HomeMy WebLinkAboutStaff Report 2507-4994CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, August 18, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
15.PUBLIC HEARING: Adoption of Resolution Correcting Clerical Errors in Three Electric Rate
Schedules: E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation),
and E-NSE-1 (Net Surplus Electricity Compensation); CEQA Status: Not a project under
CEQA Guidelines Sections 15378(b)(4) and (5) and Exempt Under Section 15273(a).
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: August 18, 2025
Report #:2507-4994
TITLE
PUBLIC HEARING: Adoption of Resolution Correcting Clerical Errors in Three Electric Rate
Schedules: E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation), and E-
NSE-1 (Net Surplus Electricity Compensation); CEQA Status: Not a project under CEQA
Guidelines Sections 15378(b)(4) and (5) and Exempt Under Section 15273(a).
RECOMMENDATION
Staff recommends that Council adopt the attached Resolution (Attachment A) and Electric Rate
Schedules (Attachment B) to correct clerical errors associated with three FY 2026 Electric rate
schedules approved on June 16, 2025: E-16 (Unmetered Electric Service), E-EEC-1 (Export
Electricity Compensation), and E-NSE-1 (Net Surplus Electricity Compensation).
BACKGROUND
At the June 16, 2025 Council meeting (Staff Report #2411-37761), Staff uploaded incorrect rate
schedules for E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation), and
E-NSE-1 (Net Surplus Electricity Compensation). Due to the clerical error, Staff recommends
adoption of the attached resolution correcting the three impacted rate schedules to reflect the
correct FY 2026 rates from the Electric Financial Forecast adopted by Council June 16, 2025 for
these services. Customers have not been charged or negatively impacted by the incorrect rates.
Solar customers are still receiving the FY 2025 rates.
ANALYSIS
Rate Schedule E-16 (Unmetered Electric Service Rate) – (Table 1)
The City offers an E-16 rate for unmetered electric service for wireless communication facilities and
related equipment on wood utility poles and streetlight poles. The E-16 unmetered service rate aligns
1 Council Meeting June 16, 2025, Item 22:
https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=35104f06-6925-4fe3-89c7-b0e53e6eec42
closely with the E-2 rate for small commercial electric service and excludes costs related to meter
reading and is determined based on the energy requirement of equipment specifications. The E-16 rate
also includes miscellaneous electric utility charges such as licensing fees for City-owned spare conduit,
usable space for utility pole attachments, and mounting communication equipment on utility poles and
streetlight poles.
The corrections from the June 16, 2025 adopted E-16 rates are:
C1 – Customer Charge should be increased from $7.31 to $10.96 per month to reflect the actual
labor cost. Prior to June 2025, this rate was last updated in July 2009.
E4 – Processing Fee for Utility Pole Attachment should be changed from $152 to one total hour
of engineering and operations review under the C-1 rate schedule for utility miscellaneous
charges. The current C-1 hourly rate for engineering and operations review is still $152, but Staff
is in the process of updating the FY 2026 C-1 miscellaneous rates, as these rates were last
updated in 2019. Prior to June 2025, the pole attachment processing fee was last updated in
October 2012.
Table 1 – Summary of E-16 Unmetered Electric Service Rate
Rate Current FY 2026 Proposed FY 2026
Customer Charge, $/month $7.31 $10.96
Processing Fee for Utility Pole Attachment, $/pole $152.00 One regular hour based
on the C-1
Miscellaneous Rate
Schedule
Rate Schedules E-NSE-1 (Net Energy Metering Compensation Rate) and E-EEC-1 (Export Energy
Compensation Rate) – (Table 2)
The City operates two Net Energy Metering (NEM) programs. Solar customers served by the
City of Palo Alto's (CPAU) original NEM program, also called NEM 1, are compensated at retail
rates for electricity they export to the grid, and solar customers served by the NEM successor
program, or NEM 2 (effective after the City reached its NEM 1 cap at the end of 2017), are
compensated at the Export Electricity Compensation (EEC) rate for exported electricity.
