HomeMy WebLinkAboutStaff Report 2501-4065CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, June 01, 2026
Council Chambers & Hybrid
5:30 PM
Agenda Item
14.Adoption of a Resolution Amending Utilities Rules and Regulations Numbers 02
(Definitions and Abbreviations), 03 (Description of Utility Services), 04 (Application for
Service), 05 (Service Contracts), 09 (Disconnection, Termination and Restoration of
Service), 10 (Meter Reading), 11 (Billing, Adjustments and Payment of Bills), 18 (Utility
Service and Facilities on Customer Premises, 20 (Special Electric Utility Regulations), 21
(Special Water Utility Regulations), 22 (Special Gas Utility Regulations), 23 (Special
Wastewater Utility Regulations), and Utility Rate Schedule C-4 (Residential Rate
Assistance Program), and Repealing Rule 15 (Metering Equipment); CEQA Status – Not a
Project
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: June 1, 2026
Report #:2501-4065
TITLE
Adoption of a Resolution Amending Utilities Rules and Regulations Numbers 02 (Definitions and
Abbreviations), 03 (Description of Utility Services), 04 (Application for Service), 05 (Service
Contracts), 09 (Disconnection, Termination and Restoration of Service), 10 (Meter Reading), 11
(Billing, Adjustments and Payment of Bills), 18 (Utility Service and Facilities on Customer
Premises, 20 (Special Electric Utility Regulations), 21 (Special Water Utility Regulations), 22
(Special Gas Utility Regulations), 23 (Special Wastewater Utility Regulations), and Utility Rate
Schedule C-4 (Residential Rate Assistance Program), and Repealing Rule 15 (Metering
Equipment); CEQA Status – Not a Project
RECOMMENDATION
Staff recommends that Council adopt the attached Resolution (Attachment A) amending
Utilities Rules and Regulations 02, 03, 04, 05, 09, 10, 11, 15, 18, 20, 21, 22, 23, and Utility Rate
Schedule C-4, and Repealing Rule 15 (Metering Equipment); as attached.
EXECUTIVE SUMMARY
Utilities Rules and Regulations (Rules) are updated as needed to ensure current procedures are
in place to continue City of Palo Alto Utilities (CPAU) operations. The recommended changes to
the various Rules and Regulations add new provisions, remove outdated sections, update
language for clarity, and reflect changes to applicable regulations, business practices and
procedures. The proposed expansion of the City’s Rate Assistance Program of increasing the
number of eligible participants and changing the residential discount rate from 25% to 35% for
electric services (under Utility Rate Schedule C-4 - Residential Rate Assistance Program) was
vetted and approved by the Utilities Advisory Committee and Finance Committee as part of the
FY 2027 budget meetings. The new gas fees (under Rule and Regulation 22 – Special Gas Utility
Regulations) for unauthorized and unscheduled gas disconnection which requires staff time was
approved by Finance Committee during the Municipal Fee section of the budget hearing.
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In addition, the staff has updated the Rules to align with the State of California’s new laws on
Accessory Dwelling Units (ADU) and the State Water Resources Control Board Cross-Connection
Handbook on customer responsibilities, testing requirements, and enforcement actions to
safeguard the public drinking water system.
BACKGROUND
changes do not impact long range planning, policies, or programs. The
changes mainly reflect daily operational changes and procedures that are currently in place.
ANALYSIS
Utilities Rules and Regulations (02, 03, 04, 05, 09, 10, 11, 15, 18, 20, 21, 22, and 23)
Senate Bill (SB) 1211, Assembly Bill (AB) 2533, and Senate Bill 1077
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Utilities Rule and Regulation 03 (Description of Utility Services)
-Connection Control and Backflow Prevention
requirements was standardized, and the Rule clarifies that customers are responsible for
installing, testing, and maintaining required assemblies in accordance with state regulations.
The update also aligns with the State Water Resources Control Board's Cross-Connection
Control Policy Handbook.
-Metering by reaffirming the prohibition on utility resale while
allowing cost allocation under specified conditions.
-owned or maintained
infrastructure, expanding the language for consistency and broader applicability. The list of
services that may require contracts is updated, described as illustrative and non-exclusive, and
expanded to include long-term service agreements, loans or leases for efficiency or reliability
improvements, distributed generation and Energy Storage Facility projects, dark fiber services,
reservation of electric capacity, installation of additional service or lateral connections, and
fiber internet services.
