HomeMy WebLinkAbout0340.094; . ~
June 16, 199.
1MB HONORABLB CITY COUNCIL
Palo Alto, california
l!..~ff Roslxmu • .tsL.II.tU1Ut.L!!Ul Compari.olJ
Merllbel-S of the Coune! 1 :
'this is an il){ol':mat.ional report providing a staff response
regarding a utilit_ic6 bill cotl1pa:rison distributed to the Council in
M~rch 1994. No Council action is required.
Baolsa rQ~!JN
On March 1, 1994 Council Nember Fazzino distributed a utilities
bill (water, g8S, .alec,tric, refuse, sewer) comparison prepared hy
resident Bill Terry (attached).
B.a8ic~11y, Mr. Te:l"ry's analysis indicates that an avera'ge monthly
Palo Alto residential utilitles bill is higher t.han corn~sponding
utilities hills of reoidenta in neighboring communities, His
comparison assUmeo' three different examples for low, medium, and
hlgh'usage residents.
Staff has several observations. First, the Palo Alto water bill
component of t.he total utilities bill is the key factor why the
total n'\{)"thly utiliti~B bills in other cities compare favorably to
Palo hlto. Howevel', this differential will change on July 1, 1994
(/
if the Council apPl"oves the proposed w{tter rate decrealic, The
pending' staff proposal spreads the decrease primarily to large
water uae;k:s, which is a focus of Mr. Terry~6 analysis. Thus,
currQntly Palo Alto ,water xales ar-e relatively higher than ratee
charged in nearby cities ~od this is due in lal"ge p .. 'nt to the need
to maintain rateo at a level Dufficient to restore the Nater-Fund~ s
financial health. However, in FY1994-95. the WattH" f.'und's
financial health will be restored ano-the Cit)·· a wat.er rates will
become more competitive (CMR'~232:9.), Additionally. recent
information indicates that M()UTltain view wi 11 propose a 12 percent
water rate increase. Othor citieu may inCl"eaSe water rates as
w"311, which will position Palo Alto as a watei:." provider with more
cQmpetitive t'ates.
Second. Mr. Tarry~ 8 analysis is ba,.ed on ~ater bills for
residential usage levels that al·,,: ilOt typical in Palo Alto and,
consequently. have the effect of unfavorably distorting the bill
comparison. For ('!xamplc, Me "I'OITY'S <-'lnalyais aS8urr.es that water
usage at low~ rr;edillrn~ and hi9h levels i,9 20 units/mont"; 40
unit8/montn; and 80 units/month" 1n Falo td.to. thel"e are only
about 50 reBid~nts cOllsu:nlng ao units/month" Low llsage in Palo
Alto is approximately 1 unlts/m.:-nth and me-di\Hl'I o:r ave:rage usage is
12 units/month. At '1 units/f'!"~nth, Palo Alto '"Water bills compare
favorably with BlllTounding an~a9: ho; .. 'ever. this impact ",',19 not
re:cognized in Hr, Tel'ry' a al1alysi s,
It is primarily above thp-consumption level of )S units pet" month
where Palo Alto water, billa al'~ relatively higher than those of
local jurisdictiv;'"fB and this has existed many years. Since 1976.
the "inverted rate atl'uctUf'C" has b(!"(lTl the l:ate structure of choice
for residents by the City because of the import.ance placed. upon
conservation and providing p-riee sig09l1s. Invertod rat~ atl"ucturcs
charge higher prices to larger uoero and low~r prices for small
users. Consequently, cities with eith{!r flat rates or only
slightly inverted rate,s will typically have .),o'fl'er bills for large
usel:S when comparing bills at similar consumption levels for Palo
Alto water usera,
Finally. Borne errOl"S in tho analysis cauae the ~alo Alto average.
monthly utilities bills to {lppear higher than they act.ually are.
Palo Alto ' s gas and sewer hills: are overstated, and the Santa Clara
water bill and Can Jose l"efuse bill ar.e understated. In adjusting
for these errors and computing water bi.lls based on a medium usage
of 12 unit9/month~ Palo Alto·.e proposed watex t'ate9 are competitive
with, the rates of other local jurisdictions, A total average
monthly utilities bill for an a\!erage consumer in palo Alto '.\'i 11 be
. \
low¢r than a bill for a Los Altos resident but will be slightly
higher (7 percent) than a bill for a Santa Clara resident.
Respectfully Bubmitted, ~~/~
W, RANDY BALDSCHUN -
Assistant Director of Utilitieo,
?n;:~iV .. riCes
EDW~ ~.f:x:t.
Director of Utilities
FI'J?/oIlt~
Manager
Attachment: Bill Tel:'.ry Utilities Bill Comparison
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