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HomeMy WebLinkAboutStaff Report 13903City of Palo Alto (ID # 13903) City Council Staff Report Meeting Date: 2/28/2022 City of Palo Alto Page 1 Title: Staff and Utilities Advisory Commission Recommend the Council Adopt a Resolution Amending Utilities Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) to Set a $5,000 Limit on Fee-Free Credit Card Payments and Apply a Cost-Recovery Charge for Credit Card Payments in Excess of $5,000 From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) recommend that the Council adopt a resolution amending Utilities Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) to set a $5,000 limit on fee-free credit card payments for monthly utility bills, and apply a cost- recovery charge for credit card payments in excess of $5,000. Executive Summary Utilities’ Rules and Regulations govern utility services in the City of Palo Alto (City) and the fees charged for those services. They are updated as needed to ensure Utilities’ procedures meet industry practices, standards, and requirements. The recommended amendment adds policies and procedures to Rule and Regulation 11 (Billing, Adjustments and Payment of Bills). The additions are as follows: customers will be able to make credit card payments without incurring cost-recovery fees, up to a maximum of $5,000 per monthly account, and the City will apply a cost-recovery charge (up to 2.7%) to recover credit card merchant fees charged to the City for any amounts charged over the $5,000 limit. Customers with balances greater than $5,000 can pay their bills with no additional fees via bank draft, automated clearing house (ACH), check, or wire transfer (Attachment A – Updated Version and Attachment B – Redlined Version). Background In 2006, the City created a credit card policy (ASD 1-47) to codify City practices and establish guidelines on the acceptance of credit card payments. As part of the policy, the City did not charge a convenience fee for credit card payments. However, the City of Palo Alto Utilities (CPAU) did not accept credit card payments of more than $10,000 per month from a single account. The credit card limit was added to control the credit card processing fees which were absorbed by CPAU. City of Palo Alto Page 2 In 2013, the City retired that credit card policy because CPAU wanted to provide more payment flexibility to their large commercial customers who preferred to pay by credit card. At that time, only 14 customers, comprising 6.7% of CPAU’s 209 large commercial customers, used credit cards to pay their utility bills. By eliminating the $10,000 credit card limit, the incremental credit card fees for accounts greater than $10,000 was approximately $22,440 in 2013. Since then, the number of utility customers who pay their bills by credit card, and the value of credit card fees CPAU pays as a result, has increased dramatically. Discussion Historically, the majority of credit card fees for municipal fee transactions, classes, fines, and utility payments have been paid by the City without being passed on to customers and residents. More recently, in order to reduce and recover some of the credit card fees, the Administrative Services Department (ASD) began including the cost of credit card fees into some fees for services, and exploring alternative payment methods to ensure this cost of doing business is not impacting the availability of funds for service delivery while ensuring a smooth experience for the customer. As a first phase, in fiscal year (FY) 2022, staff implemented a new service delivery model for the remittance of transient occupancy taxes (TOT) payment processing from hotels and motels to an online platform managed by, Avenu Analytics. This transition included a change in processing fees for credit card usage; a processing fee is now assessed on customers for credit card payments for remittance of TOT. With this change, based on figures from FY 2020, the City can expect to avoid $60,000 to $90,000 in credit card processing fees related to TOT payments annually. The City is also developing a broader policy to ensure that cost recovery of credit card payments is included in the evaluation of service costs and consequently the fees for those services. Because CPAU has faced large increases in credit card fees for utility payments in recent years, it is prudent for CPAU to implement a policy promptly to manage this escalating cost, and ensure the cost of services for delivery of utility services is appropriately distributed to the full customer base. Credit card fees for utility payments have increased by 141% in the past five years from $472,217 in FY 2017 to $1,139,418 in FY 2021. More customers (both residential and commercial) are paying their utility bills by credit card due to customer convenience and benefits received from their credit card reward programs. In addition, credit card companies are increasing their credit card charges. To address this growing cost, CPAU recommends implementing a maximum fee-free credit card payment of $5,000 per monthly utility account to reduce and manage the financial impact of credit card fees. CPAU predicts that this new credit card maximum will affect approximately 1% of current payments. In November 2021, CPAU received 9,200 credit card payments ranging from $1 to $75,000. Of the 9,200 credit card payments, 9,100, or 98.9% of the payments, were less than $5,000, leaving an estimated 100 customers potentially impacted by this new maximum fee- free credit card payment limit of $5,000. Over the past several months, CPAU has contacted large commercial customers paying via credit card and have converted some to bank draft or wire transfer (estimated reduction of $100,000 in annual credit card fees), while others City of Palo Alto Page 3 preferred to continue paying via credit card due to convenience. With the new maximum fee- free credit card amount of $5,000, approximately 100 utility customers will be impacted if they continue to pay utility bills via credit