainage) and Rate Schedule https://cityofpaloalto.primegov.com/meeting/attachment/667.pdf?name=Attachment%20A%20- %20Rate%20Schedule%20D-1%20(DRAFT) Item No. 28. Page 3 of 10 1 6 8 4 The overall system average proposed rate changes are below, with the expected average utility bill for residential service to increase 3% in FY 2024. - 9% increase for wastewater, - 5% increase for water, - 4.9% increase for Dark Fiber rate schedules EDF-1 and EDF-2 and - 4.9% increase for the Storm Water Management Fee. - 5% decrease for electric [approved by Council April 17th], and - 8% increase for gas [approved by Council April 17th]. Drivers of the water and wastewater rate changes include rising costs of construction inflation, commodity prices and the rising cost to transport water. Additionally, infrastructure is aging, and investment is needed to maintain the health and reliability of the water and wastewater utilities. On April 17, 2023, the Council held a study session9 and a Gas10 and Electric11 public hearing regarding rates for those utilities and approved the Gas and Electric rate changes. For this reason, this report does not address Gas and Electric utility rates. On the same day, the Council directed staff to proceed with Proposition 218 notification of Water and Wastewater rate changes recommended by Finance Committee on March 21, 2023, and agendize a public hearing for these rates on June 19, 2023. Staff completed the Proposition 218 customer notifications and revised the Water utility financial plan, and rate sheets consistent with the Council and Finance Committee’s direction (for a 2% water distribution rate increase). BACKGROUND Wastewater Collection & Water For both Wastewater Collection and Water utilities, on April 17, to proceed with Proposition 218 notification of Water and Wastewater rate changes recommended by Finance Committee on March 21, 2023, and agendize a public hearing for these rates on June 19, 2023.12 Staff sent the Prop 218 notifications13 on April 27, 2023. The following are the reviews that culminated in the April 17th City Council review. 9 City Council Meeting April 17, 2023, Agenda Item 3 STUDY SESSION https://cityofpaloalto.primegov.com/meeting/document/1996.pdf?name=Item%203%20Staff%20Report 10 City Council Meeting April 17, 2023, Action Item 14 PUBLIC HEARING https://cityofpaloalto.primegov.com/meeting/document/1964.pdf?name=Item%2014%20Staff%20Report 11 City Council Meeting April 17,2023, Action Item 15 PUBLIC HEARING https://cityofpaloalto.primegov.com/meeting/document/1982.pdf?name=Item%2015%20Staff%20Report 12 April 17, 2023 City Council Item 10 https://cityofpaloalto.primegov.com/meeting/document/1963.pdf?name=Item%2010%20Staff%20Report 13 https://www.cityofpaloalto.org/files/assets/public/utilities/rates-schedules-for-utilities/final_prop- 218_w_graphic-design-2023.pdf Item No. 28. Page 4 of 10 1 6 8 4 Wastewater Collection Utilities staff presented to the UAC on March 1, 2023,14 the Finance Committee on March 7, 202315 and March 21, 202316 a recommendation that Council approve the FY 2024 Wastewater Utility Financial Plan as follows: Staff recommended the following transfers at the end of FY 2023: 1. up to $3.178 million from the Capital Improvement Projects Reserve to the Operations Reserve; and 2. up to $342 thousand from the Rate Stabilization Reserve to the Operations Reserve; and Staff also recommended the following rate actions for FY 2024: 3. An increase to retail Wastewater Collection Utility Rates S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) of 9% effective July 1, 2023 The UAC unanimously approved the staff recommendation. When staff first made this recommendation to the Finance Committee at the March 7, 2023 meeting the Finance Committee did not approve it, but instead asked staff to return with additional information for further evaluation for the Wastewater Utility. When staff returned to the Finance Committee on March 21, 2023 the Committee unanimously recommended approval of the staff recommendation as written in Staff Report 2302-094417 after reviewing the additional information. Water Utilities staff presented a Water financial plan with a 3% water distribution rate increase to the UAC on March 1, 202318, and to the Finance Committee on March 7, 202319. On March 21, 202320 staff revised this recommendation to a 2% water distribution rate increase as follows: Staff recommended the following transfers at the end of FY 2023: 1. up to $3.746 million from the Capital Improvement Program (CIP) Reserve to the Operations Reserve in FY 2023; and 14 Utilities Advisory Commission March 1, 2023 Meeting https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory- commission/archived-agenda-and-minutes/agendas-and-minutes-2023/03-mar-2023/03-01-2023-item-1.pdf 15 Finance Committee Staff Report 2302-0944 https://cityofpaloalto.primegov.com/meeting/document/1691.pdf?name=Staff%20Report 16 Finance Committee Staff Report 2302-1107 https://cityofpaloalto.primegov.com/meeting/document/1852.pdf?name=Item%202%20Staff%20Report 17 Utilities Advisory Commission Staff Report 2302-0944 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory- commission/archived-agenda-and-minutes/agendas-and-minutes-2023/03-mar-2023/03-01-2023-item-1.pdf 18 Utilities Advisory Commission March 1, 2023 Meeting https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory- commission/archived-agenda-and-minutes/agendas-and-minutes-2023/03-mar-2023/03-01-2023-agenda-and- packet.pdf 19 Finance Committee March 7, 2023 Staff Report 2302-1011 https://cityofpaloalto.primegov.com/meeting/document/1759.pdf?name=Staff%20Report 20 Finance Committee March 21, 2023 Staff Report 2302-1125 https://cityofpaloalto.primegov.com/meeting/document/1871.pdf?name=Item%201%20Staff%20Report Item No. 28. Page 5 of 10 1 6 8 4 2. up to $3.0 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2023; and Staff also recommended the following rate actions for FY 2024: 3. An increase to retail Water Distribution Utility Rates W-1 (General Residential Water service), W-2 (Water Service from Fire Hydrants), W3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) of 2% effective July 1, 2023 The Finance Committee unanimously recommended approval of this proposal on March 21, 2023. Storm Drain On March 7, 2023, Public Works staff presented the Finance Committee with a recommendation that the City Council adopt a resolution amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to implement a 4.9 percent rate increase consistent with the applicable Consumer Price Index, increasing the monthly charge per Equivalent Residential Unit (ERU) by $0.78, from $15.98 to $16.76 for FY 2024. See Staff Report 2302-095721 for more information. The Finance Committee unanimously recommended approval of this proposal on March 7, 2023. ANALYSIS Based upon feedback from the UAC, Finance Committee and City Council during March and April 2023, this report requests City Council adoption of the remaining proposed rate changes for Fiscal Year (FY) 2024. This report contains links to the documents referenced and links to the City’s website for all the staff reports presented through the review process to the UAC, Finance Committee and City Council. Staff and the Finance Committee recommend that the City Council approve the utility financial plans, reserve transfers and proposed rate changes listed below. The City Council has already approved the rate changes and financial plans for both the Gas and Electric utilities on April 17, 2023. Proposed Rate Changes and Financial Plans Wastewater Collection Proposal The City’s Wastewater Collection (sewer) system collects wastewater from Palo Alto residents and delivers it to the Regional Water Quality Control Plant (RWQCP) for treatment. The City of Palo Alto runs the RWQCP, which also treats wastewater for five other partner agencies (Stanford, East Palo Alto Sanitary District, Los Altos Hills, Los Altos, and Mountain View). Some of the wastewater for certain partner agencies is also transported across the City’s wastewater collection