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Uploaded: Wednesday, April 1, 2009, 2:00 AM
Committee backs Palo Alto utility rate hike
City Council committee supports proposals to raise electricity rates by 10 percent, drop gas rates by 10 percent
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by Gennady Sheyner
Palo Alto Online Staff
Palo Alto residents should expect to see a small increase in their utility bills starting in July, when electricity, water and wastewater rates are all tentatively scheduled to go up.
But an expected 10 percent drop in natural-gas rates, the biggest portion of most customers' utility expenses, should keep the average bill from swelling too much.
On Tuesday night, the City Council's Finance Committee endorsed a staff plan to raise electricity rates by 10 percent, an adjustment that reflects more than two years of drought conditions. The four-member committee also unanimously backed staff's proposals to raise water and wastewater rates by 5 percent each, increase the refuse collection rate by 17 percent, and lower the natural-gas rate by 10 percent.
The Tuesday meeting was the council's first chance to debate the staff proposal, which has already been reviewed by the Utilities Advisory Commission (UAC) and still has to be approved by the full council. But while the commission split on most staff recommendations and failed to reach any consensus on staff's plan to raise the electric rates, the council committee unanimously backed each proposal.
The various adjustments would add about $4 to the average monthly bill of a residential customer, staff has estimated.
Staff had originally proposed spiking the electricity rates by 12 to 21 percent, but reduced the amount to 10 percent after a wave of criticism from customers and advice from the UAC. The 10 percent increase would add $6.97 to an average residential electric bill, but would still keep the bill nearly $30 dollars below the PG&E rate, according to a staff estimate.
But staff projections also indicate that steeper spikes could be on the horizon. Under the proposal endorsed by the Finance Committee Tuesday, rates could jump by another 15 percent in July 2010.
Staff noted, however, that the 15 percent estimate is on the "high side" and that the rate increase could end up being smaller.
Vice Mayor Jack Morton and Councilman Yiaway Yeh both urged staff to consider raising the electricity rates by 12 percent in July to ensure that there won't be a dramatic spike the following year, but committee Chairman Pat Burt and Councilman Larry Klein voted to support the staff recommendation.
Burt said he supports keeping the electric rates at a reasonably low level, provided the city has sufficient reserves to limit future spikes.
"In this difficult economic year for ratepayers and businesses, it is appropriate for us to try to mitigate these increases as much as possible," Burt said. "If our staff feels we're still in a strong enough position in our reserve funds and we have a basis to be optimistic that projections for the following year may come in below the staff report, I don't want to increase the burden on either residents or on our businesses."
Klein also criticized newspaper coverage of the proposed rate adjustments and emphasized that the numbers discussed at city meetings in recent months were staff recommendations, not council decisions.
"I can't tell you how upset I am when I see a headline that says 'City to increase rates,'" Klein said. "No, staff has proposed to increase rates."
Shortly after making that comment, Klein and his colleagues on the committee voted to support all the rate adjustments proposed by staff.
The committee also endorsed the staff's method for calculating how much money the city should transfer from utilities to the general fund.
Committee members voted 3-1, with Burt dissenting, to support a formula that would allow the city to collect a 6.75 percent return on its investment in utilities. Under the formula, the city would transfer $16.42 million from utilities to the general fund in fiscal year 2010, which begins July 1.
Both staff and the Finance Committee also rejected a recommendation by the UAC to require that the annual transfer cannot increase or decrease by more than 5 percent. Dexter Dawes, chairman of the UAC, told the committee the cap would cushion the ratepayers from major changes.
If the cap were imposed this year, the equity transfers from the electric and gas funds to the general fund would be limited to $13 million in the next fiscal year.
But the committee sided with City Manager James Keene's argument that the cap could end up undermining the transfer formula. Members were concerned that the 5 percent cap could potentially preclude the city from lowering the amount transfered from utilities to the general fund.
"Theoretically, if you have some precipitous situation requiring a big drop, what's the rationale for having a floor that would keep the transfer artificially high?" Keene asked.
Burt was the only committee member who voted against the staff recommendation because he wanted more information about the methodology. The committee is scheduled to revisit the topic on May 12.