card. Staff will contact these customers to alert them of the credit card payment change and request that they switch to an alternative payment method (i.e., bank draft, ACH, check, or wire transfer) to avoid the cost recovery fee. This will potentially reduce the total credit card fee amount charged to the City by 50%, or $550,000. If these customers elect to continue to pay via credit card, CPAU will assess a credit card cost- recovery fee of up to 2.7%1 of the payment amount greater than $5,000. Staff plans to have the customer portal, interactive voice response (IVR), and cashiering systems configured to limit payments to $5,000 per credit card payment per monthly account. System reconfiguration and programming may take several months to one year because it may require professional services and contract amendments with the respective vendors. Staff currently estimates one-time professional service costs ranging from $25,000 - $75,000 for system reconfiguration of the various payment platforms in addition to 200 – 350 hours of staff time (or up to three months) to assist with testing and implementation. In the meantime, staff plans to monitor Utilities credit card payments on a routine basis to determine if customers are paying over $5,000 per account per invoice using a credit card. Staff plans to reach out to these customers over the phone or provide written notification to advise this is no longer possible without an additional cost-recovery fee. Should credit card payments continue to exceed $5,000, effective March 1, 2022, staff will assess a cost-recovery charge of up to 2.7% of the payment amount greater than $5,000 in order to recover credit card merchant fees charged to the City. Utilities-related credit card processing fees average between 0.5% and 2.7% of the total payment amount depending on the type of credit card used by the customer. Timeline CPAU will notify customers of the credit card change by direct mail and through the customer account management portal MyCPAU during February and March 2022. CPAU will implement the maximum credit card payment change effective on March 1, 2022. Resource Impact CPAU staff expects a reduction of approximately $550,000 in credit card fees on an annual basis as a result of the credit card limit and direct communication with customers. There are sufficient resources in the FY 2022 Operating Budget to enable these necessary changes. CPAU will continue to monitor credit card payment activity and fees. Staff currently estimates one- time professional service costs ranging from $25,000 - $75,000 for system reconfiguration of the various payment platforms in addition to 200 – 350 hours of staff time (or up to three dedicated months) to assist with testing and implementation. Stakeholder Engagement 1 Utilities-related credit card processing fees range between 0.5% and 2.7% of the total payment amount, depending on the type of credit card used by the customer. City of Palo Alto Page 4 The UAC approved staff’s recommendation on January 5, 2022 (Report #13866). The UAC was in agreement regarding recovering credit card fees passed through to the City and ratepayers. There was discussion on whether the limit should be be set to a lower amount to recover more credit card fees and the level of effort that would be needed to change the credit card limit in the future. Due to the high number of utility accounts with arrearages and balances greater than $1,000, UAC agreed with the $5,000 credit card limit. System reconfiguration of the customer portal, IVR, and cashiering application may require professional services from vendors. After the configuration and programming algorithm is completed, the limit amount can be adjusted in the future. Environmental Impact The UAC’s recommendation on this change to Rule 11 does not require California Environmetnal Quality review since this action is not a project with a potential impact on the environment, under Public Resources Code section 21065. City needs to be clear on whether it will impose the fee or not, otherwise legally this is too vague. This now works as written (with deletion). Attachments: •Attachment7.a:Attachment A: Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) •Attachment7.b:Attachment B: REDLINED Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) •Attachment7.c:Attachment C: Resolution BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 1 A. BILLING UNITS All metered billing units used for billing purposes shall be determined to the nearest whole unit. Such units may include, kW, kWh, kVA, kVar, hp, Therms, and/or ccf. B. PAYMENT OF BILLS CPAU issues bills to its Customers on a regular interval. Bills shall be deemed received upon physical or electronic delivery to Customer, or three calendar days following the deposit of the bill in the United States Mail to the Customer’s billing address. Bills for CPAU Services are due and payable 20 calendar days following issuance of the bill statement. Bills unpaid after the 20 day period are considered delinquent (“past due”). If a Customer’s payment is not received by CPAU after 25 days of bill issuance, the outstanding balance will be assessed a late payment Charge. For the convenience of Customers there are a number of ways to pay CPAU bills: 1.By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo Alto, CA 94303-0897. 2.By enrolling in auto-pay bank draft. Payments will be drafted from a Customer’s designated checking or saving account and automatically applied to the Customer’s Utility Account for each current Billing Period. Customers may enroll by calling Utilities Customer Service at 650-329-2161 or by signing up through the “MyCPAU” on-line portal at https://mycpau.cityofpaloalto.org/portal/. 3.By establishing automated clearing house and/or wire transfer payments. To do this, Customers may call Utilities Customer Service at 650-329-2161. 