Water rates in Palo Alto would rise by an average 12.5 percent in July -- the first of several price hikes -- under a Utilities Department proposal that a City Council committee will consider tonight.
Under the proposal, the city's water customers would see their rates rise by about 12.5 percent this year, by 17 percent next year and by 16 percent in July of 2012. Utilities officials say the rate hikes are necessary because of the spiking cost of purchasing water from the San Francisco Public Utility Commission (SFPUC), the agency that supplies Palo Alto.
Utility officials estimate that water-supply costs will more than double over the next five years, from the current level of $10.8 million to $21.5 million in fiscal year 2016, according to a report from Ipek Connolly, the Utility Department's senior resource planner.
The 12.5 percent hike would increase the revenues in the city's water fund by $3.4 million in fiscal year 2012, which begins July 1. Customers using the lowest levels of water would see their monthly bills go up by $3.41, while the average residential water bill would go up by about $10, to roughly $82.
The main driver for increased water costs is a $4.6 billion effort by the SFPUC to repair and upgrade water infrastructure throughout the Bay Area. The project means higher costs for all customers who depend on the SFPUC for their water. At the same time, Palo Alto is also working on replacing its own water mains and building a new water-storage reservoir at El Camino Park -- infrastructure projects that also add to the water bill.
Palo Alto's total water expenses are expected to jump from $32 million in the current fiscal year to $42.4 million in fiscal year 2016, according to Connolly's report.
The Finance Committee will discuss the proposed water-rate adjustments at 7 p.m. in the Council Conference Room at City Hall, 250 Hamilton Ave.