News

Palo Alto water rates could jump 12.5 percent

City Council committee to debate water-rate hike tonight

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.

Comments

 +   Like this comment
Posted by How-Soon-They-Forget
a resident of Another Palo Alto neighborhood
on Mar 1, 2011 at 10:56 am

> 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

This was well discussed and approved by the Council several years ago. At that time, the Utility head (Ulrich) indicated that the City would raise the money to pay its share of the Hetch Hetchy upgrade by doubling the cost of water over ten years. How is it that this fact seems to have been forgotten by everyone?

When asked what the City would do after Palo Alto's financial commitment was retired, Ulrich would not say. Even though it will be a while before that time comes--given how little transparency exists into the Utility, people ought to be demanding a written (and binding) agreement on the part of the Utility to reduce the cost of water in the future. Presumably the costs will be set by the SFPUC in the future, but the Palo Alto Utilities needs to be firm with them about reducing water costs once the fund for the refurbishment have been raised.


 +   Like this comment
Posted by David Pepperdine
a resident of Another Palo Alto neighborhood
on Mar 1, 2011 at 11:02 am

The Utilities Department are thieves, pure and simple. They're a back door way to overcome Prop 13. That's why the city now leases its trucks from the Utilities Department. That way the cost is shifted out of the city to Utilities, which isn't subject to Prop 13. In fact, the City of Palo Alto, is pretty much a wholly owned subsidiary of the Palo Alto Utilities Department.

It is unconscionable that the city could increase water rates by 12.5% in this economy when they are already charging more than any other city in the entire 50 states! And yes, I've done my homework on this.

It's time to fire the scumbags who run this outrageous operation, at least the water & sewage departments.


 +   Like this comment
Posted by Frank
a resident of Ventura
on Mar 1, 2011 at 11:09 am

Posted by How-Soon-They-Forget:
> people ought to be demanding a written (and binding) agreement on the part of the Utility to reduce the cost of water in the future

I disagree. Unless we want to suck the Sacramento, American, Towalame, Merced and all Rivers dry we need to use less water.

The best (most effective) way to have folks use less water is to charge more for it. That's not the purpose of this rate increase since it is specifically for repairs to the delivery system. But if it is the effect then I say keep the rates high (but do keep tabs on where the funds are going and be sure they come back to the city's general fund).


 +   Like this comment
Posted by How-Soon-They-Forget
a resident of Another Palo Alto neighborhood
on Mar 1, 2011 at 11:18 am

> The best (most effective) way to have folks use less water is
> to charge more for it.

The role of government is not to impose itself on the lives of its citizens in this way. Claiming that it has a right to force people to use few natural resources will eventually lead to claims that the government can force people to live in smaller homes, have fewer (or no) children, and perhaps even mandate where they live.

There is nothing in the Charter that gives the City that right. And there have been no people elected to City Council that have demonstrated a level of intelligence that is so keen that the residents should simply "do what we say, without question".

This is one of the reasons that a municipal utility is such a bad idea.


 +   Like this comment
Posted by Fern
a resident of Gunn High School
on Mar 1, 2011 at 11:35 am

The report going to Finance Committee tonight is posted here: Web Link

Page 5 shows SFPUC's water costs and forecast increases (1000% increase over 30 years).

Unless we want to stop buying from SFPUC (Hetch-Hetchy reservoir), Palo Alto utility doesn't have much influence on the supply costs.

We do have the option to use less by becoming more efficient. Palo Alto's water consumption is down 35% from the 1976 peak. Reduce your consumption by scheduling a water-wise house call: Web Link


 +   Like this comment
Posted by Jo Ann
a resident of Embarcadero Oaks/Leland
on Mar 1, 2011 at 11:49 am

Guess we didn't have enough rain or sales tax revenues hence this outrageous rate hike???

I'm tired of expensive mailings from the Utilities Dept. saying we should use less and then saying we didn't use enough so they have to raise rates.

I'm furious hearing how comparatively little people in other communities pay for their utilities.

I'm furious with that the city can use declining sales tax revenues as an excuse for raising rates rather than doing something constructive to KEEP and SUPPORT businesses.

I hereby promise to buy 12.5% more from local merchants to make this rate hike unnecessary.

Of course the city will ignore this. And I can console myself with my "personal storm drain" user fee of $15 or whatever. I'd even undertake Storm Drain Beautification Program if only I knew where my personal storm drain was since the one near our house has drained correctly.


