Palo Alto residents will be asked to swallow higher water rates starting next month to help pay for a colossal regional effort to repair the aged Hetch Hetchy water system.
With little discussion and few protests, the City Council unanimously approved on Monday night new water rates that would add 25 percent, or about $18.31, to the monthly bill of the average water customer. The smallest customers, meanwhile, will see a 10 percent increase, which will add about $2.91 to the average bill.
The new rates would further increase what are already some of the highest water bills in the region. According to a report from Ipek Connoly, a senior resource planner in the Utilities Department, the city's water rates are about 14 percent higher than the average surrounding city. The lone exception is Menlo Park, where water rates are about 14 percent higher.
The main driver behind the latest increase is the $4.6 billion project undertaken by the San Francisco Public Utilities Commission to fix up the vast network of pipes, reservoirs and dams that makes up the Hetch Hetchy system. Palo Alto is one of 26 municipalities that draw its water from the Hetch Hetchy through the SFPUC.
Though a few dozen residents sent in letters protesting the increase, only two speakers showed up at the meeting to criticize the latest proposal. One of them, Larry Hootnick, accused the council of adopting a "soak the rich" strategy and urged staff to be more transparent about where the money is going.
"If you're not going to be transparent, just send us the rates and say, 'Here it is,'" Hootnick said.
But the council agreed that the rate hike is necessary to ensure a clean and reliable water supply. Councilman Larry Klein noted that the Hetch Hetchy water, which originates in the Yosemite, is consistently rated as among the best in the nation. Klein, who represents the city on the Bay Area Water Supply and Conservation Agency, a coalition of municipalities that get water from the SFPUC, said the city's share of the repair bill would total about $200 million.
The effort, known as the Water System Improvement Project, involves about 80 projects across the state, including replacement of the Calaveras Reservoir in Alameda County, a new tunnel stretching under the San Francisco Bay and extending from the East Bay to Menlo Park, and dozens of other upgrades and seismic retrofits to the century-old system.
And while some customers wrote letters objecting to the new rates, the council agreed that these changes are necessary.
"Of course, nobody likes to pay higher rates," Klein said. "If the choice is between higher rates or doing without water in case of an earthquake, I think people will find that this is really a bargain."
"Trying to contemplate how life would be if the water supply were interrupted is pretty scary."
Councilman Pat Burt also said the city's customers are getting a great product for their money.
"We have a higher cost," Burt said. "Frankly, for many of us, at least for drinking-water supply, we have a higher value."
Burt also urged utilities staff to do a better job breaking out the costs of the Hetch Hetchy project and making it clear to customers why their rates are going up. Without increased transparency, Burt said, the city risks losing public support.
Vice Mayor Yiaway Yeh said the city remains committed to keeping water costs as low as possible, the rate change notwithstanding. The city, he said, has recently refinanced the Utilities Department's bond obligations, which he said would achieve about $270,000 in annual savings.
"I know as a council we are very committed to looking at as many savings opportunities as possible," Yeh said.
The council also voted, with few questions and no public opposition, to add a $4.62 fee to all residential refuse bills. The city adopted the rate increase to help cover a projected $3.7 million deficit in the refuse operation. The new fee is a stop-gap measure aimed at keeping the Refuse Fund's budget balanced while staff and consultants consider more dramatic changes to the refuse rate structure.
The new refuse rates, like the water rates, are scheduled to take effect on Oct. 1.