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Utilities Rule and Regulation 09 (Disconnection, Termination and Restoration of Service)
-initiated termination or disconnection, revisions focus on accurately distinguishing
procedures that apply to non-payment from those that apply to other violations. The document
clarifies that 10-day and 48-hour notices are specific to non-payment cases and removes
extraneous or duplicative clauses. Additional edits refine the list of violations that may lead to
termination or disconnection and strengthen language describing unsafe conditions, improper
equipment, and customer impacts on the electric distribution system. Several operational
clarifications were added, including processing timelines for mailed or third-party payments
and emphasizing the need for customers facing imminent disconnection to use methods that
post payments immediately.
-of-service section preserves the distinction between
disconnection for non-payment and termination for other causes, and it outlines the conditions
under which service will be restored once financial, physical, or safety issues have been
resolved.
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Utilities Rule and Regulation 11 (Billing, Adjustments and Payments of Bills)
-party payments and credit card limits. Several sections were
reorganized for clarity, including delinquency rules, dispute processes, and the Budget Billing
Payment Program. Customers served with AMI water meters are not eligible for water leak
adjustments because such Customers can receive email notifications based on City-set
thresholds to alert them of unusually high water flows and/or potential leaks. The edits
removed the maximum credit card payment of $5,000 per account and cost recovery fee for
credit card payments over $5,000, since the City will be implementing a new credit card service
fee for cost recovery. Billing adjustments for water leaks remain capped at $2,500. Maximum
billing for undercharges will no longer be subject to the $500 dollar per Account, per incident,
for cost recovery. The retroactive billing adjustment (back bill or refund) shall not exceed three
years. If requested, CPAU will offer payment arrangement or budget billing for retroactive back
bill adjustments.
-family residential services in wildfire-risk areas must be underground whenever CPAU
determines elevated threat levels. Rules governing number of services reinforce the “one
Point-of-Service per lot” standard, while retaining CPAU discretion to allow additional service
points and clarifying cost responsibility. Edits across protective device and equipment sections
reaffirm Customer/Applicant responsibility for installation, maintenance, and compliance with
CPAU standards, including protective coordination, short-circuit rating alignment, and safe
operation of generation equipment. CPAU retains discretion to require agreements and
conditions under which CPAU will install and maintain such facilities.
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Utilities Rule and Regulation 21 (Special Water Utility Regulations)
Proposed edits in Rule 21 further clarify and strengthen the City’s requirements for maintaining
reliable backflow protection across the water system. The revisions reinforce that Customers
are responsible for installing, testing, and maintaining approved backflow prevention
assemblies in accordance with State Water Resources Control Board requirements and the
City’s Cross Connection Control Program, which is administered under the California Health and
Safety Code. The Program documents and tracks all Customer-owned devices to ensure they
meet annual inspection and testing standards that safeguard the potable water supply from
cross-contamination. If a Customer fails to submit the required annual test report within 90
days, the City may arrange for inspection and testing at the Customer’s expense, and may
curtail or terminate water service if compliance is not achieved. A new section was added for
development that impact the City’s water infrastructure. Developers may be required to
provide a fire flow test to quantify fire flow and domestic water demands as part of a capacity
study. All costs associated with the capacity study and Applicant’s share of necessary water
system improvements are the full responsibility of the Applicant.
Utilities Rule and Regulation 22 (Special Gas Utility Regulations)
The revisions to Rule 22 add a new section barring unauthorized construction activity near
service lines, adding a defined 10-foot buffer and clearer consequences for proceeding without
CPAU permission, including potential service disconnection and responsibility for related fees.
The proposed fee will be included in the Municipal Fee Schedule as discussed during the FY
2027 Proposed Budget meetings with the Finance Committee. A new section was added for
development that impacts the City’s gas infrastructure. Developers may be required to provide
a capacity report to quantify the project’s demands as part of a capacity study. All costs
associated with the capacity study and Applicant’s share of necessary gas system improvements
are the full responsibility of the Applicant.
Utilities Rule and Regulation 23 (Special Wastewater Utility Regulations)
In addition to adding new ADU language, a new section was added to address development
that impact the City’s wastewater infrastructure. Developers may be required to provide a
sewer capacity and flow monitoring report to quantify the project’s demands. All costs
associated with the capacity study and Applicant’s share of necessary wastewater system
improvements are the full responsibility of the Applicant.
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Utility Rate Schedule C-4 (Residential Rate Assistance Program)
FISCAL/RESOURCE IMPACT
Approval of changes to Utilities Rules and Regulation 2, 3, 4, 5, 9, 10, 11, 15, 18, 20, 21, 22, and 23,
will not result in a significant change in net operating revenues or expenses. Changes to Utility Rate
Schedule C-4 of increasing the electric rate discount rate from 25% to 35% and expanding the
number of eligible participants for the rate assistance program will cost approximately $300,000
and $80,000 from the electric and gas public benefit funds respectively.