 +   Like this comment
Posted by How-Soon-They-Forget
a resident of Another Palo Alto neighborhood
on Mar 1, 2011 at 11:50 am

> Unless we want to stop buying from SFPUC (Hetch-Hetchy reservoir),
> Palo Alto utility doesn't have much influence on the supply costs.

If water costs are projected to increase 1000% (really??), then other sources become viable. Desalination has always been expensive, but compared to the kinds of costs that might be borne by Palo Alto in the future, there is no reason not to start thinking about joining with a couple other cities to get our water from the sea:

Desalination:
Web Link

Major Breakthrough With Water Desalination System:
Web Link


 +   Like this comment
Posted by Joel
a resident of Barron Park
on Mar 1, 2011 at 11:55 am

My understanding is the more we conserve the more it costs to run the utility department. As with the recent trash pick up increase, the more we reduce our use the more it cost to meet the contract with our new trash company. So it is a classic case of a "Catch 22" in our type of constant growth economy. I use my 22 gal garbage can once a year. My cost just went up 6%. Go figure!


 +   Like this comment
Posted by Dan
a resident of Southgate
on Mar 1, 2011 at 12:18 pm

Rather than having my Utility bill tell me if I used more or less than my neighbors, I'd like every bill to state how much of it is diverted to the General Fund. Let's face it: we have a local tax system that has almost nothing to do with the ability to pay.


 +   Like this comment
Posted by common sense
a resident of Midtown
on Mar 1, 2011 at 12:42 pm

Here is how much is diverted to the general fund for the 2010 - 2011 Fiscal year:

Users Utility Tax: $11,417,000
Return on Investment: $16,500,000
Rents paid to City: 13,606,000

a total of around $42,000,000.

There is also expenses that the city charges the Utilities for HR, Legal, finance, etc. of $10,546,000.

So around 30% of the city budget comes from the utilities; 37% is you count the charge backs, which some would argue could be done less expensively.

This amounts to $640/per person; or for a family of 4, $2,560/year - around $200 of each month's utility bill.


 +   Like this comment
Posted by NativePaloAltan
a resident of Old Palo Alto
on Mar 1, 2011 at 12:51 pm

This increase will encourage residents to cover as much of their property as possible with house and hardscape. Real estate values already incentivize homeowners to do so.


 +   Like this comment
Posted by Fern
a resident of Gunn High School
on Mar 1, 2011 at 1:44 pm

Regarding 1000% water supply cost increase from the report:
The 30 year time period was for 1991 - 2021 (historical plus forecast).

Supply costs have tripled in the past 20 years.
They forecast increases of about 135% in next 10 years.

Current cost is $800 per acre-foot. By 2021, they forecast the cost to reach $1,900/acre-foot (under one cent per gallon).

Desalination takes energy (and $$$). SFPUC water system is gravity fed.


 +   Like this comment
Posted by Richard
a resident of Another Palo Alto neighborhood
on Mar 1, 2011 at 4:47 pm

> Current cost is $800 per acre-foot. By 2021, they forecast the
> cost to reach $1,900/acre-foot (under one cent per gallon).

> Desalination takes energy (and $$$). SFPUC water system
> is gravity fed.

With the cost of gravity increasing, the $1,100 per acre foot price increase can be applied to energy sources, perhaps a small nuclear device.

The Pursuit of Cost-Effective Desalination:
Web Link

According to the NYT article, it costs about $.50/cubic-meter to desalinate water using today's technology. With an acre-foot containing about 1233 cubic meters, that means that an acre-foot of water can be produced for a little over $600/AF. $600 is about one-third of what is forecast for gravity-feed water only ten years out.

The NYT article goes on to say research in nanotechnology at Lawrence Livermore could reduce the current costs by 75%--

Nanotechnology At Lawrence Livermore:
Web Link

A water desalination system using carbon nanotube-based membranes could significantly reduce the cost of purifying water from the ocean. The technology could potentially provide a solution to water shortages both in the United States, where populations are expected to soar in areas with few freshwater sources, and worldwide, where a lack of clean water is a major cause of disease
---

Let's hope someone at the Utility is reading this blog.


 +   Like this comment
Posted by Jenny
a resident of Charleston Gardens
on Mar 1, 2011 at 4:53 pm

If you use less water, your increase will be greater!! The Utility Department tried to pull this one off before but a previous City Council turned them down; now with a new City Council they are trying to pull the same deception again. The Utility Department are downright thieves.