Customers on the NEM 1 program who have chosen to have the value of any annual net
generation they produced over the past 12 months credited back to their account do so under
the Net Metering Net Surplus Electricity Compensation (E-NSE-1) rate. The Net Surplus
Electricity Compensation rate represents the value of the City’s avoided cost or value of
customer-generated electricity in Palo Alto, including compensation for the energy, avoided
capacity charges, avoided transmission and ancillary service charges, avoided transmission and
distribution (T&D) losses, and renewable energy credits (RECs), or environmental attributes.
The corrections being made from the June 16, 2025 rate schedules are:
E-NSE-1 – Net Surplus Electricity should be decreased from $0.1273 to $0.1012 to reflect
market prices.
E-EEC-1 – Export Electricity should be decreased from $0.1243 to $0.1206 to reflect
market prices.
No customers have been charged the incorrect rates. Net energy metering customers are still
receiving the FY 2025 rates for the months of July and August 2025.
Table 2: NEM Buyback Rates – Current vs. Proposed
Rate
Current
FY 2026
$/kWh
Proposed
FY 2026
$/kWh
Net Surplus Electricity (E-NSE-1)$0.1273 $0.1012
Export Electricity (E-EEC-1)$0.1243 $0.1206
FISCAL/RESOURCE IMPACT
The estimated financial cost impact to the Electric utility from the two-month delay in
implementing the correct rates for schedules E-NSE-1 and E-EEC-1 is approximately $1,200 and
$23,000, respectively. There is a fiscal impact of $1,600 from the E-16 schedule revisions since it
is used for annual billing. The annual customer charge bills will be invoiced post-Council action,
with two months charged at the June-adopted rate and the remainder of the year at the
corrected rates. There were no pole attachment applications in July and August 2025.
STAKEHOLDER ENGAGEMENT
The City Council reviewed staff’s proposal for the Electric Utility at its June 16, 2025 meeting.
The City Council unanimously approved the Electric Utility proposal, and this action simply
corrects clerical errors in three rate schedules, to align with the Council-approved Electric Utility
Financial Forecast.
ENVIRONMENTAL REVIEW
The proposed Resolution correcting clerical errors in three electric rate schedules are not
projects subject to environmental review, pursuant to California Public Resources Code Sec.
21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a).
ATTACHMENTS
Attachment A: Resolution Amending Electric Rate Schedules E-16, E-EEC-1, and E-NSE-1
Attachment B: Corrected Rate Schedules for E-16, E-EEC-1, and E-NSE-1
APPROVED BY:
Alan Kurotori, Director of Utilities
Attachment A * NOT YET APPROVED *
027073125 1
Resolution No.
Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedules
E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation),
and E-NSE-1 (Net Metering Surplus Electricity Compensation)
R E C I T A L S
A. 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.
B. On August 18, 2025, the City Council heard and approved the proposed rate
increase at a noticed public hearing.
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 E-16 (Unmetered Electric Service) is hereby amended as attached and incorporated.
Utility Rate Schedule E-16, as amended, shall become effective September 1, 2025;
SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule E-EEC-1 (Export Electricity Compensation) is hereby amended as attached and
incorporated. Utility Rate Schedule E-EEC-1, as amended, shall become effective September 1,
2025;
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate
Schedule E-NSE-1 (Net Surplus Electricity Compensation Rate) is hereby amended as attached and
incorporated. Utility Rate Schedule E-NSE-1, as amended, shall become effective September 1,
2025;
SECTION 4. 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.
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Attachment A * NOT YET APPROVED *
027073125 2
SECTION 5. The Council finds that amending the rate schedules do 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 assessment is required. The Council finds that changing electric 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 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
UNMETERED ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-16
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Sheet No. E-16-1 Supersedes Sheet No. E-16-1
Effective 97-1-2025 dated 7-1-202516
A. APPLICABILITY:
This rate schedule is applicable under the terms and conditions of the City of Palo Alto Utilities
Department to Customers who contract with the City for unmetered electric service for
billboards, unmetered telephone services, telephone booths, railroad signals, cathodic protection
units, traffic cameras, wireless antenna and related equipment, community antenna television and
video systems, cable TV power supplies, and automatic irrigation systems and also applies to
other miscellaneous Electric Utility fees to various public agencies and private entities.