STAKEHOLDER ENGAGEMENT
1, staff presented the FY 2027 Utilities Budget to the Utilities Advisory Committee
(UAC), recommending two changes in the City’s residential rate assistance program. The changes
include a) increasing the residential electric rate discount from 25% to 35%; and b) increasing the
qualifying income level from 50% (Very Low Income) to 80% (Low Income) of the Santa Clara
County Area Median Income (AMI). On March 25, 2026, staff presented the changes of the rate
assistance program to the UAC Budget Subcommittee. Given rising affordability concerns, both
the UAC and subcommittee were supportive of the proposed changes to the rate assistance
program.
1 Utilities Advisory Committee Meeting on May 6, 2026:
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=7833047e-6411-4548-8b9e-
c22862b8bd11
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On May 5, 20263, staff presented the FY 2027 Utilities Budget to the UAC, recommending two
changes in the City’s residential rate assistance program. The changes include a) increasing the
residential electric rate discount from 25% to 35%; and b) increasing the qualifying income level
by approximately 50% for entire rate assistance program. Finance Committee expressed support
for the proposed expansion of utility assistance programs for lower-income residents and
emphasized the importance of communicating those benefits to the public. Additional comments
noted that the revised income thresholds would also apply to S/CAP-related assistance programs.
On May, 20264, staff introduced the new gas disconnection fees for non-scheduled gas service or
disconnection call during after-hours and weekends. These fees reflect the Utility’s cost to
disconnect gas service prior to construction to discourage unsafe or hazardous construction
activities within 10 feet of a live gas service or meter. The responsible party will be responsible
for the disconnection and/or removal fees and penalties. Finance Committee tentatively
approved of the proposed FY 2027 municipal fees including the new gas fees.
ENVIRONMENTAL REVIEW
The adoption of the resolution amending Utility Rules and Regulations does not meet the definition
of a “project” under Public Resources Code 21065 or CEQA Guidelines Section 15378(b)(2), thus no
CEQA review of this action is required.
ATTACHMENTS
APPROVED BY:
3 Finance Committee Meeting on May 5, 2026:
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=1c90c2b7-8128-4dab-8581-
e7d87c08a1c7
4 Finance Committee Meeting on May 6, 2026:
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=09639f78-ff3b-4b7e-9877-c6ef67e46219
ATTACHMENT A
RESOLUTION NO. _____________________
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING
AMENDMENTS TO UTILITIES RULE AND REGULATION 2 (DEFINITIONS AND
ABBREVIATIONS), UTILITIES RULE AND REGULATION 3 (DESCRIPTION OF
UTILITY SERVICES), UTILITIES RULE AND REGULATION 4 (APPLICATION
FOR SERVICE), UTILITIES RULE AND REGULATION 5 (SERVICE
CONTRACTS), UTILITIES RULE AND REGULATION 9 (DISCONNECTION,
TERMINATION AND RESTORATION OF SERVICE), UTILITIES RULE AND
REGULATION 10 (METER READING), UTILITIES RULE AND REGULATION 11
(BILLING, ADJUSTMENTS AND PAYMENT OF BILLS), UTILITIES RULE AND
REGULATION 18 (UTILITY SERVICE AND FACILITIES ON CUSTOMER
PREMISES), UTILITIES RULE AND REGULATION 20 (SPECIAL ELECTRIC
UTILITY REGULATIONS), UTILITIES RULE AND REGULATION 21 (SPECIAL
WATER UTILITY REGULATIONS), UTILITIES RULE AND REGULATION 22
(SPECIAL GAS UTILITY REGULATIONS), UTILITIES RULE AND REGULATION
23 (SPECIAL WASTEWATER UTILITY REGULATIONS), AND APPROVING
AMENDMENTS TO UTILITY RATE SCHEDULE C-4 (RESIDENTIAL RATE
ASSISTANCE PROGRAM), AND REPEALING UTILITIES RULE AND
REGULATION 15 (METERING)
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 Rule and Regulation 02 (Definitions and Abbreviations) is hereby amended as
attached and incorporated. Utility Rule and Regulation 02, as amended, shall become
effective June 1, 2026.
Section 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rule and Regulation 03 (Description of Utility Services) is hereby amended as attached
and incorporated. Utility Rule and Regulation 03, as amended, shall become effective
June 1, 2026.
