As a result of the continuing drought, surchages and seismic retrofitting necessary to provide water after earthquakes, East Palo Alto residents could face a double-digit water-rate increase this summer, staff told the City Council this week.
At the City Council meeting Tuesday night, members approved 5-0 a staff request to authorize sending out public notices of the possible increase. The exact rate won't be determined until the San Francisco Public Utilities Commission (SFPUC), which sets the rate and supplies wholesale water to many Bay Area cities including East Palo Alto and Palo Alto, officially adopts a rate increase. It is expected to do so on May 13.
City staff has erred on the high side in announcing the potential increase, but they expect the SFPUC will approve a rate lower than the maximum estimate, Jones said.
East Palo Alto's city-owned water system serves about 80 percent of residents who receive drinking water from the Hetch Hetchy Reservoir. But a severely limited Sierra Mountain snowpack has reduced water flowing into reservoirs by a significant amount, compounding two previous years of drought. The state Department of Water Resources announced Thursday, May 1, that the snowpack is only at 18 percent of normal levels.
East Palo Alto's contracted water-system operator, American Water Enterprises, asked for the rate increase in anticipation of the SFPUC's increase in wholesale water costs. Under state law, the city can pass on to customers the full amount of water-rate increases.
Council member Donna Rutherford asked staff Tuesday evening if seniors could receive any discounts, but John Doughty, director of community development for East Palo Alto, said the water ordinances do not allow for any cost reductions through the SFPUC. The city would have to subsidize those costs, and a subsidy would add a significant expense to the city's general fund. East Palo Alto already operates at an annual general fund deficit, Doughty said.
"We don't take this lightly, absolutely. This is one of those situations were we have very little flexibility," he said.
Surcharges will also contribute to the rate increase, primarily for meter replacement. Rates could go even higher after a contracted water rates and financial model study is completed this fall, staff said.
Council member Lisa Yarbrough-Gauthier asked staff Tuesday if the meter surcharge could be separated from the water-rate increase; Jones said it could. The council could choose to vote to separate the meter and water charges during a public hearing to be held in June.
Under industry standards, meters lose accuracy over time and should be replaced every 10 to 15 years, Jones said, and East Palo Alto's meters are significantly older than that. Inaccurate readings mean "lost water" from leakage and runoff isn't recognized. The city is paying for water to the SFPUC for which it is not being reimbursed by users, Doughty said, making water conservation is critical to reducing costs.
The surcharge would include the cost of the meters and any construction and pipe replacement costs. The proposed meters could save the city meter reader costs, since they could be read without workers having to go and open a meter box. A less expensive model would require more time for readers, Doughty said.
Doughty said the increase also includes seismic retrofits that are critical to providing water after an earthquake.
A public hearing on the increase will take place Tuesday, June 17. Residents can protest the rate increase, but under California Proposition 218, official protests must be in writing.
"We knew this was coming. We knew we were going to have to revisit this because of the drought," Rutherford said, noting the council had delayed the discussion last year. "It's not just the City of East Palo Alto facing this. There are other cities also."
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