Obviously, if you economize and use less water your increase should be less - right!!! Not according to our Utilities Department, your increase will be greater than those using more water. Their argument is your water goes through the same pipes but less of it goes through, so you must pay more!!!

I hope our new City Council sees the inequity of this deception. If you use less water your increase should be less or at least the same as those who use more water. What is the incentive to cut back on scares water supplies if they charge you more for using less?


 +   Like this comment
Posted by SteveU
a resident of Barron Park
on Mar 1, 2011 at 7:40 pm

SteveU is a registered user.

In 1985, 16 units (my hottest summer months usage)cost $20 and change.
In 2020, 16 units cost $60 and change.

Did every one forget that rates INCLUDE system maintenance? Infrastructure upgrades are funded by Bonds and are repaid by the additional usage (why else, would the system need Upgrades?), Not by rate increases.


The SFWD thieves did not spend the maintenance money collected where it was supposed to be spent.


 +   Like this comment
Posted by Bob
a resident of Community Center
on Mar 1, 2011 at 8:44 pm

..... still the 'flood' continues. Th paper flood More mail, more brochures, more do-this-don't-do-that from Utilities and Green Waste. Gaudy brochurse in living color, Today was a banner day for the City of PA to tell us what to do and how to live and how to be 'green'. Enough. Save money from the top down. Stop this deluge of paper.


 +   Like this comment
Posted by Tom
a resident of another community
on Mar 1, 2011 at 8:52 pm

You can find out 2009 salary data for most government agencies, including Palo Alto on the Mercury Web Link

Hopefully they update it with the 2010 data soon.


 +   Like this comment
Posted by pares
a resident of Fairmeadow
on Mar 2, 2011 at 9:12 am

The report comparing my energy use to my neighbors energy use makes me wonder how far away we are before the Utilities will be needing more and more info on me to make a report. Right now, the report is inaccurate and shows the wrong square footage so I'm getting a wagging finger. Never mind I have been a supporter of the environment and recycling for decades. But having bureaucrats keep tabs on me is offensive to say the least. Even if the square footage were accurate, there are too many variables to make a comparison to neighbors useful. Some of us stay at home, some work at home, some travel and are seldom around, some have sick people living there, some tolerate the cold better, and so on. Our govt is morphing into Big Brother.


 +   Like this comment
Posted by Richard
a resident of Another Palo Alto neighborhood
on Mar 2, 2011 at 9:53 am

> Right now, the report is inaccurate and shows the wrong square
> footage so I'm getting a wagging finger.

You can remove yourself from the program. Why not do so?


 +   Like this comment
Posted by mirror
a resident of Crescent Park
on Mar 2, 2011 at 9:54 am

Pares, the point of the comparison is so you can make a conscious decision about how much you are using. If you have nothing to compare against then you don't know whether you should be pro-active in making improvements.
If your lifecycle/house is so different to your neighbors then the comparison may be meaningless. That is your call to make. Utilities are just providing the information.


 +   Like this comment
Posted by David Pepperdine
a resident of Another Palo Alto neighborhood
on Mar 2, 2011 at 11:18 am

Fern: By any chance are you a mole from the Utilities Department?

> Page 5 shows SFPUC's water costs and forecast increases (1000% increase over 30 years).

A 10X increase over 30 year works out to an 8% annual increase. The proposed 12.5% annual increase works out to a 34X increase over 30 years.

Re:
> 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

I love how other Bay Area cities that also use Hetch Hetchy water are able to maintain (and improve) their infrastructure for less money than Shallow Alto.

Such a rip-off.


 +   Like this comment
Posted by How-Soon-They-Forget
a resident of Another Palo Alto neighborhood
on Mar 2, 2011 at 12:03 pm

> I love how other Bay Area cities that also use Hetch Hetchy water
> are able to maintain (and improve) their infrastructure for less
> money than Shallow Alto.

While this may be true, the documentation for this kind of spending is hard to come by, so the yearly dollar amounts is generally unknown outside those in each city's public works department/utilities departments.

One sad fact is that "infrastructure has no constituency" and it's not clear how well the infrastructure in most cities is being maintained. Since 1998, Palo Alto has had "infrastructure" on the table, and we now realize that we have a backlog of about $550M (estimated) in projects to bring our extant infrastructure up to some sort of "standard". Questions around whether the standards are too high have not really been asked, but sooner or later, everything wears out and needs to be fixed.

Few cities seem to have taken on this job of (at least) creating backlog inventories in as visible way as Palo Alto has. If they did, we'd have a better basis for making the kinds of statements about their doing a better job than Palo Alto (or cheaper anyway).