4.By paying in person at the Civic Center, Revenue Collections or the Utilities Customer Service Business counter, Ground Floor, 250 Hamilton Avenue, Palo Alto between the hours of 8:00 a.m. and 4:30 p.m. a. Credit card payments are accepted at both Revenue Collections and the Utilities Customer Service Business counter. Effective March 1, 2022, Customers are limited to a maximum credit card payment of $5,000 per account, per monthly invoice, without incurring additional cost recovery fees. Customers may call Utilities Customer Service at 650-329-2161 for a current list of acceptable credit cards. b. Effective March 1, 2022, credit card payments over the $5,000 limit listed in 4(a) Attachment A BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 2 will be assessed a cost recovery fee of up to 2.7 percent1 of the amount over $5,000, to recover the merchant fees imposed upon CPAU for these payments. c. Customers can pay delinquent bills with a credit card by phone by calling the Utilities Customer Service Center during business hours. 5.By depositing the payment in the walk-up Night Depository Box in the front of the City Hall building on the Civic Center Plaza, or at the drive-up Night Depository Box in the Civic Center Garage, on “A” Level. 6.By paying online through the “MyCPAU” on-line portal, accessible from the Utilities’ website at https://www.cityofpaloalto.org/Departments/Utilities. Payment through the “MyCPAU” on-line portal may be made by credit card or by bank draft. 7.By enrolling at a financial institution or service company that can provide electronic payments to CPAU on behalf of the Customer. 8.By completing a “Revert to Owner (RTO) Agreement” in order to maintain Utilities Service to units during the interim period between tenants (this option is available to Customers who are property managers and landlords). C. BUDGET BILLING PAYMENT PROGRAM The Budget Billing Payment Program establishes equalized monthly payments and is available to all Residential Customers who qualify as set forth below: 1.Customers may join the Budget Billing Payment Program at any time providing the Customer Account balance is zero and the Customer has not been previously removed from the Budget Billing Program for non-payment. 2.A Customer electing to utilize the program shall agree to make monthly payments based on CPAU’s forward estimate of the Customers’ Charges for the subsequent twelve-month period. 3.CPAU does not guarantee that the total actual Charges will not exceed, or be less than, its original estimate. Customers should review their Account on an ongoing basis and request 1 Utilities-related credit card processing fees range between 0.5% and 2.7% of the payment amount, depending on the type of credit card used by the Customer. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 3 changes to the budget billing amount in response to changes in their household usage. CPAU may require that Customers pay a revised monthly amount as a condition to continuing participation in the plan, if CPAU determines that substantial changes in Customer usage patterns or consumption has occurred. CPAU will perform an annual true-up on Customer Budget Billing Accounts every twelve months. This will result in either a Customer credit for CPAU over-collection or an outstanding balance due from the Customer for under-collection by CPAU during the prior twelve months. D. DISCONTINUANCE OF BUDGET BILLING The Customer’s Budget Billing Payment Program shall remain in effect, subject to review of the monthly payment amount, and shall terminate when: 1.The Customer notifies CPAU to terminate participation in the Budget Billing Program; 2.CPAU notifies the Customer of the termination of its Budget Billing Payment Program: 3.The Customer no longer takes Service at the Premises; or 4.The Customer owes an amount of two or more monthly payments. However, if the Customer eliminates the delinquency, removal from the program will not occur. Upon termination of either Utilities Service or participation in the Budget Billing Payment Program, any amount owed by the Customer for actual Charges shall immediately become due and payable or any amount due to the Customer shall be refunded or credited. E. INSUFFICIENT FUNDS FOR PAYMENT 1.A Service Charge will be made and collected by the City of Palo Alto for each check returned by a bank to CPAU for the reason of insufficient funds in accordance with Rate Schedule C-1. 2.Unsuccessful bank drafts due to insufficient funds will be subject to late payment fees in accordance with Rate Schedule C-1. F.PRORATION OF BILLS 1.Bills for Utilities Services will be prepared for each Billing Period in accordance with the applicable Rate Schedules or CPAU contract applicable to the Premises served. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 4 2.Proration is intended to produce a uniform average unit cost for the commodity regardless of the number of days in the Service period. Services will be prorated if the number of actual Service days differs from the number of days in the applicable Billing Period. Electric Demand (kW) and Electric Power Factor Charges will not be prorated. Proration will not occur for those Rate Schedules that contain Meter fees, connection fees, deposits, and other miscellaneous fees. 3.If Rate Schedules change during the Billing Period, Charges will be prorated on the basis of the number of days covered by the previous Rate Schedule and the number of days covered by the new Rate Schedule. G. DELINQUENT BILLS AND LATE PAYMENT CHARGES 1.Utilities Charges incurred in the applicable Billing Period are due and payable by the “Due Date” indicated on the front of the bill statement. Bills unpaid by the due date are delinquent and a late payment Charge will be added to the outstanding balance as specified in Rate Schedule C-1. 2.Residential and commercial Accounts having unpaid balances older than 180 days shall be subject to collection action by the City. Collection action may result in notifications to credit reporting agencies. 3.Late payment Charges may be suspended by CPAU if the Customer is withholding full or partial payment pending final resolution of disputed bill. The late payment Charge may be waived by CPAU based upon the ultimate resolution of a disputed Charge. 