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Palo Alto utility rates may jump 10 percent in July
Utilities Advisory Commission unanimously approves increases at sparsely attended meeting

by Becky Trout

In July, rates for water, natural gas and electricity are expected to jump an average of nearly 10 percent due to an "unpredictable marketplace."

The increases need the approval of the City Council and could be warded off if a majority of utility customers write letters of protest.

But the increases are necessary, and, in the case of electricity, perhaps even a bit low, Utilities Department staff members said Wednesday at a sparsely attended meeting of the Utilities Advisory Commission.

In past years, it's when the new rates take effect that protesting voices are heard.

"We've done what we can to manage supply costs in an unpredictable marketplace and reduce operating costs to keep the rate proposals as low as possible," Jane Ratchye, the city's assistant utilities director for resource management, said in a statement issued earlier Wednesday.

The commission, minus an absent Marilyn Keller, unanimously approved raising electric rates by 14 percent, gas rates by 7.1 percent and water rates by 8 percent.

Commissioner Dexter Dawes said he is concerned the city's water rates are now above those of neighboring communities.

"It's a trend that's very worrisome," Dawes said.

Some of the increases stem from the city's need to transfer money each year from the utility funds to the city's General Fund, Dawes and Chairman Dick Rosenbaum said. Transfers totaled more than $13.7 million in 2005-06.

Perhaps the transfer policies should be re-examined, Dawes said.

"To be frank, it's not my call," Utilities Director Val Fong responded.

If rate increases are not approved, the transfers would continue, but utilities maintenance projects would be scaled back, Fong said.

Gas-rate increases appear to be leveling off, however, the commission acknowledged.

Gas rates jumped 20 percent in 2006 and 9.5 percent last year.

"My thought is we've gotten used to such large rate increases, 7 (percent) seems so small," Rosenbaum said, smiling.

The rate increases next go before Finance Committee before they are considered by the City Council, probably in June.

Staff Writer Becky Trout can be e-mailed at btrout@paweekly.com.