Concerned about the steady drip of rate increases, Palo Alto’s Finance Committee pushed back on Tuesday against a new proposal by the Utilities Department to increase rates by 4 percent in July and by 7 percent in each of the following two years.
The committee, which was scheduled to adopt the Water Utility Financial Plan and the 4 percent rate hike, instead directed staff to take a fresh look at its expenditures and come up with ways to keep increases down. This could mean revising the department’s infrastructure priorities or scaling back plans to adopt smart meters over the next three years.
Some of the cost increases are due to factors largely beyond the city’s control, including the wholesale cost of buying water from the city’s supplier, San Francisco Public Utilities Commission. The SFPUC is also still in the midst of a multiyear, $4.8-billion effort to upgrade the Hetch Hetchy system, a project that is also contributing to higher water bills.
While the city has no purview over the regional project, committee members urged staff to rethink some of the local infrastructure priorities. These include maintenance of an emergency reservoir and replacement of aged water mains. Councilman Greg Tanaka observed that construction costs are now extremely high and wondered whether it would make sense to defer some projects until the economy cools off and the projects can be done at a “fraction of the costs.”
“It’s not like the wheels are falling off the wagon now,” Tanaka said.
Ed Shikada, general manager of the Utilities Department, countered that replacement infrastructure over time is a “prudent risk management strategy.”
“You don’t plan to make a major replacement of capital infrastructure within a small period of time,” Shikada said.
Councilman Greg Scharff questioned the need for smart meters, which the city hopes to start installing by 2021 and which are projected to cost about $4 million. Given the high costs, Scharff wondered whether residents are better off with or without the smart meters.
The committee did not vote on the proposed plan, but instead directed Utilities Department staff to return with alternatives for having lower rates in future years.
“I think the rate increases are too high,” Scharff said. “I can’t support them.”
If the city adopts the 4 percent rate increase this year, the change would add about $2.84 to the median residential water bill, which currently stands at $84.27.
Staff plans return to the committee within the next month to continue the discussion, before going to the full City Council for approval.
How refreshing that the usual rubber stamp for increased prices is not happening. Yet.
If we have our own utilities it seems we should always be the beneficiaries of better prices than others in our region of the Bay Area. Otherwise there is scant reason for running a city utility department. And using elevated pricing to produce significant additional revenue to shift to the general fund seems to go against the best interested of citizens. Or if that is to be the game better to be very clear to the public that the city strategy is to fund a portion general expenses through utilities and not attempt to disguise the motivation as something else.
The Utilities Department his the department that makes LOTS of money. I believe some goes into the General Fund. Why is it necessary to increase water rates. Oh, yes, salaries go up.
What is the profit Utilities will deposit into the city’s general fund this year? About $20 million? Turns out our utility rates are a cash cow for the city to fund vanity projects and shiny toys.
There is NO money from the Water fund transferred into the general fund, except for the usual cost of services and rent. It is only the Gas and Electric funds that make explicit (and large!) transfers to the general fund to support other City services. If the residents understood how much of that was paid by non-residential customers (especially in the Electric fund), they would strongly support these transfers. Otherwise police and fire, library, etc. services would be either more expensive or less expansive.
Finally some push back against the annual rate increases that subsidize the General Fund. Maybe the citizen lawsuit against the PA Utilities rate hikes that siphon money from us into the general fund and against the 5% utilities user tax is having some impact? Maybe people are wondering why the city so aggressively keeps pitching conservation and then raises rates, saying we’re conserving too much?
More likely, the city polls re the proposed “infrastructure” tax are also showing pushback against city’s out-of-control spending and dismissal of residents’ concerns.
WOW Finally someone is taking a look at the drip, drip, drip of rate increases over the year(s). Keep looking
@Not alternate facts states:
“There is NO money from the Water fund transferred into the general fund, except for the usual cost of services and rent. It is only the Gas and Electric funds that make explicit (and large!) transfers to the general fund to support other City services. If the residents understood how much of that was paid by non-residential customers (especially in the Electric fund), they would strongly support these transfers. Otherwise police and fire, library, etc. services would be either more expensive or less expansive.”