system. The Wastewater Collection Utility has two main costs: Palo Alto’s share of the cost of running the RWQCP (treatment costs) and the costs of operating and maintaining the collection system. One of the main drivers for the increase in the Wastewater Collection Utility’s costs (and therefore rates) over the next several years is the cost for wastewater treatment, which is projected to increase by an average of 6.2% annually from FY 2022 to FY 2028 as the City makes several upgrades to the RWQCP. Increases to capital expenses begin in FY 2024 with the Joint Intercepting Sewer Rehabilitation construction, funded on a pay-as-you-go basis. Additional debt service payments begin as estimated: 21 Finance Committee March 7, 2023 Staff Report 2302-0957 https://cityofpaloalto.primegov.com/meeting/document/1704.pdf?name=Staff%20Report Item No. 28. Page 6 of 10 1 6 8 4 - In FY 2025 for the Primary Sedimentation Tank, - In FY 2028, for the construction of an Outfall Line, Lab/Technical Services building, and Operations building remodel, and - In 2029 for Secondary Treatment Upgrades and Headworks. Staff projects Wastewater Collection operations and CIP costs (excluding costs associated with treatment) to increase by approximately 3.7% annually from FY 2022 to FY 2028; operations costs are projected to grow an average of 1.4% annually over the same time period. The Wastewater Collection Utility undertakes a larger main replacement project every other year. Undertaking a larger main replacement project every other year allows staff to continue replacing wastewater mains that are in poor condition, while easing scheduling difficulties for inspection coverage due to shared staffing across Water, Wastewater, Gas, and large development services projects. Over the last few years, main replacement costs have been increasing for utilities due to economic activity in the Bay Area causing construction cost inflation. It is likely that this trend will continue in the short term. The Finance Committee, UAC and staff recommend accelerating the rate of main replacements, from 1 mile to 2.5 miles per year beginning in FY 2026. This acceleration will allow the Wastewater Collection Utility to replace the last main no more than approximately 8 years beyond its anticipated 100-year life expectancy. Staff’s recommendation attempts to minimize rate impacts while also prudently managing the City’s infrastructure and maintaining an acceptable level of risk. Staff proposes a 9% overall rate increase in FY 2024, 9% annual rate increases in FY 2025 and FY 2026, 8% in FY 2027 and 5% in FY 2028, to cover current and projected costs. Water Proposal The City’s water rate schedules currently consist of a volumetric charge for each CCF (100 Cubic Feet or 748 gallons) of water consumed during the billing period and a monthly service charge for each customer, based on water meter size. The volumetric charge has two parts: a wholesale commodity rate (or San Francisco Public Utilities Commission or SFPUC wholesale rate), and a volumetric rate. Water rates are designed to recover the City’s costs of buying and distributing water while maintaining adequate financial reserves. The volumetric rate and the monthly service charge together are considered distribution rates; revenue from those rates pay for the upkeep of Palo Alto’s distribution system. Revenue from the wholesale commodity rate pays for the City’s cost of buying water from the SFPUC. The FY 2024 Water Utility Financial Plan includes projections of the utility’s costs and revenues for FY 2023 through FY 2028. The Financial Plan projects costs to rise by about 2-3% per year over the next several years. California has experienced drought over the past 3 years and customer response to state, regional and local calls for water conservation reduced water sales revenue. In FY 2022, water sales revenue declined by 7% compared with FY 2021; the FY 2023 Financial Plan anticipated this level of reduction and there was adequate funding in the Operations Reserve as well as offsetting cost reductions due to lower water purchase costs. On April 11, 2023, Palo Alto’s water supplier, the San Francisco Public Utilities Commission (SFPUC), rescinded the Water Shortage Emergency Declaration but kept the voluntary San Francisco Regional Water system-wide water use reduction of 11% in place until the State’s emergency regulation expires in June. Palo Alto’s water use restrictions track both the State’s regulation and SFPUC’s water use regulation. Staff expects some rebound in water sales during FY 2024, while some water conservation is projected to be permanent. Other revenues also declined below prior forecast levels primarily due to reductions in Item No. 28. Page 7 of 10 1 6 8 4 water service connection and capacity fee revenue. These drought impacts put upward pressure on water rates. While these rate increases can be perceived as decreasing the benefit of conservation, bills for customers who conserve will be lower in the future than they would have been without conservation. The Water Fund’s healthy reserve levels allowed the Water Utility to hold rates flat for two years (FY 2021 and FY 2022) and provide adequate funding for the first year of drought-related sales revenue reductions in FY 2022. Additionally, the Finance Committee and staff propose the Water Utility use remaining reserves to mitigate distribution rate increases (rates that cover the cost to deliver water within the City) to 2% in FY 2024 and to 7% annually from FY 2025 through FY 2028 while still funding essential capital investments. Customers pay a separate commodity rate for purchased water from the SFPUC relative to the rest of the distribution-related portion of the volumetric rates. This commodity charge passes through SFPUC rate increases to customers (Resolution 9844).22 The pass-through commodity rate is currently $4.75 per hundred cubic feet (CCF). On May 9, 2023, SFPUC held a public hearing and adopted the FY 2024 wholesale water rate of $5.21 per CCF, effective July 1, 2023; this represents an increase of 9.7% from the current rate. Palo Alto will notify customers at least 30 days in advance of the pass-through rate increase via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. Dark Fiber Proposal Since 2007, the EDF-1 and EDF-2 rates for Dark Fiber customers have increased annually by the annual December change in the Consumer Price Index for All Urban Consumers (CPI-U) in the San Francisco area, as stated in their dark fiber license agreements and rate schedules. Based on prior UAC and City Council direction, these rate changes are routinely included as part of the Budget adoption process rather than in a separate staff report. This year’s change in CPI-U was 4.9 percent, as reported by the Bureau of Labor Statistics. The City has five customers remaining on the EDF-1 rate schedule, which applies to customer accounts established before September 18, 2006. All other dark fiber customers are on the EDF-3 rate schedule, which has remained unchanged since its inception on September 18, 2006, and no rate change is recommended for this year. The attached rate schedules EDF-1, EDF-2 and EDF-3 include minor clarifications that are not substantive to synchronize the rate schedules with the defined terms in City of Palo Alto Utilities Rule and Regulation 2. Storm Water and Surface Water Drainage Proposal On April 11, 2017, a majority of Palo Alto property owners approved a ballot measure approving a monthly Storm Water Management Fee. This fee funds thirteen storm drainage capital improvement projects listed in the ballot measure, enhanced maintenance of the storm drainage system, and a variety of storm water quality protection programs. The approved ballot measure allows for an annual adjustment based on the Consumer Price Index (CPI) or six percent, whichever is less. The Storm Water and Surface Drainage Rate will increase 4.9 percent, increasing the monthly charge per Equivalent Residential Unit (ERU) by $0.78, from $15.98 to $16.76 for Fiscal Year 2024 effective July 