4.Full or partial payments towards outstanding balances will be applied to the oldest outstanding Charges. Failure to pay outstanding balances will result in late fees and termination of Service for non-payment. 5.In the event that a Customer donating to the ProjectPLEDGE Program has a delinquent bill, the late Charge percentage will not be applied to the amount of the Customer’s pledge. However, the Customer’s participation in ProjectPLEDGE will be discontinued after three consecutive Billing Periods in which the Customer has not included their pledge amount in the bill. 6.Customers whose Utility bills include payments of principal and/or interest on loans from CPAU which are secured by deeds of trust on real property shall be charged a late payment Charge when any current Utility bill includes an unpaid installment on such loan from a prior BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 5 bill. Nothing in this Rule and Regulation shall be construed to alter in any way the duty of the Customer to pay any installment on a loan from CPAU when due, or to alter the rights of CPAU to enforce the payment of such installments. H. DISPUTED BILLS If bill accuracy is questioned or disputed by the Customer, Customers shall request an explanation from CPAU within the current Billing Period or as soon as reasonably possible. After reviewing the disputed bill, CPAU will: 1.Issue a corrected bill to the Customer or reflect the correction on the bill in a subsequent Billing Period. 2.Determine if an amortization period (“payment arrangement”) for the Charge-in-question shall be provided by CPAU. If a payment arrangement is offered by CPAU and agreed to by the Customer, Utility Services will not be discontinued for nonpayment while the Customer complies with the payment arrangement for the “past due” balance , and subsequent Utilities bills are paid on time during the payment arrangement period. 3.Advise the Customer that the bill is correct as presented. The Customer may choose, at the Customer’s option, to have the Meter removed for testing under the Provisions of Rule 15 “Metering” and payment of the applicable fee found in Rate Schedule C-1 “Exchange Meter for Accuracy Test”. I. METERED SERVICE BILLING ERRORS AND ADJUSTMENTS Where a Customer has been undercharged or overcharged for metered Service, the date and cause of which can be reliably established by CPAU, the retroactive billing adjustment (back bill or refund) shall not exceed three years. The maximum bill adjustment for undercharges shall be $500 per Account, per incident. 1.When, as a result of either a CPAU or a Customer-initiated accuracy test, an Electric or Gas Meter is found to register more than two percent (2%) fast or a Water Meter is found to register more than one and a half percent (1.5%) fast, CPAU will refund the Customer the overcharge based upon the corrected Meter readings for the period the Meter was in use, or three years, whichever is less. Any applicable late payment will be waived. 2.When, as a result of a test, a Customer’s Electric or Gas Meter is found not to register or to register more than two percent (2%) slow, or a Water Meter is found not to register or to register more than one and half percent (1.5%) slow, CPAU may bill the Customer for the BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 6 undercharge base on an average bill. The bill will be computed based on an estimate of the Customer’s consumption during a prior month in the same season or on the consumption in the same period of the prior three years. 3.When, a billing or consumption problem has been investigated and verified, Utilities will attempt to notify the Customer within 30 working days or a reasonable amount of time depending on the complexity of the error. 4.When CPAU is the cause of an error that results in an overcharge, CPAU will refund the full amount of the overcharge, subject to the three year retroactive billing adjustment period described above. Back bills for undercharges will be determined and approved by the General Manager of Utilities, or delegate, and may be waived in an amount up to $2,500 per Customer Account, per incident, subject to the three year retroactive billing adjustment period described above. J. UNMETERED SERVICE BILLING ERRORS AND ADJUSTMENTS Where a Customer has been undercharged or overcharged for unmetered Service, the date and cause of which can be reliably established where a customer has been undercharged or overcharged, the retroactive billing adjustment (back bill or refund) shall not exceed three years. K. THEFT OF SERVICE Where there is evidence that meter tampering or theft of Utility Service has occurred, CPAU will retroactively bill, and collect any underpayment or nonpayment of Charges as well as any labor or material costs related to investigating the theft and making any required corrections. The applicable period to assess Charges shall commence from the date it can be reasonably established the theft began to the date in which the underpayment was discovered and initially established. The labor and material costs related to investigating the theft will be calculated in accordance with Utility Rate Schedule C-1 and/or any other applicable Utility Rate schedules. All underpayments or non- payments shall become immediately due and payable. Customers committing theft of Utility Service may also be subject to legal action pursuant to Rule 1, California Penal Code sections 487,496, 498, 591, 592, 593 and California Civil Code sections 1882 through 1882.6. Customers billed for theft of service can dispute the charges by following the process described in Rule and Regulation 11.H. If that process does not resolve the matter, customers billed for theft of service may, within thirty (30) calendar days, request (by telephone, in writing, or in person) an administrative hearing. If a hearing is requested, the city manager or his designee shall schedule a date and time for said hearing as soon as possible after the request is filed, but no later than ten (10) business days after the filing of such request for hearing. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 7 At the hearing, the customer billed for theft of service may offer evidence in person or in the form of a written statement, setting forth the reasons why the customer believes the determination of theft is incorrect. Utilities personnel shall also be allowed to offer whatever evidence they may have as to why they have established the customer engaged in utilities theft. The city manager or his designee shall make a determination as to whether the customer is liable for the charges for theft of service. L. WATER LEAK CREDITS The General Manager of Utilities, or delegate, may approve Water leak adjustments for Customer’s Water and Wastewater Accounts (when Wastewater charges are based on Water consumption) under the following conditions: 1.Customers having higher-than-average Water consumption for a particular billing period due to leaks may request a Water and/or Wastewater Leak bill adjustment, as applicable. 2.Applications for Water and Wastewater leak bill adjustments must be submitted to the Utilities Department within 60 days from the bill’s due date, for the bill covering the period in which the higher-than-average Water consumption occurred. 3.Customers are restricted to one Water and/or Wastewater leak billing adjustment in each 36-month period. 4.Higher-than-average Water consumption is defined as the volume of water greater than 100% of the Customer’s normal consumption compared to the Customer’s historical consumption over the prior three years, calculated by CPAU using prior averages for the relevant billing period(s). 5.Leaking systems must be repaired before the Customer receives a Water or Wastewater leak bill adjustment, to ensure future bills are not impacted by the same leak. Shutting off the source of the leak is not considered a repair. Undetermined or general high water consumption is not eligible for adjustment. 6.Water leak bill adjustments will be applied to Customer bills based on the higher-than- average water volumes calculated by CPAU. Water leak bill adjustments will be applied to 50% of the calculated higher than average water volume, to a limit of $2,500, using the Tier 1 Commodity Rate cost of the appropriate residential or commercial Water Rate Schedule. 7.Wastewater bill adjustments related to Water leaks will be made based upon the adjusted Water volume, and are not included in the $2,500 Water leak bill adjustment limit. 8.Utility User Tax (UUT) billing adjustments related to Water leaks will be made based upon the adjusted Water volume and are not included in the $2,500 Water leak bill adjustment limit. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 3-01-2022 Sheet No 8 9.Administrative decisions regarding Water and Wastewater leak bill adjustments, including eligibility, volume calculations, and adjustment costs will be made by the General Manager of Utilities, or delegate, and are final. M. REFUSE BILLING ERRORS, DISPUTES AND ADJUSTMENTS 1.Adjustments to the Refuse bill shall be requested to the City’s Collector. Customers with adjustments unresolved by the City’s Collector, may dispute their claim with the City’s Public Works Department, Refuse. Billing adjustments will be resolved by following the City’s Rules and Regulations, Chapter 5.20 of the Palo Alto Municipal Code and specific regulations promulgated by the City Manager pursuant to the authority established in Chapter 5.20. 2.When an error in billing has occurred, the date and cause of which can be reliably established where a Customer has been undercharged or overcharged, the retroactive billing adjustment shall not exceed three years. (END) BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 1 A. BILLING UNITS All metered billing units used for billing purposes shall be determined to the nearest whole unit. Such units may include, kW, kWh, kVA, kVar, hp, Therms, and/or ccf. B. PAYMENT OF BILLS CPAU issues bills to its Customers on a regular interval. Bills shall be deemed received upon physical or electronic delivery to Customer, or three calendar days following the deposit of the bill in the United States Mail to the Customer’s billing address. Bills for CPAU Services are due and payable 20 calendar days following issuance of the bill statement. Bills unpaid after the 20 day period are considered delinquent (“past due”). If a Customer’s payment is not received by CPAU after 25 days of bill issuance, the outstanding balance will be assessed a late payment Charge. For the convenience of Customers there are a number of ways to pay CPAU bills: 1.By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo Alto, CA 94303-0897. 2.By enrolling in the Utilities Bank Draft Program.auto-pay bank draft. Payments will be drafted from a Customer’s designated checking or saving account and automatically applied to the Customer’s Utility Account for each current Billing Period. Customers may enroll by calling Utilities Customer Service at 650-329-2161 or by signing up through the “MyCPAU” on-line portal at https://mycpau.cityofpaloalto.org/portal/. 3.By establishing enrolling through automated clearing house and/or wire transfer payments. To do this, Customers may contactcall Utilities Customer Service at 650-329-2161. 4.By paying in Personperson at the Civic Center, Revenue Collections, 1st or the Utilities Customer Service Business counter, Ground Floor, 250 Hamilton Avenue, Palo Alto between the hours of 8:00 a.m. and 4:30 p.m. The City offices are closed on alternate Fridays. Customers should call 650-329-2317 to ensure the office is open. a.Credit card payments are accepted at both Revenue Collections. Aand the Utilities Customer Service Business counter. Effective March 1, 2022, Customers are limited to make a maximum credit card payment of $5,000 per account, per monthly invoice, without incurring additional cost recovery fees. Customers should may call Utilities Customer Service at 650-329-2161 for a current list of acceptable to see which credit cards are accepted. b. Effective March 1, 2022, credit card payments over the $5,000 limit listed in 4(a) Attachment B BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 2 will be assessed a cost recovery fee of up to 2.7 percent1 of the amount dueover $5,000, to recover the merchant fees imposed upon CPAU for these payments. c.Customers can pay delinquent bills with a credit card by phone by calling the UtilityUtilities Customer Service Center during business hours. 