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Posted by YouShouldKnow, a resident of the Old Palo Alto neighborhood, on Apr 1, 2009 at 11:10 am (I probably should have filed this under CRIMES and incidents)
CITY OF PALO ALTO HIKES UTILITY RATES:
Council backs hike. Here's how this translates to me and others in my position I've spoken to:
CARPETBAGGERS translated for modern times: Probably the worst Carpetbaggers were the politicians who used their positions in the corrupt Reconstruction Government (CITY COUNCIL) to enrich themselves (CITY COFFERS) through bribes, graft and other despicable acts (UTILITY HIKE DURING DIRE ECONOMIC TIMES)at the expense of native Southerners.(PALO ALTANS) Today the dictionary defines a Carpetbagger as " an outsider (COMPLETELY CLUELESS) involved in politics.
ROBBER BARONS:
The term derives from the medieval German lords who illegally charged exorbitant tolls against ships traversing the Rhine river (utilities) There has been some dispute over the term's origin and use. It was popularized by U.S. political and economic commentator Matthew Josephson during The Great Depression in a 1934 book. He attributed its first use to an 1880 anti-monopoly pamphlet in which Kansas farmers (Palo Altans)applied the term to railroad magnates (Palo Alto City Council). The informal term captains of industry (yeah, that's it)may sometimes be used to avoid the negative connotations of "robber baron". Recently the term "Robber 'Boomer' Baron" has been used to describe the undisciplined greed of financial 'robbers' (City Council) during the financial meltdown in 2008 and 2009.
So let's see. What's the good news the last few weeks? Here are just a few of the wallet grabbers:
Vehicle license tax doubles
State sales tax up a full one percent
More job layoffs this week in Silicon Valley.
According to one blog this morning, the following:
More than anything else, business needs a predictable environment if it is to create jobs. Changes in the regulatory environment and the tax code make it almost impossible for businesses to make investments.
On top of all this festive. news:
Palo Alto hikes utility rates, makes an already elevated rate even higher to fund their pet projects while many Palo Altans reported going cold this winter. When there have been numerous complaints of strangely escalated random billings. While the Utilities Dept. is being investigated for fraud.
When there is already a surplus in the utility fund due to high billing even when natural gas rates went down.
Way to support your City, Council.
Does anyone know where there would be a sale on pitchforks and torches?
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Posted by BP resident, a resident of the Barron Park neighborhood, on Apr 1, 2009 at 11:22 am Why are they raising rates when they are making a profit already? Because they are stealing profits from the utilities to fund OVERHEAD=too many employees. Palo Alto employs more people per citizen than all of our surrounding neighbor cities. Do we get more services? No. We get part time work weeks, bureaucratic babble, and no responses. We have streets in extreme disrepair.
They're funding their excessive benefits packages & pay rates with utility money.
While private, federal, and state organizations are all executing cost savings measures, I haven't heard one peep from PA city council about how they are going to save money.
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Posted by stretch, a resident of another community, on Apr 1, 2009 at 11:22 am Check out how much people who live outside Palo Alto pay for their utilities! If there's a problem with any utility, the City is there right away to handle it. Just call PG&E, and they might be out in a week. hmph!
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Posted by Jo Ann, a resident of the Embarcadero Oaks/Leland neighborhood, on Apr 1, 2009 at 11:48 am It was reported last week that we're paying 38% more for utilities than PG&E customers. Shame on Palo Alto.
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Posted by YSK, a resident of the Old Palo Alto neighborhood, on Apr 1, 2009 at 12:01 pm [Post removed by Palo Alto Online staff.]
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Posted by YSK, a resident of the Old Palo Alto neighborhood, on Apr 1, 2009 at 12:28 pm Excuse me, but how can my pointing out that most people do their research before they post on this forum be objectionable and therefore deleted? Do you READ postings on any other sites, like the Chronicle or Mercury? Good way to educate yourselves on truly 'objectionable' content vs. discourse.
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Posted by Has $5, a resident of the Ventura neighborhood, on Apr 1, 2009 at 6:35 pm I think they said @ last night's meeting that the total net cost increase averaged about $5/month per resident (include garbage and sewer increases).
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Posted by YPK, a resident of the Crescent Park neighborhood, on Apr 1, 2009 at 8:32 pm What happened to those council members who ran on the platform of tighter budgetary and fiscal control? Since they apparently had changed their position when they voted for the rate increase en-mass, can the citizens get an injunction against the increase by reason of lack of representation?