B.TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
C.NET MONTHLY BILL:
1. Customer Charge using annual SEIU salary schedule: $ 7.3110.96 per
month
2. Energy Charge:
(for all kWh supplied) using Electric Rate Schedule E2 plus all applicable riders
3. Minimum Charge:
Minimum monthly charge will be the Customer Charge.
D. DETERMINATION OF ENERGY REQUIREMENTS:
a.Initial Inventory
Customer shall enter into a contract for service under this Schedule and provide a written
inventory of all equipment at each of service requested, including the type and nameplate
rating for each piece of equipment. The billing energy for each point of service will be
determined by the Utilities Electric Engineering Division estimation of the kWh usage
based on the type, rating and quantity of the equipment provided by the Customer.
Monthly bill will be based on the following calculations:
1.Total Wattage.
2.Total Wattage times estimated annual operating hours as set in the contract equals
annual watt hours.
3. Annual watt hours divided by 1000 hours equals annual kilowatt hours (kWh)
4. Annual kWh divided by twelve (12) months equal monthly kWh.
Attachment B
UNMETERED ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-16
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Sheet No. E-16-2 Supersedes Sheet No. E-16-2
Effective 97-1-2025 dated 7-1-202516
5. Monthly kWh times current rate per kWh = monthly bill for each unmetered service
location or equipment.
b. Updating Inventory
Customer will update its inventory by informing the Utilities Electric Engineering Division
in writing of changes in type, rating and/or quantity of equipment as such changes occur,
and billings will be adjusted accordingly. Upon Utilities Electric Engineering Division
request, but no later than the one year anniversary of the date on which Customer first takes
service, Customer shall provide an updated inventory of all equipment at each point of
service.
c. Test Metering
The Utilities Electric Engineering Division may, at its discretion, test meter the load at
various types and ratings of the Customer’s equipment to the extent necessary to verify the
estimated kWh usage used for billing purpose and, where dictated by such test metering,
Utilities Electric Engineering Division will make prospective adjustments in estimated
usage for subsequent billing purposes; however, Utilities shall be under no obligation to
test meter- the load of Customer’s equipment. Utilities’ decision not to test meter the load
of Customer’s equipment shall not release Customer from the obligation to provide to
Utilities Electric Engineering Division, and to update, annually as provided in section b,
an accurate inventory of the types, rating and quantities of equipment upon which billing
is based.
d. Inspection
The Utilities Electric Engineering Division shall endeavor to inspect the equipment at each
point of service annually as close to the anniversary date of the contract as is practical, and
make prospective adjustments in billing as indicated by such inspections; however,
Utilities shall be under no obligation to conduct such inspections for the purpose of
determining accuracy of billing or otherwise. Utilities decisions not to conduct such
inspections shall not release Customer from the obligation to provide to Utilities Electric
Engineering Division, and to update, an accurate inventory of the types, rating and
quantities of equipment upon which billing is based.
e. Billing for Service
As the service described in this schedule is unmetered, Customer agrees to pay amounts
billed in accordance with the current inventory, regardless of whether any of the
installations of the Customer’s equipment were electrically operable during the period in
question and regardless of the cause of such equipment failure to operate.
E. MISCELLANEOUS RATES:
Attachment B
UNMETERED ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-16
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Sheet No. E-16-3 Supersedes Sheet No. E-16-3
Effective 97-1-2025 dated 7-1-202516
Service Description Rate *
1. License Fee for Electric Conduit Usage
(A) Exclusive use $ 1.94/ft/yr
2. Processing Fee for Electric Conduit Usage Actual Cost
3. License Fee for Utility Pole Attachments
(A) 1 ft. of usable space $ 47.60/pole/yr
(B) 2 ft. of usable space 95.20/pole/yr
(C) 3 ft. of usable space 142.80/pole/yr
4. Processing Fee for Utility Pole Attachments C-1 rate – 1 hr
$ 152.00/pole -
5. License Fee for mounting communication equipment
including distributed antenna systems on utility poles $ 329.44/pole/yr
* Rates are monthly unless otherwise indicated.