45.By depositing the payment in the walk-up Night Depository Box in the front of the City Hall building on the Civic Center Plaza, or at the drive-up Night Depository Box in the Civic Center Garage, on “A” Level. 6.By paying online through the “My Utilities Account” applicationMyCPAU” on-line portal, accessible from the Utilities’ website at https://www.cityofpaloalto.org/Departments/Utilities. Payment through the “My Utilities Account”MyCPAU” on-line portal may be made by credit card or by bank draft. 7.By enrolling at a financial institution or service company that can provide electronic payments to CPAU on behalf of the Customer. By Property Managers8. By completing a “Revert to Owner (RTO) Agreement” in order to maintain utility serviceUtilities Service to units during the interim period between tenants. (this option is available to Customers who are property managers and landlords). C.BUDGET BILLING PAYMENT PROGRAM The Budget Billing Payment Program establishes equalized monthly payments and is available to all Residential Customers who qualify as set forth below: 1.Customers may join the Budget Billing Payment Program at any time providing the Customer Account balance is zero and the Customer has not been previously removed from the Budget Billing Program for non-payment. 2.A Customer electing to utilize the program shall agree to make monthly payments based on CPAU’s forward estimate of the Customers’ Charges for the subsequent twelve-month period. 3.CPAU does not guarantee that the total actual Charges will not exceed, or be less than, its 1 Utilities-related credit card processing fees range between 0.5% and 2.7% of the payment amount, depending on the type of credit card used by the Customer. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 3 original estimate. Customers should review their Account on an ongoing basis and request changes to the budget billing amount in response to changes in their household usage. CPAU may require that Customers pay a revised monthly amount as a condition to continuing participation in the plan, if CPAU determines that substantial changes in Customer usage patterns or consumption has occurred. 4.CPAU will perform an annual true-up on Customer Budget Billing Accounts every twelve months. This will result in either a Customer credit for CPAU over-collection or an outstanding balance due from the Customer for under-collection by CPAU during the prior twelve months. D. DISCONTINUANCE OF BUDGET BILLING The Customer’s Budget Billing Payment Program shall remain in effect, subject to review of the monthly payment amount, and shall terminate when: 1.The Customer notifies CPAU to terminate participation in the Budget Billing Program; 2.CPAU notifies the Customer of the termination of its Budget Billing Payment Program: 3.The Customer no longer takes Service at the Premises; or 4.The Customer owes an amount of two or more monthly payments. However, if the Customer eliminates the delinquency, removal from the program will not occur. Upon termination of either UtilityUtilities Service or participation in the Budget Billing Payment Program, any amount owed by the Customer for actual Charges shall immediately become due and payable or any amount due to the Customer shall be refunded or credited. E. INSUFFICIENT FUNDS FOR PAYMENT 1.A Service Charge will be made and collected by the City of Palo Alto for each check returned by a bank to CPAU for the reason of insufficient funds in accordance with Rate Schedule C-1. 2.Unsuccessful bBank dDrafts due to insufficient funds will be subject to late payment fees in accordance with Rate Schedule C-1. F.PRORATION OF BILLS BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 4 1.Bills for UtilityUtilities Services will be prepared for each Billing Period in accordance with the applicable Rate Schedules or CPAU contract applicable to the Premises served. 2.Proration is intended to produce a uniform average unit cost for the commodity regardless of the number of days in the Service period. Services will be prorated if the number of actual Service days differs from the number of days in the applicable Billing Period. Electric Demand (kW) and Electric Power Factor Charges will not be prorated. Proration will not occur for those Rate Schedules that contain Meter fees, connection fees, deposits, and other miscellaneous fees. 3.If Rate Schedules change during the Billing Period, Charges will be prorated on the basis of the number of days covered by the previous Rate Schedule and the number of days covered by the new Rate Schedule. G. DELINQUENT BILLS AND LATE PAYMENT CHARGES 1.Utilities Charges incurred in the applicable Billing Period are due and payable by the “Due Date” indicated on the front of the bill statement. Bills unpaid by the due date are delinquent and a late payment Charge will be added to the outstanding balance as specified in Rate Schedule C-1. 2.Residential and commercial Accounts having unpaid balances older than 180 days shall be subject to collection action by the City. Collection action may result in notifications to credit reporting agencies. 3.Late payment Charges may be suspended by CPAU if the Customer is withholding full or partial payment pending final resolution of disputed bill. The late payment Charge may be waived by CPAU based upon the ultimate resolution of a disputed Charge. 4.Full or partial payments towards outstanding balances will be applied to the oldest outstanding Charges. Failure to pay outstanding balances will result in late fees and termination of Service for non-payment. 