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Posted by YSK, a resident of the Old Palo Alto neighborhood, on Apr 1, 2009 at 10:21 pm Doubtful. This commentary was hot a month ago, dwindled to nothing. That's what they count on, how they win.
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Posted by Rajiv, a resident of the Adobe-Meadows neighborhood, on Apr 1, 2009 at 10:29 pm Palo Altans are getting ripped off on this deal. Natural gas prices are down well over 60% and all we get is a 10% cut. Then electricity goes up 10% even though many of power source commodity prices are down. Hydro is flat, gas & oil are way down, and even if we are using coal, it has been tracking oil.
If workers are getting salary increases, that would be ridiculous given that everyone in the world is taking pay cuts.
So what gives?
Where's the oversight?
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Posted by common sense, a resident of the Midtown neighborhood, on Apr 2, 2009 at 4:51 am Oversight? they are part of the problem. This is just part of the money that the utilities transfers to the city:
"ROI" of assets - $16 million
Utility users tax - $10 million
Charges for leases - $5 million (see Diana Diamond's article, where she enumerates cases where the city will lease a parcel of land from Stanford for $1, and charges the utility department hundreds of thousands of dollars Web Link)
Add it all up and it's about $500+ per resident.
And the city council keeps voting for this hidden tax...
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Posted by Resident, a member of the Jordan Middle School community, on Apr 2, 2009 at 5:03 am Not all council members are in favor of this.
Greg Schmidt is good and tries very hard to grill staff on this.
There are several other council members who I am pretty certain are against this.
The city manager and his staff want the money to fund projects or something. It is hard to extract honest information from these guys.
Council tries, but gets the run around.
We need a good audit, and probably should hire several more financial auditors to help our new auditor.
Sharon was great, I wish we still had her.
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Posted by YSK, a resident of the Old Palo Alto neighborhood, on Apr 2, 2009 at 10:39 am Well then, it would be interesting for someone to go out and interview CM Keene. Sharp concise questioning should elicit some sort of response and then we can get the reporters impression regarding the veracity of that answer. Formulate some of the questions based on some of the points put forth by poster common sense and some other's on this forum.
If some in the City Council disagree, then why vote with the others? This isn't high school, it's ok to buck your peers and vote your conscience.
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Posted by Ben, a resident of the Barron Park neighborhood, on Apr 2, 2009 at 10:44 am "Council tries, but gets the run around."
Who in the hell is running our city, the council or the staff?! If the Council is trying to get answers and the city manager is giving them the runaround.... then perhaps we need a new city manager who understands who's the ultimate authority...
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Posted by Mike, a resident of the Crescent Park neighborhood, on Apr 2, 2009 at 11:45 am The city tries to do forward contracts, and as a result we ended up paying 68% over PG&E rates for gas the last 6+ months. That was prime gas usage time, so the impact to consumers (us) was maximized.
The huge utility surplus should first have a portion allocated to a fund for the utility to rebate or credit monthly back to users to compensate for the 68% overcharge. Instead of making the biggest transfer ever to the general fund to bail out the city for not being able to balance the budget.
We utility users are captive slaves to the general fund, and staff payroll/retirement funding.
Plus the increase in water rates will come just in time for the biggest time of the year for water usage-spring and summer when the rains stop, and lawns and gardens need watering.
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Posted by Alma & Loma Verde Resident, a member of the JLS Middle School community, on Apr 6, 2009 at 1:36 pm This ridiculous...didn't they just raise our rates like 30% this past winter...oh and now that summer is coming and we won't be using our gas heaters, ...now electricity is going up??? WTF???
Puh-leaaase!!! I know it's expensive to live here and I love PA, but come on...this is WAAYY outt-a-control!!!
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Posted by resident, a resident of the Adobe-Meadows neighborhood, on Apr 6, 2009 at 7:01 pm I was not at the meeting at the time of this vote. Can anyone please tell me who voted in favor of raising rates and who voted against? I want to make sure I know who to vote out in the next election. I would very much appreciate it, thank you.
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Posted by Kateb, a resident of the Charleston Gardens neighborhood, on Nov 9, 2009 at 9:08 am How are you. Every day you may make progress. Every step may be fruitful. Yet there will stretch out before you an ever-lengthening, ever-ascending, ever-improving path. You know you will never get to the end of the journey. But this, so far from discouraging, only adds to the joy and glory of the climb.
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