Section 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 04 (Application for Service) is hereby amended as attached
and incorporated. Utility Rule and Regulation 04, as amended, shall become effective
June 1, 2026.
Section 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 05 (Service Contracts) is hereby amended as attached and
incorporated. Utility Rule and Regulation 05, as amended, shall become effective June 1,
2026.
ATTACHMENT A
Section 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 09 (Disconnection, Termination and Restoration of Service)
is hereby amended as attached and incorporated. Utility Rule and Regulation 09, as
amended, shall become effective June 1, 2026.
Section 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 10 (Meter Reading) is hereby amended as attached and
incorporated. Utility Rule and Regulation 10, as amended, shall become effective June 1,
2026.
Section 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities 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 July 1, 2026.
Section 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 18 (Utility Service and Facilities on Customers Premises) is
hereby amended as attached and incorporated. Utility Rule and Regulation 18, as
amended, shall become effective June 1, 2026.
Section 9. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 20 (Special Electric Utility Regulations) is hereby amended
as attached and incorporated. Utility Rule and Regulation 20, as amended, shall become
effective June 1,2026.
Section 10. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 21 (Special Water Utility Regulations) is hereby amended
as attached and incorporated. Utility Rule and Regulation 21, as amended, shall become
effective June 1, 2026.
Section 11. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 22 (Special Gas Utility Regulations) is hereby amended as
attached and incorporated. Utility Rule and Regulation 22, as amended, shall become
effective June 1, 2026.
Section 12. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 23 (Special Wastewater Utility Regulations) is hereby
amended as attached and incorporated. Utility Rule and Regulation 23, as amended, shall
become effective June 1, 2026.
Section 13. Pursuant to section 12.20.010 of the Palo Alto Municipal Code,
Schedule C-4 (Residential Rate Assistance Program) of the Palo Alto Utilities Rates and
Charges is hereby amended to read as attached and incorporated. The foregoing Utility
Rate Schedule, as amended, shall become effective July 1, 2026.
ATTACHMENT A
Section 14. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utilities Rule and Regulation 15 (Metering Equipment) is hereby repealed as attached
and incorporated. Utility Rule and Regulation 15, as repealed, shall become effective
June 1, 2026.
Section 15. 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.
Section 16. Council finds that the adoption of this resolution is statutorily exempt
from the California Environmental Quality Act (CEQA), pursuant to California Code of
Regulations Title 14, Chapter 3, Section 15273(a), because the fees and charges proposed
are necessary to recover the cost of providing utility service and meet operating expenses.
After reviewing the reports presented, 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: APPROVED:
____________________________ _________________________________
City Clerk Mayor
APPROVED AS TO FORM: _________________________________
City Manager
____________________________
Senior Deputy City Attorney
_________________________________
Director of Utilities
_________________________________
Director of Administrative Services
Attachment B: Table of URLs
efinitions and
Abbreviations
Rule and
Regulation 2
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-02-definitions-and-
abbreviations.pdf
ription of Utility
Services
Rule and
Regulation 3
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-03-description-of-
utility services.pdf
Application for Service Rule and
Regulation 4
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-04-application-of-
utility services.pdf
vice Contracts Rule and
Regulation 5
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-05-service-
contracts.pdf
Disconnection,
Termination and
Restoration of Services
Rule and
Regulation 9
/files/assets/public/v/2/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-09-disconnection-
termination-and-restoration-of-service.pdf
Meters and Meter
Reading
Rule and
Regulation 10
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules and regulations/rr 10 reading.pdf
Billing, Adjustments and
Payment of Bills
Rule and
Regulation 11
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-11-billing-adjustments-
and-payments-of-bills.pdf
Utility Service and
Facilities on Customer
Premises
Rule and
Regulation 18
/files/assets/public/v/2/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-18-utility-service-
connections and facilities premis.pdf
Special Electric Utility
Regulations
Rule and
Regulation 20
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-20-special-electric-
utility regulations.pdf
Special Water Utility
Regulations
Rule and
Regulation 21
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-21-special-water-
utility regulations.pdf
Special Gas Utility
Regulations
Rule and
Regulation 22
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-22-special-gas-utility-
regulations.pdf
Special Wastewater
Utility Regulations
Rule and
Regulation 23
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/rr-23-special-
wastewater-utility-regulations.pdf
Residential Rate
Assistance Program
Utility Rate
Schedule C-4
/files/assets/public/v/1/agendas minutes
reports/agendas-minutes/city-council-agendas-
minutes/2026/june/rules-and-regulations/utility-rate-schedule-c-4-
residential assistance program.pdf