5.In the event that a Customer donating to the ProjectPLEDGE Program has a delinquent bill, the late Charge percentage will not be applied to the amount of the Customer’s pledge. However, the Customer’s participation in ProjectPLEDGE will be discontinued after three consecutive Billing Periods in which the Customer has not included their pledge amount in the bill. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 5 6.Customers whose Utility bills include payments of principal and/or interest on loans from CPAU which are secured by deeds of trust on real property shall be charged a late payment Charge when any current Utility bill includes an unpaid installment on such loan from a prior bill. Nothing in this Rule and Regulation shall be construed to alter in any way the duty of the Customer to pay any installment on a loan from CPAU when due, or to alter the rights of CPAU to enforce the payment of such installments. H. DISPUTED BILLS If bill accuracy is questioned or disputed by the Customer, Customers shall request an explanation from CPAU within the current Billing Period or as soon as reasonably possible. After reviewing the disputed bill, CPAU will: 1.Issue a corrected bill to the Customer or reflect the correction on the bill in a subsequent Billing Period. 2.Determine if an amortization period (“payment arrangement”) for the Charge-in-question shall be provided by CPAU. If a payment arrangement is offered by CPAU and agreed to by the Customer, Utility Services will not be discontinued for nonpayment while the Customer complies with the payment arrangement for the “past due” balance , and subsequent Utilities bills are paid on time during the payment arrangement period. 3.Advise the Customer that the bill is correct as presented. The Customer may choose, at the Customer’s option, to have the Meter removed for testing under the Provisions of Rule 15 “Metering” and payment of the applicable fee found in Rate Schedule C-1 “Exchange Meter for Accuracy Test”. I. METERED SERVICE BILLING ERRORS AND ADJUSTMENTS Where a Customer has been undercharged or overcharged for metered Service, the date and cause of which can be reliably established by CPAU, the retroactive billing adjustment (back bill or refund) shall not exceed three years. The maximum bill adjustment for undercharges shall be $500 per Account, per incident. 1.When, as a result of either a CPAU or a Customer-initiated accuracy test, an Electric or Gas Meter is found to register more than two percent (2%) fast or a Water Meter is found to register more than one and a half percent (1.5%) fast, CPAU will refund the Customer the overcharge based upon the corrected Meter readings for the period the Meter was in use, or three years, whichever is less. Any applicable late payment will be waived. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 6 2.When, as a result of a test, a Customer’s Electric or Gas Meter is found not to register or to register more than two percent (2%) slow, or a Water Meter is found not to register or to register more than one and half percent (1.5%) slow, CPAU may bill the Customer for the undercharge base on an average bill. The bill will be computed based on an estimate of the Customer’s consumption during a prior month in the same season or on the consumption in the same period of the prior three years. 3.When, a billing or consumption problem has been investigated and verified, Utilities will attempt to notify the Customer within 30 working days or a reasonable amount of time depending on the complexity of the error. 4.When CPAU is the cause of an error that results in an overcharge, CPAU will refund the full amount of the overcharge, subject to the three year retroactive billing adjustment period described above. Back bills for undercharges will be determined and approved by the General Manager of Utilities, or delegate, and may be waived in an amount up to $2,500 per Customer Account, per incident, subject to the three year retroactive billing adjustment period described above. J. UNMETERED SERVICE BILLING ERRORS AND ADJUSTMENTS Where a Customer has been undercharged or overcharged for unmetered Service, the date and cause of which can be reliably established where a customer has been undercharged or overcharged, the retroactive billing adjustment (back bill or refund) shall not exceed three years. K. THEFT OF SERVICE Where there is evidence that meter tampering or theft of Utility Service has occurred, CPAU will retroactively bill, and collect any underpayment or nonpayment of Charges as well as any labor or material costs related to investigating the theft and making any required corrections. The applicable period to assess Charges shall commence from the date it can be reasonably established the theft began to the date in which the underpayment was discovered and initially established. The labor and material costs related to investigating the theft will be calculated in accordance with Utility Rate Schedule C-1 and/or any other applicable Utility Rate schedules. All underpayments or non- payments shall become immediately due and payable. Customers committing theft of Utility Service may also be subject to legal action pursuant to Rule 1, California Penal Code sections 487,496, 498, 591, 592, 593 and California Civil Code sections 1882 through 1882.6. Customers billed for theft of service can dispute the charges by following the process described in Rule and Regulation 11.H. If that process does not resolve the matter, customers billed for theft of service may, within thirty (30) calendar days, request (by telephone, in writing, or in person) an BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 7 administrative hearing. If a hearing is requested, the city manager or his designee shall schedule a date and time for said hearing as soon as possible after the request is filed, but no later than ten (10) business days after the filing of such request for hearing. At the hearing, the customer billed for theft of service may offer evidence in person or in the form of a written statement, setting forth the reasons why the customer believes the determination of theft is incorrect. Utilities personnel shall also be allowed to offer whatever evidence they may have as to why they have established the customer engaged in utilities theft. The city manager or his designee shall make a determination as to whether the customer is liable for the charges for theft of service. L. WATER LEAK CREDITS The General Manager of Utilities, or delegate, may approve Water leak adjustments for Customer’s Water and Wastewater Accounts (when Wastewater charges are based on Water consumption) under the following conditions: 1.Customers having higher-than-average Water consumption for a particular billing period due to leaks may request a Water and/or Wastewater Leak bill adjustment, as applicable. 