Translation:
“The Utilities Department is our secret sauce to undo the intent of Prop. 13. Please don’t screw with it or it will impact our generous raises, retiree health and pension plans, for which most of us work only 9 days every two weeks.”
I believe the discussion about Palo Alto utility rates should focus on customer BILLS.
Utility bills can be reduced even with rising rates when we decrease consumption through efficiency and managing waste.
UTILITY BILLS decrease when customers get good information about managing their usage. Smart meters provide the opportunity to give notifications when there is high usage due to a water leak or malfunctioning irrigation system for example.
Please don’t delay installing smart meters which are a key method to help Palo Alto meet our Sustainability goals.
Most insane business ever seen….
Demand me to reduce my water usage.
Which I comply the past 5+ yrs, reducing around 12%-18%.
But due to myself and other Palo Altans reducing our water
usage, our water bill goes up 15%-20% over same time period!
BECAUSE THE WATER COMPANIES ARE NOT MAKING AS MUCH MONEY.
So they have to charge customers more……
Just absolutely insane. And I am in the finance/economic industry!
If I am complying and participating, why am I punished with higher pricing?
III
@dejiii
I am sick of this too … save or not save, reduce or not reduce, POURING RAINS or draught — Palo Alto will raise the fees anyway! Unbelievable!!!
I’m not opposed to the increase.
Every once in a while residents benefit when an influencer has his/her eye on re-election or higher office. Looks like this may be one of those times.
Kudos to Tanaka for his suggestion about deferring construction until the economy cools and it can be done for less.
We pay a ‘Meter charge’ to support the infrastructure. We pay that regardless of how much we consume.
There should be no need to raise the ‘unit’ charge unless they made a ‘sweetheart’ (or stupid) deal with Hetch Hetchy
In 1985 16 Units was $20. Today 10 units is over $100.
CPA water is no longer the bargain a City owned Utility is supposed to offer.
PS don’t forget that a rate increase also INCREASES the Utility Users Tax paid.
SteveU wrote:
“We pay a ‘Meter charge’ to support the infrastructure. We pay that regardless of how much we consume.”
———-
It might even be worse.
About 10 years ago, I noticed a $5 monthly charge for reading the water meter had been added to my bill.
I thought this was an error because I was temporarily renting an apartment in which water was included in the rent. There was only one water meter for the whole building. The individual units did not have separate water meters.
Each month there was a charge by CPAU for reading a meter — which did not exist — but there was no measure or charge reflecting actual gallons used.
I stopped by the City Utilities Department and showed them my bill. I was told this was *not* an error; that in fact, each residence was charged this fee, regardless of whether or not the residence has a water meter.
I don’t know if this fee also applied to multi-unit office buildings.
So, in many, many multi-unit dwellings across the city, CPAU should have been collecting $5 per month for reading the lone meter, but was fraudulently collecting $5 x # of unit in the building.
I hope this is no longer the case.
BTW, the city has a utilities discount program based on medical or financial need, see https://www.cityofpaloalto.org/gov/depts/utl/billpay/assist.asp
I think Palo Alto utility should not exist long time back, it charged about 50% more for water bill and significant higher rate for gas and electricity bill as well. The trash rate is also unbelievably higher than neighbor-hood cities. Why we need such a department and have all residents to pay more to feed so many people in the department for such as small city.
My water bill jumped $300 this month so I called the Utilities Dept. and reminded them that I’d had a similar jump months ago when 2 Utilities guys could find no problem. They had no record of the previous service call!
I asked how that was possible and volunteered to look up the exact date.
The customer service rep said “don’t bother;” they probably had no record because it “went through Police Dispatch” even though I’d called Utilities and not the police!
It’s mind-boggling they don’t record customers’ history, the nature of service calls or their technicians’ findings!
Someone needs to audit them.