1, 2023, to reflect the annual CPI change. See Staff Report 2302-0957 for more information.23 22 Resolution 9844 https://www.cityofpaloalto.org/files/assets/public/city-clerk/resolutions/reso- 9844.pdf?t=69020.51 23 Finance Committee March 7, 2023 Meeting Stormwater Management Staff Report #2302-0957 https://cityofpaloalto.primegov.com/meeting/document/1704.pdf?name=Staff%20Report Item No. 28. Page 8 of 10 1 6 8 4 TIMELINE Water and Wastewater Collection Rates After the June 19th Public Hearing is opened and testimony from members of the public accepted, City Council may choose to: 1. Close the hearing and take action; or 2. Close the hearing and defer action until the close of the Budget Adoption Hearing on June 19th; Unless written protests are filed by a majority of affected Water and Wastewater customers, Council may vote on the proposed rate actions. If approved, the Water and Wastewater rates will become effective July 1, 2023. Dark Fiber and Storm Water rates, as well as Utility Financial Plans The dark fiber and storm drainage rates will be considered at the June 19, 2023 public hearing. Should the City Council take action to approve any or all of these rates, they will become effective July 1, 2023. The City Council will also consider changes to Financial Plans and/or Reserve Management Policies for the Wastewater Collection and Water utilities, and should the Council take action to approve any or all of these plans and/or policies, they will also become effective July 1, 2023. Additionally, for the water commodity pass-through rate, SFPUC voted to increase the wholesale water rate to $5.21 per CCF effective July 1, 2023. Staff provided Palo Alto customers with notice of the wholesale rate increase and will pass-through the increase. FISCAL/RESOURCE IMPACT Utility fund resource impacts of the recommendations summarized in this report include the continued financial solvency of the various utilities through the revenue increases described below. Following are the estimated FY 2024 revenue impacts of the recommendations in this report: • Staff projects estimated revenue for the Water Utility in FY 2024 to increase by $2.5 million or 5% compared to FY 2023 levels. This estimate includes the SFPUC wholesale rate increase of 9.7%. • For Wastewater Collection, staff projects revenues in FY 2024 to increase by approximately $1.8 million or 9% compared to FY 2023 levels because of the proposed rate changes. • The proposed 4.9% fee increase is expected to increase FY 2024 revenue to the Storm Water Management Fund by approximately $0.4 million. • The Dark Fiber rate increase is the CPI index of 4.9% for rate schedules EDF-1 and EDF-2. Staff expects this to increase FY 2024 revenue for Dark Fiber by approximately $0.03 million. For those on the EDF-3 rate, there is no increase. The recommendations summarized in this report are reflected in the FY 2024 Proposed Operating Budget except for the Water Utility, which will require revenue and expense adjustments to align with the final SFPUC wholesale rate increase, as that information was not available at the time the budget was produced. Staff will bring these water adjustments forward for Council consideration through the annual budget process. POLICY IMPLICATIONS Policy Implications related to the proposed Wastewater Collection, Water, and Storm Water Management fee rate actions are detailed fully in the linked Finance Committee reports. There are no policy changes contained in the adoption of the proposed new Dark Fiber rates. Item No. 28. Page 9 of 10 1 6 8 4 STAKEHOLDER ENGAGEMENT On March 1, 202324 the UAC reviewed and approved the FY 2024 Water and Wastewater Collection Utility Financial Plans and Rate Proposals. • Wastewater Collection Staff Report Action Item 125 • Water Staff Report Action Item 226 The UAC voted unanimously to approve staff’s proposals. On March 7, 202327, the Finance Committee reviewed the FY 2024 Water, Wastewater Collection Utility Financial Plans and Rate Proposals and the Stormwater Management fee increase. • Wastewater Collection Staff Report # 2302-094428 • Water Staff Report # 2301-101129 • Storm Water Management Staff Report # 2302-095730 The Finance Committee approved the Water Utility proposals unanimously and continued the Wastewater item to March 21, 2023 and asked staff to return with additional information for further evaluation. The Finance Committee unanimously approved the Storm Water Management proposals. On March 21, 202331, the Finance Committee reviewed the FY 2024 Water, and Wastewater Collection Financial Plans and Rate Proposals • Wastewater Collection Staff Report # 2302-110732 and Supplemental Memo33 24 Utilities Advisory Commission Meeting of March 1, 2023 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory- commission/archived-agenda-and-minutes/agendas-and-minutes-2023/03-mar-2023/03-01-2023-agenda-and- packet.pdf 25 Utilities Advisory Commission Meeting March 1, 2023, Action item 1 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory- commission/archived-agenda-and-minutes/agendas-and-minutes-2023/03-mar-2023/03-01-2023-item-1.pdf 26 Utilities Advisory Commission Meeting March 1, 2023, Action item 2 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/utilities-advisory- commission/archived-agenda-and-minutes/agendas-and-minutes-2023/03-mar-2023/03-01-2023-item-2.pdf 27 Finance Committee Meeting March 7, 2023 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=11235 28 Finance Committee Meeting March 7, 2023, Action Item 2 https://cityofpaloalto.primegov.com/meeting/document/1691.pdf?name=Staff%20Report 29 Finance Committee Meeting March 7, 2023, Action Item 1 https://cityofpaloalto.primegov.com/meeting/document/1759.pdf?name=Staff%20Report 30 Finance Committee Meeting March 7, 2023, Action Item 3 https://cityofpaloalto.primegov.com/meeting/document/1704.pdf?name=Staff%20Report 31 Finance Committee Meeting March 21, 2023 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=11228 32 Finance Committee Meeting March 21, 2023, Action Item 2 https://cityofpaloalto.primegov.com/meeting/document/1852.pdf?name=Item%202%20Staff%20Report 33 Finance Committee Meeting March 21, 2023, Action Item 2 https://cityofpaloalto.primegov.com/meeting/attachment/1081.pdf?name=Item%202%20Supplemental%20Mem o Item No. 28. Page 10 of 10 1 6 8 4 • Water Staff Report # 2303-112534 and Supplemental Memo35 The Finance Committee unanimously approved the Water and Wastewater Collection Proposals. On April 17, 2023,36 the City Council reviewed the FY 2024 Water, and Wastewater Collection Financial Plans and Rate Proposals and directed staff to proceed with Proposition 218 notification of Water and Wastewater rate changes recommended by Finance Committee on March 21, 2023, and agendize a public hearing for these rates on June 19, 2023. The City Council voted to approve this item 6-1 with Council Member Tanaka voting no. ENVIRONMENTAL REVIEW Adoption of the referenced Financial Plans and budgeted transfers does not meet the California Environmental Quality Act’s definition of a project, pursuant to CEQA Guidelines Section 15378(b)(4) and (5), because it is a governmental fiscal and administrative activity which will not cause a direct or indirect physical change in the environment. Adoption of the proposed Wastewater Collection, Water, Storm Water Management fee, and Dark Fiber rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and CEQA Guidelines Section 15273(a). After reviewing the staff report and all referenced financial plans, rate schedules, and resolutions presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. ATTACHMENTS Attachment A: Dark Fiber Optic Resolution Attachment B: Storm Drain and Surface Resolution and Amending Utility Rate Schedule D-1 Attachment C: Wastewater FY24 Resolution Attachment D: Water FY24 Resolution Attachment E: Dark Fiber Rate Schedules Attachment F: Wastewater Rate Schedules Attachment G: Water Rate Schedules APPROVED BY: Dean Batchelor, Director of Utilities Staff: Utility Rates Team Lisa Bilir, Senior Resource Planner Micah Babbitt, Senior Resource Planner Eric Wong, Resource Planner 34 Finance Committee Meeting March 21, 2023, Action Item 1 https://cityofpaloalto.primegov.com/meeting/document/1871.pdf?name=Item%201%20Staff%20Report 35 Finance Committee Meeting March 21, 2023, Action item 1 https://cityofpaloalto.primegov.com/meeting/attachment/1078.pdf?name=Item%201%20Supplemental%20Mem o 36 April 17, 2023 City Council Item 10 https://cityofpaloalto.primegov.com/meeting/document/1963.pdf?name=Item%2010%20Staff%20Report 6056632 1 6 3 4 *Not Yet Passed* Resolution No.