F. NOTES:
The fees set forth in Section E.1 through E.5, inclusive, are subject to adjustment annually in
accordance with fluctuations in the Consumer Price Index (CPI), if any. The base for computing
the adjustment is the Consumer Price Index for All Urban Consumers (CPI-U) for the San
Francisco-Oakland-San Jose MSA, which is published by the U.S. Department of Labor,
Bureau of Labor Statistics for the month of December of a base year, which falls within the
year in which a master license agreement is signed by the City and the licensee. The adjustment
shall be calculated, if there is an increase or decrease between December of a base year (when
the rate(s) is/are first applicable) and December of any subsequent base year.
{End}
Attachment B
EXPORT ELECTRICITY COMPENSATION
UTILITY RATE SCHEDULE E-EEC-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-EEC-1 Sheet No.E-EEC-1
dated 7-1-20254 Effective 97-1-2025
A. APPLICABILITY:
This Rate Schedule applies in conjunction with the otherwise applicable Rate Schedules for each
Customer class. This Rate Schedule may not apply in conjunction with any time-of-use Rate Schedule.
This Rate Schedule applies to Customer-Generators as defined in Rule and Regulation 2 who are either
not eligible for Net Energy Metering or who are eligible for Net Energy metering but elect to take
Service under this Rate Schedule.
B. TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. RATE:
The following compensation rate shall apply to all electricity exported to the grid.
Per kWh
Export electricity compensation rate $ 0.12430.1206
D. SPECIAL CONDITIONS
1. Metering equipment: Electricity delivered by CPAU to the Customer-Generator or received by
CPAU from the Customer-Generator shall be measured using a Meter capable of registering the
flow of electricity in two directions (aka “bidirectional meter”). The electrical power
measurements will be used for billing the Customer-Generator. CPAU shall furnish, install and
own the appropriate Meter.
2. Billing:
a. CPAU shall measure during the billing period, in kilowatt-hours, the electricity delivered
and received after the Customer-Generator serves its own instantaneous load.
b. CPAU shall bill the Customer-Generator consumption charges for the electricity delivered
by CPAU to the Customer-Generator based on the Customer-Generator’s applicable Rate
Schedule.
c. In the event the electricity generated exceeds the electricity consumed and therefore is
received by CPAU, the Customer will receive a credit for all electricity received by CPAU
at the buyback Rate designated in section C above.
{End}
Attachment B
NET METERING NET SURPLUS ELECTRICITY COMPENSATION
UTILITY RATE SCHEDULE E-NSE-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. E-NSE-1 Sheet No. E-NSE-1
dated 07-01-20254 Effective 97-1-2025
A. APPLICABILITY:
This Rate Schedule applies to eligible residential and small commercial Net Energy Metering Election
A Customers who, at the end of an annual settlement period, as described in Rule 29, are Net Surplus
Customer-Generators of electricity who elect to receive monetary compensation as such preference is
indicated on the net surplus electricity election form. This Rate Schedule only applies to Customers
who participate in Net Energy Metering, and does not apply to Customers that take service under the
City’s Net Energy Metering Successor Rate, as each of these terms are defined in Rule and Regulation
2.
B. TERRITORY:
This rate schedule applies everywhere the City of Palo Alto provides Electric Service.
C. RATES:
Per kWh
Net Surplus Electricity Compensation rate $ 0.12730.1012
D. SPECIAL CONDITIONS
1. Net Surplus Electricity Compensation Rate eligibility shall be determined as specified in Rule 29.
Net surplus electricity, as specified in Rule 29, if applicable, will be multiplied by the above
compensation rate to determine the Customer’s annual net surplus electricity compensation stated
in dollars.
2. Additional terms, conditions and definitions govern Net Energy Metering Service and
Interconnection, as described in Rule 29.
{End}
Attachment B