One thing is clear, however. The Palo Alto government is paying very high salaries for what it is getting in return, in terms of value of labor. If the City were to rethink its service delivery models, then it might be able to outsource most of the work needed to deliver services, and still be able to pay for the backlogged infrastructure. Assuming that the current revenue stream stays the same (no inflation), the City will get about $1.4B in revenues in the next ten years. Under the business-as-usual model, most of this money will go to salaries, benefits, and increasingly to post-retirement payouts (pensions and healthcare). However, if this $1.4B were spent in the private sector for labor, there's every reason to believe that a significant amount of money would be available to pay for the $550M infrastructure backlog--without pushing another property tax on the property owners of Palo Alto.


 +   Like this comment
Posted by City employee
a resident of Menlo Park
on Mar 2, 2011 at 12:23 pm

re: "common sense"'s point on transfers to the General Fund of $42 million per year resulting in a cost per person of $420/year. The fact is that the bulk of these costs are paid by non-residential utilities customers, not residents. Also, none of the return on investment piece is from the water fund (the subject of this forum).


 +   Like this comment
Posted by How-Soon-They-Forget
a resident of Another Palo Alto neighborhood
on Mar 2, 2011 at 1:02 pm

> The fact is that the bulk of these costs are paid by
> non-residential utilities customers, not residents.

Not necessarily true.

According to responses from the Utility Department in the past, about 85% of the electricity in Palo Alto was consumed by commercial accounts (like Roche), but gas use is about 85% residential use vs commercial accounts.

Water use is an open question. In this category, the schools and the city also are heavy users of water. Some recycled water is used by the City, so a detailed break-down of the actual use would be instructive.


 +   Like this comment
Posted by Anon.
a resident of Crescent Park
on Mar 2, 2011 at 6:13 pm

I agree with Jo Ann, a resident of the Embarcadero Oaks/Leland neighborhood:
> I'm tired of expensive mailings from the Utilities Dept. saying we should use less and then saying we didn't use enough so they have to raise rates.

They completely FUBARed the garbage contracts too. Do we have unsophisticated "rubes" working in our city that writes deals that are clueless and foolish with our money, or is is there something deeper going on here in terms of kickbacks or sweetheart deals?

The correct incentives are not considered or built in in all of these deals - meaning that the lower users are often getting hit with more cost that those who use more. The best example is the last garbage price hike, dumping more costs on the people who use less garbage volume that those who use more. I guess this is the no good deed goes unpunished model of city management?


 +   Like this comment
Posted by pares
a resident of Fairmeadow
on Mar 2, 2011 at 6:47 pm

Richard and Mirror who tell me to just opt out of the energy report, here are the problems:

1. I'm still paying for it.

2. What good is it? Really, there are too many variables for the Utility to evaluate my usage compared to my neighbor's. The Utility will need more and more data in order to make a valid comparison. Even so, why should the Utility tell me what is good usage and what is bad: What if I'm sick and need it warmer in my house than I did a year ago? Do I need to get the approval of the Utility?

3. Why does the Utility think I'm so dumb that I need them to watch me personally? Really!

4. What's next, the Utility showing up at my door for an inspection?


 +   Like this comment
Posted by Richard
a resident of Another Palo Alto neighborhood
on Mar 3, 2011 at 11:13 am

> 1. I'm still paying for it.

Well, half of it, anyway. The rate payers are paying for half, and the other half comes from taxpayers via "grants".

> 3. Why does the Utility think I'm so dumb that I need them to
> watch me personally?

Well .. they think we ALL are "so dumb", since everyone is being watched.

> Do I need to get the approval of the Utility?

Not at this time. However, there is every reason to believe that acquiring that kind of control over our lives is one of the Utilities/government's long-term goals.

> 4. What's next, the Utility showing up at my door
> for an inspection?

Anything is possible. There is nothing in the City Charter to control the power of the Utility. To make matters worse, with Palo Alto being a "Charter City", it has more power to do that sort of thing than a "General Law" city.

In addition to removing yourself from this program, you should also write a letter to the CC, outlining your objection.

This "program" is another example of bad management, and a loss of vision about the purpose of a municipal utility. The idea that providing the lowest price for the "products" offered has long been lost here in PA. The $500,000 spent on this program is not going to provide much to the ratepayers, as individuals, or as a group. The cost for this service is excessive, but this is not a Profit&Loss organization, so there is no reason to use the ratepayers' money prudently.


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