____ Resolution of the Council of the City of Palo Alto Adopting a Dark Fiber Rate Increase and Amending Rate Schedules EDF-1 (Dark Fiber Licensing Services), EDF-2 (Dark Fiber Connection Fees), and EDF-3 (Dark Fiber Licensing Services) 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, Utility Rate Schedule EDF-1 (Dark Fiber Licensing Services) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-1, as amended, shall become effective July 1, 2023. SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule EDF-2 (Dark Fiber Connection Fees) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-2, as amended, shall become effective July 1, 2023. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule EDF-3 (Dark Fiber Licensing Services) is hereby amended to read as attached and incorporated. Utility Rate Schedule EDF-3, as amended, shall become effective July 1, 2023. SECTION 4. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. // // // // // // // // // // // 6056632 2 6 3 4 // SECTION 4. The Council finds that the adoption of this resolution increasing Dark Fiber utility rates by the Consumer Price Index to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Assistant City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services *YET TO BE PASSED* Resolution No. Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Water Management Fee Rates by 4.9% Per Month Per Equivalent Residential Unit for Fiscal Year 2024 A. In April 2017, a majority of property owners approved a ballot measure adopting a monthly Storm Water Management Fee to fund storm drain capital improvements projects, enhanced maintenance of the storm drain system, storm water quality protection programs, and related activities. B. The ballot measure allowed for annual increases to the fee based on lesser of the local rate of inflation (based on changes to the Consumer Price Index for the San Francisco-Oakland-San Jose region as published by the Bureau of Labor Statistics) or 6%. C. According to the Bureau of Labor Statistics, the Consumer Price Index for the San Francisco-Oakland-San Jose region increased by 4.9% between December 2021 and December 2022. The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule D-1 (Storm and Surface Water Drainage) is hereby amended to read in accordance with sheet D-1-1, attached hereto and incorporated herein. The foregoing Utility Rate Schedule, as amended, shall become effective July 1, 2023. SECTION 2. The Council finds that this rate increase is being imposed to offset the effects of inflation on labor and material costs pursuant to the annual inflationary fee escalator provision of the Storm Water Management Fee ballot measure, which was approved by a majority of Palo Alto property owners on April 11, 2017. SECTION 3. The Council finds that the revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. / / / / / / / / / / / / // SECTION 4. The Council finds that the adoption of this resolution changing the Storm Water Management Fee to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15378(b)(4). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Public Works Director of Administrative Service GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 A. APPLICABILITY: This schedule applies to all Storm and Surface Water Drainage Service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the City. C. RATES: Per Month: Storm Water Management Fee per Equivalent Residential Unit (ERU) .......................... $16.76 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm drainage fees for residential and non-residential Customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERUs computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2. For more details on the Storm Water Management Fee, refer to Utilities Rule and Regulation 25. {End} CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2023 Supersedes Sheet No.D-1-1 dated 7-1-2022 Sheet No. D-1-1 Attachment A 027021423 * NOT YET APPROVED * Resolution No. Resolution of the Council of the City of Palo Alto Approving the FY 2024 Wastewater Collection Utility Financial Plan, Including Reserve Transfers, and Adjusting Wastewater Rates by Amending Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) R E C I T A L S A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The City does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Plans to summarize these projections. B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices attached to and made a part of the Financial Plans. C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. D. On , 2023, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals. E. As required by Article XIII D, Section 6 of the California Constitution and applicable law, notice of the , 2023 public hearing was mailed to all City of Palo Alto Utilities wastewater customers by , 2023. F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed wastewater rate amendments, therefore a majority protest does not exist against the proposal. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. The Council hereby adopts the FY 2024 Wastewater Collection Utility Financial Plan. Attachment A 027021423 * NOT YET APPROVED * SECTION 2. The Council hereby approves the following transfers as described in the FY 2024 Wastewater Collection Utility Financial Plan: a. Up to $3,178,000 in FY 2023 from the Capital Improvement Projects Reserve to the Operations Reserve. b. Up to $342,000 in FY 2023 from the Rate Stabilization Reserve to the Operations Reserve. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-1, as amended, shall become effective July 1, 2023. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-2 (Commercial Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-2, as amended, shall become effective July 1, 2023. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-6, as amended, shall become effective July 1, 2023. SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-7, as amended, shall become effective July 1, 2023. SECTION 7. The Council finds that the revenue derived from the wastewater rates approved by this resolution do not exceed the funds required to provide wastewater service, and the revenue derived from the adoption of this resolution shall be used only for the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 8. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. // // // // Attachment A 027021423 * NOT YET APPROVED * // SECTION 9. The Council finds that the adoption of this resolution approving the FY 2024 Wastewater Financial Plan and Reserve transfers does not meet the California Environmental Quality Act’s definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing Wastewater collection rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Utilities Director of Administrative Services Attachment A 027021423 * NOT YET APPROVED * Resolution No. Resolution of the Council of the City of Palo Alto Approving the FY 2024 Water Utility Financial Plan and Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non- Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) R E C I T A L S A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The City does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Plans to summarize these projections. B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices attached to and made part of the Financial Plans. C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. D. On , 2023, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals. E. As required by Article XIII D, Section 6 of the California Constitution and applicable law, notice of the , 2023 public hearing was mailed to all City of Palo Alto Utilities water customers by , 2023. F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed water rate amendments, therefore a majority protest does not exist against the proposal. The Council of the City of Palo Alto does hereby RESOLVE, as follows: Attachment A 027021423 SECTION 1. The Council hereby adopts the FY 2024 Water Utility Financial Plan. SECTION 2. The Council hereby approves a transfer from the Capital Improvement Program Reserve to the Operations Reserve of up to $3,746,000 in FY 2023 as described in the FY 2024 Water Utility Financial Plan. SECTION 3. The Council hereby approves a transfer from the Rate Stabilization Reserve to the Operations Reserve of up to $3,000,000 in FY 2023 as described in the FY 2024 Water Utility Financial Plan. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-1 (General Residential Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-1, as amended, shall become effective July 1, 2023. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-2 (Water Service from Fire Hydrants) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-2, as amended, shall become effective July 1, 2023. SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-3 (Fire Service Connections) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-3, as amended, shall become effective July 1, 2023. SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-4 (Residential Master-Metered and General Non-Residential Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-4, as amended, shall become effective July 1, 2023. SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-7 (Non-Residential Irrigation Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-7, as amended, shall become effective July 1, 2023. SECTION 9. The City Council finds as follows: a. Revenues derived from the water rates approved by this resolution do not exceed the funds required to provide water service. b. Revenues derived from the water rates approved by this resolution shall not be used for any purpose other than providing water service, and the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. c. The amount of the water rates imposed upon any parcel or person as an incident of Attachment A 027021423 property ownership shall not exceed the proportional cost of the water service attributable to the parcel. SECTION 10. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. // // // // // // // // // // // // // // // // // // // Attachment A 027021423 // SECTION 11. The Council finds that the adoption of this resolution approving the FY 2024 Water Financial Plan and Reserve transfers does not meet the California Environmental Quality Act’s (CEQA) definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing water rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Utilities Director of Administrative Services DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-1-1 Effective 07-01-20232 dated 7-01-20221 Sheet No. EDF-1-1 A. APPLICABILITY: This Rrate Sschedule applies to Ccustomer Aaccounts established prior to September 18, 2006, unless the Ccustomer elects to apply the EDF-3 rate to the entire Ccustomer Aaccount. This Rrate Schedule applies to Fiber Optic services Service from the City of Palo Alto Utilities (CPAU) pertaining to the City's network Dark Fiber Infrastructure and Fiber Optic (Backbone. and associated connections). B. TERRITORY: All territory wWithin the incorporated limits of the City of Palo Alto and land owned or leased by the City. C. FEES: 1. DARK FIBER BACKBONE LICENSE FEES: The values or ranges for each of these price components are shown below: (1) Fiber Price………………………………………………………………. $432.32453.50/FMfiber mile/month (2) Quantity discount ……………………………………………………… $0 to $59.84/fiber mileFM/month (3) Buffer tube discount……………………………………………………….. $0 to $59.84/fiber mileFM/month (4) Route length discount…………………………………………………….. $0 to $77.80/fiber mileFM/month (5) Ring topology discount………………………………………………………$0 to $23.94/fiber mileFM/month (6) Length of term discount…………………………………………………… $0 to $46.80/fiber mileFM/month Minimum Backbone License Fee $685.90653.86/month Project Minimum Backbone License Fees apply to any project proposal signed after September 18, 2006 in which the project connects with the Fiber Optic Backbone. Description for Discounts: Quantity discount: based on an array of discounts for quantities of fiber licensed on a specific path. Buffer tube discount: discount for numbers of full buffer tubes licensed on a specific path. Route length discount: based on the route length licensed on a specific project. Ring topology discount: The ring topology discount for customers Customers contracting for complete rings. Term discount: based on an array of discounts for contracts Dark Optical Fiber Backbone License Agreement greater than one and less than ten years. 2. DARK FIBER LATERAL CONNECTION FEES: DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-1-2 Effective 07-01-20232 dated 7-01-20221 Sheet No. EDF-1-2 Customer responsibilities and fees for drop and custom cable construction are described in the CPAU Rules and Regulations, Rate Schedule EDF-2, project proposals and other associated documents. In all cases, the Licensee shall pay an annual Drop/Custom Cable Management Fee based on the follow per foot fees: (1) Drop Cable Management Fees (for the first 12-Fibers) …………………………… $0.03- $0.098/ft/month (2) Custom Cable Management Fees (for the first 12-Fibers) …………………… .......... $0.442/ft/month (3) Fees for additional Drop or Custom Cable fibers (each additional set of 12-Fibers) . $0.098/ft/month Minimum Drop or Custom Cable Management Fees .................................................. $338.91323.08/month Minimum Drop Cable Management Fees apply to any project proposal signed after September 18, 2006. DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-1-3 Effective 07-01-20232 dated 7-01-20221 Sheet No. EDF-1-3 3. EARLY TERMINATION FEES: If the Licensee chooses to terminate for convenience the Dark Fiber Licensinge Agreement (License Agreement) or the term of any project under the License Agreement, then the Licensee shall pay the applicable termination payment as specified in this schedule or in the License Agreement, as provided below. Unless otherwise provided in the License Agreement, the Licensee shall pay a termination fee in one of the following amounts, whichever is less: • Annual fee of the contract year that the Licensee chooses to terminates in full without term discounts, or • Remaining fees of the project term as indicated in the License Agreement. D. SPECIAL NOTES: 1. All fees must be paid to the City in accordance with the terms of the Dark Fiber Licensinge Agreement, the cCustomer’s project proposals and all the applicable Utilities Rates, Rules, and Regulations. 