Palo Alto committee backs higher water rates

Proposal would raise rates by 12.5 percent in July because of rising cost of wholesale water, major infrastructure projects

A proposal by Palo Alto's Utilities Department to raise the city's water rates by an average of 12.5 percent in July earned the endorsement of a City Council committee Tuesday night.

After a lengthy debate, the council's Finance Committee voted 3-1, with Nancy Shepherd dissenting, to increase the water rates this summer. The four committee members agreed that the rates have to be raised to keep up with the spiking costs of wholesale water. The wholesale price of water is scheduled to double by 2016 because of a $4.6 billion effort by the San Francisco Public Utilities Commission (SFPUC), the city's water supplier, to repair the aged water structure.

"I feel strongly that we do need a rate increase," Councilman Greg Schmid said after hearing the staff presentation. "The SFPUC has put the burden on us and we have to respond.

"I think this moves us in the right direction."

The increased rates would bring the Utility Department an estimated $3.1 million in extra revenue, which will be used to help offset a projected deficit of $6.2 million in the Water Fund. The balance of the deficit would be covered by the city's reserves.

Though all committee members supported the increase, members split over how much of the water rate should be comprised of fixed monthly costs and how much should consist of "volumetric charges," which vary by usage. Fixed charges currently constitute about 7 percent of the fund's revenues, while volumetric charges add up to the other 93 percent.

A recent Cost of Service Study recommended increasing the fixed-service component of the bill. Staff had initially proposed raising the fixed rate for most residential mains from $5 to $14 a month, but revised its proposal after members of the Utilities Advisory Commissioners argued that volumetric costs should comprise a large part of the bill to encourage conservation. After the UAC's review, staff proposed increasing the fixed cost from $5 to $7.50 for most residential customers.

The Finance Committee ultimately settled on what Vice Mayor Yiaway Yeh characterized as a "compromise" between the two proposals. The committee voted 3-1 to increase the fixed charge for most residential water customers from $5 to $10.

"I think it's a good middle ground," Yeh said. "It does increase some of the structures to push for conservation measures and get customers to think about that."

The full council is scheduled to discuss the rate increases in June. The new rates would take effect July 1.

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Like this comment
Posted by Ron
a resident of Old Palo Alto
on Mar 3, 2011 at 11:40 am

It is a mistake to not set rates to accurately reflect the fixed and volumetric rates. By overpricing the volumetric rate and under-pricng the fixed rate, if water users reduce their usage declines fixed costs may not be covered. The result will be a additional increase in volumetric rates and the paradoxical result that the less water you use the more you pay per unit. A similar thing has happened with garbage collection rates. Effective recycling in Palo Alto has reduced the amount of trash that has to be collected so that it has been necessary to increase rates to cover the fixed costs.

Like this comment
Posted by barely making ends meet
a resident of Ventura
on Mar 3, 2011 at 11:40 am

so do i understand correctly that the fixed charges for water increased 100%? so much for all my conservation. i live on a fixed income, which was NOT increased this year, this water increase just prevented me from putting food on my table one day a week.

Like this comment
Posted by Up-Up-And-Away
a resident of Another Palo Alto neighborhood
on Mar 3, 2011 at 11:43 am

> "I think this moves us in the right direction."

As Greg Schmidt continues to wow with his vacuous sound-bytes. Has Greg Schmidt ever spoken in a complete sentence, that actually conveys some meaningful information?

> Utilities Advisory Commissioners argued that volumetric costs
> should comprise a large part of the bill to encourage conservation.

In the private sector, this decision would have been made on use-based principals. Since this is a municipal utility, we get lectures about things that the Council's personal agendas. It might be interesting to require that people running for City Council submit their utility bills for the last five years (or as long as they have lived in town). If those bills don't reflect a continued decrease in utility use, then this would give the voters a chance see who is a hypocrite, and who is not.

There are always costs associated with running small operations--like this Utility. What's needed is a full analysis of what the costs would be if the Utility were sold to the private sector. Certainly we would not be captive customers of people like the yoyos that end up on the City Council, and the Boards and Commissions they appoint.

Like this comment
Posted by Grace
a resident of College Terrace
on Mar 3, 2011 at 12:16 pm

I don't get it -- it has been raining like crazy so there will be plenty of water. What's the excuse for the increased rates again???

Like this comment
Posted by Bah Humbug!!
a resident of Another Palo Alto neighborhood
on Mar 3, 2011 at 12:33 pm

So they're going partially for the less water you use the more you must pay, i.e. the fixed rate is the same for all. So much for encouraging conservation now we get penalized and must pay the same rate as those who use more water, even though so many of us have cutback our watering.