2.Applications for Water and Wastewater leak bill adjustments must be submitted to the Utilities Department within 60 days from the bill’s due date, for the bill covering the period in which the higher-than-average Water consumption occurred. 3.Customers are restricted to one Water and/or Wastewater leak billing adjustment in each 36-month period. 4.Higher-than-average Water consumption is defined as the volume of water greater than 100% of the Customer’s normal consumption compared to the Customer’s historical consumption over the prior three years, calculated by CPAU using prior averages for the relevant billing period(s). 5.Leaking systems must be repaired before the Customer receives a Water or Wastewater leak bill adjustment, to ensure future bills are not impacted by the same leak. Shutting off the source of the leak is not considered a repair. Undetermined or general high water consumption is not eligible for adjustment. 6.Water leak bill adjustments will be applied to Customer bills based on the higher-than- average water volumes calculated by CPAU. Water leak bill adjustments will be applied to 50% of the calculated higher than average water volume, to a limit of $2,500, using the Tier 1 Commodity Rate cost of the appropriate residential or commercial Water Rate Schedule. 7.Wastewater bill adjustments related to Water leaks will be made based upon the adjusted Water volume, and are not included in the $2,500 Water leak bill adjustment limit. BILLING, ADJUSTMENTS AND PAYMENT OF BILLS RULE AND REGULATION 11 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 4-2-20183-01-2022 Sheet No 8 8.Utility User Tax (UUT) billing adjustments related to Water leaks will be made based upon the adjusted Water volume and are not included in the $2,500 Water leak bill adjustment limit. 9.Administrative decisions regarding Water and Wastewater leak bill adjustments, including eligibility, volume calculations, and adjustment costs will be made by the General Manager of Utilities, or delegate, and are final. M. REFUSE BILLING ERRORS, DISPUTES AND ADJUSTMENTS 1.Adjustments to the Refuse bill shall be requested to the City’s Collector. Customers with adjustments unresolved by the City’s Collector, may dispute their claim with the City’s Public Works Department, Refuse. Billing adjustments will be resolved by following the City’s Rules and Regulations, Chapter 5.20 of the Palo Alto Municipal Code and specific regulations promulgated by the City Manager pursuant to the authority established in Chapter 5.20. 2.When an error in billing has occurred, the date and cause of which can be reliably established where a Customer has been undercharged or overcharged, the retroactive billing adjustment shall not exceed three years. (END) 6055595 Attachment C *Yet to be Passed* Resolution No. Resolution of the Council of the City of Palo Alto Amending Utilities Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) R E C I T A L S A.In 2006, the City of Palo Alto created a credit card policy (ASD 1-47) to establish guidelines on the acceptance of credit card payments. The City did not charge a convenience fee for credit card payments. To limit credit card processing fees absorbed by the City of Palo Alto Utilities (CPAU), CPAU did not accept credit card payments of more than $10,000 per month from a single account. B.The $10,000 payment limit was lifted in 2013, in order to provide more payment flexibility to CPAU’s large commercial customers. C.Since then, more customers have been paying their utility bills by credit card. In addition, credit card companies have been increasing their credit card charges. Credit card fees for utility payments have increased by 141% in the past five years from $472,217 in FY 2017 to $1,139,418 in FY 2021. D.In November 2021, CPAU received 9,200 credit card payments ranging from $1 to $75,000. Of the 9,200 credit card payments; 9,100, or 98.9%, of the payments were less than $5,000. E.Staff recommends amending Utility Rule and Regulation 11 to set $5,000 as the maximum amount customers may charge when paying their utility bill via credit card without an additional cost recovery fee of up to 2.7% of the amount charged over $5,000. With the new maximum fee-free credit card amount of $5,000, staff will contact approximately 100 utility customers and recommend they switch to an alternative payment method, which would potentially reduce the total credit card fee amount charged to the City by 50%, or $550,000. NOW, THEREFORE, 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 Rule and Regulation 11 (Billing, Adjustments and Payment of Bills) is hereby amended as attached and incorporated. Utility Rule and Regulation 11, as amended, shall become effective March 1, 2022. // // // 6055595 // SECTION 2. The Council finds that the adoption of this resolution does not meet the definition of a project under Public Resources Code Section 21065 or CEQA Guidelines Section 15378(b)(2), thus, no environmental assessment under the California Environmental Quality Act is required. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: City Manager Assistant City Attorney Director of Utilities