2. All fees and minimum charges are subject to Consumer Price Index (CPI) adjustments, to be applied annually, except as defined by Section D.3 of this Rate Schedule. Discounts will not be modified by changes to CPI. 3. The CPI adjustment will be based on the Consumer Price Index for All Urban Consumers (CPI-U) for the San Francisco-Oakland-San JoseHayward MSA, published by the U.S. Department of Labor, Bureau of Labor Statistics. The adjustment is calculated by dividing the most recent calendar year’s December CPI by the December CPI in the year rates last changed. In the event that the change between December CPI’s indicates an adjustment of less than 1% is required, a change to rate schedulechanges may not be made for the upcoming year. Future rate changes will take the last year of change as the new base year for purposes of calculation. {End} DARK FIBER SERVICE CONNECTION FEES UTILITY RATE SCHEDULE EDF-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-2-1 Effective 7-01-20232 dated 7-01-20221 Sheet No. EDF-2-1 A. APPLICABILITY: This Rate Sschedule applies to all connections, expansions, and upgrades to the City's Dark Fiber Infrastructure and network (Fiber Optic Backbone). B. TERRITORY: All territory within the incorporated limits of the City of Palo Alto and land owned or leased by the City. C. FEES: 1. ADVANCE ENGINEERING FEES: Advance engineering (AER) fees must be paid to start the engineering process and are non-refundable. The fees will be credited against the estimated project cost prior to the collection of the project construction fees. (1) Commercial/Industrial AER minimum fee ..................................................................... $108332.00 (2) Special conditions (requiring expert assessment) ........................................................... By Estimate 2. ESTIMATED SERVICE CONNECTION AND RECONFIGURATION FEES All estimated Sservice connection and reconfiguration fees must be paid prior to the scheduling of any construction or reconnections to the City's Dark Fiber Infrastructure and Fiber Optic Backbonenetwork. (1) Service connection (Interconnection) fee ...................................................... By Estimate (2) Reconfiguration Fees ..................................................................................... By Estimate Labor rates are subject to change as stated in the Utility Rate Schedule C-1. D. NOTES: 1. The Customer is responsible for the installation and maintenance of all ducts and pathways from the facility to the property line in compliance with City of Palo Alto Utilities Rules and Regulations and contract agreements. 2. The City shall not be held liable for delays or interruptions in service, but will make reasonable efforts to provide timely continuous Sservice. 3. All fees are subject to Consumer Price Index (CPI) adjustments, to be applied annually. The CPI adjustment will be based on the Consumer Price Index for All Urban Consumers (CPI-U) for the San Francisco-Oakland- San JoseHayward MSA, published by the U.S. Department of Labor, Bureau of Labor Statistics. The adjustment is calculated by dividing the most recent calendar year’s December CPI by the December CPI in the year rates last changed. In the event that the change between December CPI’s indicates an adjustment of less than 1% is required, a rate change to rate schedules may not be made for the upcoming year. Future rate changes will take the last year of change as the new base year for purposes of calculation. 3. {End} DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-3 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-3-1 Effective 9-18-20067-1-2023 dated 9-18-2006 Sheet No.EDF-3-1 A. APPLICABILITY: This Rrate Sschedule applies to all Ccustomer Aaccounts created after September 18, 2006 and also may be elected at any time by Ccustomers with Dark Optical Fiber Backbone Licenseing Agreements in effect existing prior to that dateSeptember 18, 2006. This Rrate Sschedule applies to Fiber Optic Sservices from the City of Palo Alto Utilities (CPAU) pertaining to the City's Dark Fiber Infrastructure and Fiber Optic network (Backbone and associated connections). B. TERRITORY: All territory wWithin the incorporated limits of the City of Palo Alto and land owned or leased by the City. C. FEES: 1. DARK FIBER BACKBONE LICENSE FEES: The values or ranges for each of these price components are shown below: (1) Price for first fiber on public agency project routes may range between……… $213-$362/fiber mile/month a. Additional fibers used in the project on same route, per each .............. $142.00/fiber mile/month (2) Price for first fiber on non-public agency project routes may range between… . $250-$425/fiber mile/month a. Additional fibers used in the project on same route, per each .............. $166.67/fiber mile/month 2. DROP AND CUSTOM CABLE MANAGEMENT FEES: Customer responsibilities and fees for drop and custom cable construction are described in the CPAU Rules and Regulations, Rate Schedule EDF-2, project proposals and other associated documents. In all cases, the Licensee shall also pay the applicable Drop or Custom Cable Management Fees based on the following: (1) Drop Cable Management Fees for public agencies (per 12 fiber drop)………… $179-$213/fiber mile/month (2) Drop Cable Management Fees for non-public agencies (per 12 fiber drop)…… $210-$250/fiber mile/month (3) Custom Cable Management Fees (first 12 fiber cable on a project route) .................. $0.25/ft/month (4) Custom Cable Management Fees (per additional 12 fiber cable on a project route)…….. $0.05/ft/month D. SPECIAL NOTES: 1. All fees must be paid to the City according to the terms of specifics in the Dark Optical Fiber Backbone License Agreement, the Ccustomer’s project proposals and all the applicable Utilities Rates, Rules, and Regulations. DARK FIBER LICENSING SERVICES UTILITY RATE SCHEDULE EDF-3 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No EDF-3-2 Effective 9-18-20067-1-2023 dated 9-18-2006 Sheet No.EDF-3-2 2. All fees are subject to change by the City of Palo Alto Council. {End} RESIDENTIAL WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-1-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-1-1 A. APPLICABILITY: This schedule applies to each Occupied Domestic Dwelling unit. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: Per Month Each Occupied Domestic Dwelling unit ................................................................................ $44.6248.64 D. SPECIAL NOTES: 1. Any dwelling unit being individually served by a Water, Gas, or Electric Meter will be considered continuously occupied. 2. For two or more Occupied Domestic Dwelling units served by one Water Meter, the monthly Wastewater charge will be calculated by multiplying the current Wastewater rate by the number of dwelling units. 3. Each developed separate lot shall have a separate service lateral to a sanitary main or manhole. {End} COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-2-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-2-1 A. APPLICABILITY: This schedule applies to all commercial establishments other than those served under Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal), Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) or Rate Schedule S-7 (Commercial Establishments Wastewater Disposal – Industrial Discharger). B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: Quantity Rate, per 100 cubic feet (See Section D.1) .......................................................... $9.088.33 D. SPECIAL NOTES: 1. The monthly charge for the quantity rate set forth in Section C of this rate schedule will be based upon the average Water usage for the months of January, February and March, and applied in the following July. If a Water Meter is identified as exclusively serving irrigation landscaping, such Meter will be exempted from Wastewater charge calculations. Customers without an applicable usage history will be rebuttably presumed to have usage of 4.8 ccf per month until such time as such usage may reasonably be established by the City of Palo Alto Utilities Department. 2. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in which case Service will be governed by terms of a special agreement between the City and the Customer. {End} RESTAURANT WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-6 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-6-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-6-1 A. APPLICABILITY: This schedule applies to all restaurants. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: Quantity Rates, per 100 cubic feet of monthly metered Water usage ...................................$ 13.5512.43 D. SPECIAL NOTES: 1. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in which case Service will be governed by terms of a special agreement between the City and the Customer. {End} COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL – INDUSTRIAL DISCHARGER UTILITY RATE SCHEDULE S-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-7-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-7-1 A. APPLICABILITY: This schedule applies to any establishment requiring sampling of industrial discharges in excess of 25,000 gallons per day, or special discharge monitoring, as defined in Rule 23, Section C. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: 1. Collection System Operation, Maintenance, and Infiltration Inflow: $ 4.144.51 per 100 cubic feet of metered water use. 2. Advanced Waste Treatment Operations and Maintenance Charge: $ 1.651.80 per 100 cubic feet of metered water use 3. $220.43202.23 per 1000 pounds (lbs) of COD (Chemical Oxygen Demand) 4. $ 531.46 487.58 per 1000 lbs of SS (Suspended Solids) 5. $ 3,672.26 3,369.05 per 1000 lbs of NH 3 (Ammonia) 6. $ 16,111.5614,781.25 per 1000 lbs of toxics (chromium, copper, cyanide, lead, nickel, silver, and zinc) D. SPECIAL NOTES: 1. Water usage will be determined as defined in Rule 23, Section C. If a Water Meter is identified as exclusively serving irrigation landscaping, such Meter will be exempted from Wastewater charge calculations. 2. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in which case Service will be governed by terms of a special agreement between the City of Palo Alto and the Customer. 3. Charges for large discharges will be determined on the basis of sampling as outlined in Utilities Rule 23, Section C. However, for purposes of arriving at an accurate flow estimate, discharge Meters, if installed, can be utilized to measure outflow for billing purposes. Annual charges will be determined and allocated monthly for billing purposes. {End} GENERAL RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-1-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-1-1 A. APPLICABILITY: This schedule applies to separately metered single-family residential dwellings receiving Water Service from the City of Palo Alto Utilities. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: Per Meter Monthly Service Charge: Per Month For meters 5/8-inch to 1 inch .................................................................................... $ 21.4806 For 1 1/2 inch meter .................................................................................................. 69.388.02 For 2-inch meter ........................................................................................................ 107.325.22 For 3-inch meter ........................................................................................................ 227.483.02 For 4-inch meter ........................................................................................................ 404.56396.63 For 6-inch meter ........................................................................................................ 828.2712.03 For 8-inch meter ........................................................................................................1,523.92494.04 For 10-inch meter ......................................................................................................2,409.29362.05 For 12-inch meter ....................................................................................................... 3,168.1906.07 Per Hundred Cubic Feet Volumetric Rates: (To be added to Service Charge, applicable to all pressure zones.) Per Month Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) .................................. $4.10 Water Delivery Charge from SFPUC (effective August 1, 2022) .............................. $ 5.214.75 Distribution Rate: Tier 1 usage ........................................................................................................................$ 2.7267 Tier 2 usage (All usage over 100% of Tier 1) ....................................................................... 6.3321 GENERAL RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-1-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-1-2 Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable commodity rate for Tier 1 and Tier 2 Water usage when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.4. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Tier 1 0.20 0.43 0.64 Tier 2 0.58 1.21 1.85 Temporary Service – Developers Temporary unmetered service to residential subdivision developers, per connection ........................................................................ $ 6.00 D. SPECIAL NOTES: 1. Calculation of Cost Components The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement, the bill amount may be broken down into appropriate components as calculated under Section C. 2. Commodity Rate The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. GENERAL RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-1-3 Effective 7-1-20232 dated 7-1-202219 Sheet No W-1-3 3. Calculation of Usage Tiers Tier 1 Water usage shall be calculated and billed based upon a level of 0.2 ccf per day rounded to the nearest whole ccf, based on Meter reading days of Service. As an example, for a 30-day bill, the Tier 1 level would be 0 through 6 ccf. For further discussion of bill calculation and proration, refer to Rule and Regulation 11. 4. Drought Surcharge During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End} WATER SERVICE FROM FIRE HYDRANTS UTILITY RATE SCHEDULE W-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-2-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-2-1 A. APPLICABILITY: This schedule applies to all Water taken from fire hydrants for construction, maintenance, and other uses in conformance with provisions of a Hydrant Meter Permit. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: 1. Monthly Service Charge. METER SIZE 5/8 inch ........................................................................................................................... $ 50.00 3 inch ........................................................................................................................... 125.00 2. Volumetric Rate: (per hundred cubic feet) Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) ......................... $ 5.24.101 Water Delivery Charge from SFPUC (effective August 1, 2022) ..................... $4.75 Distribution Rate: .................................................................................................................$ 3.8376 4. Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable Commodity rate when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.6. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Surcharge 0.26 0.53 0.77 WATER SERVICE FROM FIRE HYDRANTS UTILITY RATE SCHEDULE W-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-2-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-2-2 D. SPECIAL NOTES: 1. Monthly charges shall include the applicable monthly Service Charge in addition to usage billed at the commodity rate. 2. The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. 3. Any person or company using a hydrant without first obtaining a valid Hydrant Meter Permit shall pay a fee of $50.00 for each day of such use in addition to all other costs and fees provided in this schedule. A hydrant permit may be denied or revoked for failure to pay such fee. 4. A Meter deposit of $750.00 may be charged any applicant for a Hydrant Meter Permit as a prerequisite to the issuance of a permit and Meter(s). A charge of $50.00 per day will be added for delinquent return of hydrant Meters. A fee will be charged for any Meter returned with missing or damaged parts. 5. Any person or company using a fire hydrant improperly or without a permit, or who draws Water from a hydrant without a Meter installed and properly recording usage shall, in addition to all other applicable charges be subject to criminal prosecution pursuant to the Palo Alto Municipal Code. 6. During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End} FIRE SERVICE CONNECTIONS UTILITY RATE SCHEDULE W-3 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-3-1 Effective 7-1-202322 dated 7-1-202219 Sheet No W-3-1 A. APPLICABILITY: This schedule applies to all public fire hydrants and private fire Service connections. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: 1. Monthly Service Charges Public Fire Hydrant .................................................................................................... $ 5.00 Private Fire Service: 2-inch connection .......................................................................................................$ 4.42 4.34 4-inch connection .......................................................................................................27.38 26.85 6-inch connection ....................................................................................................... 79.51 77.96 8-inch connection .......................................................................................................169.45 166.13 10-inch connection .....................................................................................................304.74 298.77 12-inch connection .....................................................................................................492.24 482.59 2. Commodity (To be added to Service Charge unless Water is used for fire extinguishing or testing purposes.) Per Hundred Cubic Feet All water usage ..........................................................................................................$ 10.00 D. SPECIAL NOTES: 1. Service under this schedule may be discontinued if Water is used for any purpose other than fire extinguishing or testing and repairing the fire extinguishing facilities. Using hydrants and fire Services for other purposes is illegal and will be subject to the commodity charge as noted above, fines, and criminal prosecution pursuant to the Palo Alto Municipal Code. 2. For a combination Water and fire Service, the Water Service schedule shall apply. FIRE SERVICE CONNECTIONS UTILITY RATE SCHEDULE W-3 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-3-2 Effective 7-1-202322 dated 7-1-202219 Sheet No W-3-2 3. Utilities Rule and Regulation No. 21 provides additional information on Automatic Fire Services. 4. Repairs and testing of fire extinguishing facilities are not considered unauthorized use of Water if records and documentation are supplied by the Customer. {End} RESIDENTIAL MASTER-METERED AND GENERAL NON-RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-4 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-4-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-4-1 A. APPLICABILITY: This schedule applies to Water Services to non-residential buildings, and multi-family residential dwellings served through a Master-Meter. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: Per Meter Monthly Service Charge Per Month For 5/8-inch meter .................................................................................... $ 18.78 18.42 For 3/4-inch meter .................................................................................... 25.11 24.62 For 1-inch meter .................................................................................... 37.76 37.02 For 1 ½-inch meter .................................................................................... 69.38 68.02 For 2-inch meter .................................................................................... 107.32 105.22 For 3-inch meter .................................................................................... 227.48 223.02 For 4-inch meter .................................................................................... 404.56 396.63 For 6-inch meter .................................................................................... 828.27 812.03 For 8-inch meter ....................................................................................1,523.92 1,494.04 For 10-inch meter ....................................................................................2,409.29 2,362.05 For 12-inch meter ....................................................................................3,168.19 3,106.07 Per Hundred Cubic Feet Volumetric Rates: (to be added to Service Charge, applicable to all pressure zones) Per Month Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) ............... $ 5.214.10 Water Delivery Charge from SFPUC (effective August 1, 2022) ........... 4.75 Distribution Rate: ........................................................................................... 3.8376 RESIDENTIAL MASTER-METERED AND GENERAL NON-RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-4 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-4-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-4-2 Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable commodity rate when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.3. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Surcharge 0.26 0.53 0.77 D. SPECIAL NOTES: 1. Calculation of Cost Components The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement, the bill amount may be broken down into appropriate components as calculated under Section C. 2. Commodity Rate The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. 3. Drought Surcharge During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. RESIDENTIAL MASTER-METERED AND GENERAL NON-RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-4 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-4-3 Effective 7-1-20232 dated 7-1-202219 Sheet No W-4-3 {End} NON-RESIDENTIAL IRRIGATION WATER SERVICE UTILITY RATE SCHEDULE W-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-7-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-7-1 A. APPLICABILITY: This schedule applies to non-residential Water Service supplying dedicated irrigation Meters. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Services. C. RATES: Per Meter Monthly Service Charge Per Month For 5/8-inch meter .................................................................................... $ 18.78 18.42 For 3/4-inch meter .................................................................................... 25.11 24.62 For 1-inch meter .................................................................................... 37.76 37.02 For 1 1/2 inch meter .................................................................................... 69.38 68.02 For 2-inch meter .................................................................................... 107.32 105.22 For 3-inch meter .................................................................................... 227.48 223.02 For 4-inch meter .................................................................................... 404.56 396.63 For 6-inch meter .................................................................................... 828.27 812.03 For 8-inch meter ....................................................................................1,523.92 1,494.04 For 10-inch meter ....................................................................................2,409.29 2,362.05 For 12-inch meter ....................................................................................3,168.19 3,106.07 Per Hundred Cubic Feet Volumetric Rates: (to be added to Service Charge, applicable to all pressure zones) Per Month Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) ..................... $ 5.214.10 Water Delivery Charge from SFPUC (effective August 1, 2022) ................. 4.75 Distribution Rate: ..................................................................................................... 5.8372 NON-RESIDENTIAL IRRIGATION WATER SERVICE UTILITY RATE SCHEDULE W-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-7-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-7-2 Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable commodity rate when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.3. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Surcharge 0.53 1.25 2.02 D. SPECIAL NOTES: 1. Calculation of Cost Components The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement, the bill amount may be broken down into appropriate components as calculated under Section C. 2. Commodity Rate The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. 3. Drought Surcharge During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End}