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Palo Alto Online

Publication Date: Friday, April 06, 2001

Whopping gas hike sought Whopping gas hike sought (April 06, 2001)

Electric-rate increase deferred

by Marv Snow

A proposal to raise gas rates by 67 percent was approved by the Palo Alto Utilities Advisory Committee Wednesday night, but a request for a 43-percent electric-rate increase was deferred until April 10.

The proposed gas increase will be brought to the city's Finance Committee for approval before going to the full City Council for final adoption. Should the rate increase be approved, it would go into effect June 1.

The electric rate increase was continued to a special meeting, tentatively scheduled for 7 p.m. Wednesday in the council chambers, because the committee was concerned the increase was not necessary at this time.

According to Utilities Director John Ulrich, the gas-rate increase is needed to recover the higher cost of purchasing gas and replenish gas reserve funds.

Palo Alto Utility customers saw gas-rate increases of 15 percent on Aug. 1, 2000, 25 percent on Jan. 1, 2001, and another 25 percent that became effective on April 1 of this year -- a total increase of 65 percent within the last nine months.

Examples of the impact of the rate increase include:

A winter residence that uses 100 therms of gas would see an increase of $52.14 per month (8 percent below PG&E's rate). The monthly gas bill would be $129.14. Those using 150 therms would see an increase of $88.09 per month.

A commercial business using 500 therms of gas in the winter would see a $268 increase in its bill, to $668 per month.

An industrial G-2 business that uses 10,000 therms would see an increase of $5,360 in its monthly bill, which would climb to $13,360 per month.

"This proposed retail rate increase is designed to offset forecasted gas purchase costs of approximately $33 million for fiscal year 2001/2002 and to replenish approximately $6.6 million to the rate stabilization reserves," Ulrich said in his report to the committee.

"However, to provide approximately $536,000 in additional revenues for the current fiscal year, staff is recommending an effective date of June 1 rather than July 1," Ulrich's report stated.

As for the electricity rate increase, Ulrich said, "This is one of the most significant requests for a rate increase in a long time. The impact on our customers, the percentages do not bode well. (For) the small customer -- condos and apartments--it's about 35 percent. For a single-family homes, its about $14 a month.

According to Ulrich's report, the projected Western Area Power Association's rate increase will go from 1.8 cents per kilowatt-hour to 3 cents per kilowatt-hour.

"In addition, higher transmission costs by the Independent System Operator (ISO) are forecast, as well as higher reliability and Grid Management Charges, service costs from the Northern California Power Agency are expected to rise," the report stated.

A 43-percent rate increase would impact customers as follows:

A small residential home that uses 300 kilowatt-hours usage a month will pay $4.75 more per month, still 57 percent below PG&E's rate.

A residence that uses 650 kilowatt-hours a month will ses an increase of $14.38 per month, or a total bill of $47.94 (50 percent of what PG&E charges).

A residence that uses 3,000 kilowatt-hours a month would see its bill jump to $97.75 per month. <@$p>

E-mail Marv Snow at


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