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Last Updated: May 23, 2013
Rates Overview
As community-owners of Palo Alto’s municipal utilities, residents should understand these four issues, especially when thinking about rate changes:
Value - What you get for what you spend on utilities
Supplies - What are the sources and their status
Infrastructure - What are the current conditions and planned improvements
Rates -Changes made in 2012 and 2013 outlook
Value
When we’re doing our job right, you shouldn’t have to think much about the utilities you use every day. But in the context of evaluating rates, we encourage you to take a moment to do so now. Keeping in mind how much you spend per day on other products and services you value, consider:
ELECTRICITY: For about $1.30 per day, the average household can purchase enough electricity to run their refrigerator, TVs, computers, the lights in every room, hair dryers, space heaters, power tools in the garage, possibly a clothes dryer, stove, oven and anything else they plug in.
NATURAL GAS: For under $1 per day in the summer and just over $4 per day in the winter, the average household can buy enough gas to heat their entire home, operate a gas stove and oven and also heat water for cooking, showering, bathing and clothes washing.
WATER: For under $2 per day in the winter, the average household can buy enough water to drink, cook, do dishes, wash hands, wash clothes, flush toilets as well as take showers and baths. During warm weather, when water use typically doubles in order to irrigate yards and gardens, fill pools etc, the average price tag is still under $3 per day.
Supply Status
Electric - Palo Alto gets its electricity from several sources. While the exact numbers vary annually, ~ 20% of those sources are what the state considers “eligible” renewables (solar, wind etc.) and another ~50% are contracts for low-cost non-carbon-emitting hydropower.
Gas - The current natural gas supply in this country is substantial and the market price has dropped dramatically, so in 2012 Utilities staff and the City Council agreed to follow a “market-based” purchase strategy instead. Gas rates are now determined monthly based on market prices.
Water - Palo Altans are fortunate to get water from the Hetch-Hetchy system, one of the most pristine, high-quality sources in the country. But like all Californians, we have to face the statewide problem of not having enough water to meet ever-growing needs---a problem that is not going away. Recurring drought cycles are a permanent feature of water supply in this state.
Infrastructure Conditions
Electric - Along with ordinary maintenance, the Utilities Department is implementing numerous capital improvement projects to replace aging lower voltage electric lines with new higher voltage ones. For details on these and other major capital projects, click here.
Gas - Leading the industry with an aggressive pipeline maintenance program, the City has replaced over 110 miles of aging gas mains (out of 207 total miles of pipeline) with new lines made of state-of-the-art materials. Click here to learn more about the gas supply system, including specific pipeline materials and projects in different areas of town. Click here to read about current gas line replacement projects.
Water - Palo Alto’s supplier, the San Francisco Public Utilities Commission (SFPUC), is still implementing its 4.6 billion dollar infrastructure improvement program to upgrade old pipelines and build new secondary pipelines to enable the Hetch-Hetchy supply system to recover quickly from an earthquake or other natural disaster. At the same time, the City continues to implement an aggressive program to upgrade its own water distribution pipelines as well as finishing its multi-year project to rehabilitate, replace and install new reservoirs and wells to bolster our local emergency water supply system. Both the Hetch-Hetchy upgrade and City 's emergency water project are very smart investments in the long-term viability of our superior water supply.
Sewer - Projects continue to maintain and replace sewer lines reaching the end of their useful life. For details on current major projects, click here. Since July of 2011, the City has also been engaged in an industry-leading program to search for and identify any gas line crossbores in the sewer pipeline system to ensure the safety of customers dealing with blocked sewer lines. Check out the progress here.
Electric - NO CHANGE SINCE 2009. While no changes are needed for the next fiscal year, staff intends to conduct a pilot study of specialized time of use rates to encourage night-time electric vehicle charging. Currently, no rate increases are proposed for FY 2013-2014.
Current residential electric rate schedules are here.
Current commercial electric rate schedules are here.
Natural Gas - DOWN. Supply rates are now market-based and therefore fluctuate from month to month. Given current market trends, staff is anticipating supply costs to be substantially lower which means the monthly gas rates have dropped compared to previous years.
Although your gas bill includes costs for things other than supply---such as the expense of infrastructure improvements and customer services---and those costs will be going up, the overall impact to the average residential and commercial bill so far has been lower gas costs. (The exception to this expected drop in bills is for a small number of our largest commercial customers who were already on a market-priced rate.)
It’s important to remember that even with this changed strategy, usage levels---not prices---will remain the biggest factor impacting your gas costs. Therefore, efficiency improvements remain the best way to manage your gas bill.
Water - UP. This is no surprise. The utility financial projections have been showing the need for annual rate increases for some time now. We are currently midway through the process of paying Palo Alto’s share of the costs from the SFPUC system’s infrastructure upgrade program as well as those upgrades required by our own water utility. The FY2012-13 increase was double-digit for most customers; for 2013-14, a more modest increase is currently purposed.
To view the Council Finance Committee report recommending proposed new water rates for 2013, click here.
To view the Proposition 218-mandated notice letter mailed to all Palo Alto property owners in April, click here.
The main factors driving this increase are:
SEISMIC SAFETY---the ongoing need to pay Palo Alto’s share of the costs for the SFPUC's Water System Improvement Program (WISP) as well as replacing aging infrastructure within our own water utility distribution system.
DISASTER PREPAREDNESS---the costs of rehabilitating and expanding Palo Alto's local emergency water storage and supply system.
FAIR TREATMENT---adjustments to ensure each customer class (residential, commercial, etc.) is paying their fair share based on the true cost of service for their class.
Current residential water rate schedules are here.
Total Bill Impact----DOWN slightly for the average resident. Varies for commercial customers. For the average resident, if all utility costs are considered---including electricity, gas, water, sewer, storm drain and refuse---the total bill is estimated to be a few dollars lower than before the current rate changes.* The City has been working hard to hold the line on utilities rates and this overall increase is primarily driven by the water supply and delivery system infrastructure improvements, which have to be paid for regardless of how much water customers use.
*This average bill estimate assumes continued low market prices for natural gas.