They've deliberately made it so convoluted in the hopes that Palo Altans won't get the deception.

Like this comment
Posted by ann
a resident of Los Altos Hills
on Mar 3, 2011 at 2:50 pm

i'm with you grace...we shoulda put the rain barrels out....pretty soon water will be as expensive as gas...or is it already.....big bankrupt government...just keep that water rolling to down south...and if that revenue isn't enough....raise our rates and tax us till we drop..

Like this comment
Posted by qq
a resident of Barron Park
on Mar 3, 2011 at 4:37 pm

Be careful putting those rain barrels out. The city might just sue you.

"Catching rain water is against the law"

Web Link


Like this comment
Posted by OY!
a resident of Green Acres
on Mar 3, 2011 at 4:51 pm

Oh well... it's only a 12.5% increase. Meanwhile council maintains a incompetent city manager at a yearly salary of $275,000 with additional benefits including buying him a $2,000,000 luxury home and pulling $30,000+ extra from the city general fund for a kitchen remodel. Not being able to pay property taxes on this meager salary, council approved to pay his taxes courtesy of resident taxpayers. Car allowance, medical benefits, retirement benefit payments... and the list goes on. How can we pay for this, simple, raise utility fees, charge additional fees for city services, reduce services and employees who provide that service.... and the list goes on. City Council and city management continue their attempt to offer excuses to residents for failed management practices.

Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Mar 3, 2011 at 5:28 pm


I believe there are similar rules in Mountain View as their drinking water comes from groundwater and they don't want it going into the storm drains!

I don't understand this because usage varies from home to home and has very little to do with square footage and much more to do with the number of occupants, lifestyles and how much time is spent in the home.

Hype over water conservation has caused us to make false saving measures and we have low flow shower heads and toilets. It takes longer to rinse the shampoo out of my hair and often I need to use two flushes to get rid of the waste. Showering at the gym and taking laundry to the laundromat are options to take water usage somewhere else.

But charging us more for using less shows that there is plenty of water around and the hype was exaggerated, once again.

Like this comment
Posted by ann
a resident of Los Altos Hills
on Mar 3, 2011 at 6:05 pm

qq....your web link was for Utah....oh please tell me it is not so in california...water is a renewable resource....the rain gods shine upon us and big gov charges us for if i capture 100 gallons of rainwater that falls on my property that i own...its free and freedom...but if i'm not allowed to capture it and i have to let it run thru the gov system i have to pay for that 100 gallons of it's just about the bureacracy and as OYI says we can buy some gov worker a nice big house.....wonder if the city manager pays for his water....betcha 100 gallons of water he doesn't......

Like this comment
Posted by qq
a resident of Barron Park
on Mar 3, 2011 at 9:22 pm

Hi Ann,

Yes, that specific article was for Utah, but similar laws exists all over the Union.

I just went through a similar issue with riparian water rights. The laws surrounding these issues are old and complicated and require much research.

Water Rights

Web Link

Riparian Water Rights

Web Link


Like this comment
Posted by Give us a break
a resident of Monroe Park
on Mar 4, 2011 at 12:17 pm

It's time for Palo Alto residents to figure out that, no matter what their behavior vis-a-vis conservation of water happens to be, the water rates are going to increase every year, because the real goal is not conservation, but REVENUE.

I, for one, would like to see proof that the water rate increases mandated by the SFPUC are actually going to repair aging infrastructure. I have no doubt that the system has not been maintained properly over the years, but if that is indeed the case, why should we trust that the money is going there at this point?

Like this comment
Posted by Resident of Community Center
a resident of Community Center
on Mar 5, 2011 at 3:44 pm

My utility bill was just under $500 this month. When will the Utility Dept. realize many of us live on fixed incomes?

Like this comment
Posted by JoAnn
a resident of Ventura
on Mar 5, 2011 at 6:32 pm

When the voters stomp their little feet and insist on a 2/3 yes vote to raise most taxes, and also insist on being provided services, government entities will go for revenue where they still can. I'm on fixed income too (3rd year in a row of frozen Social Security payments, because, you know, there's no inflation...), so it ticks me off, too. But this is the system we've cobbled together for ourselves.

They seem to be blaming San Francisco's need to upgrade the water delivery systems for this hike. It would be interesting to see if all the increase is passed along to them.

Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Mar 7, 2011 at 11:45 am

Walter_E_Wallis is a registered user.

When has a Palo Alto committee NOT recommended an increase in any fee, charge or tax?

Sorry, but further commenting on this topic has been closed.

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