Palo Altans Will Have No Electric, Gas, Water Or Sewer Rate Increases This Year

News from Debra Katz, City of Palo Alto:


The Palo Alto City Council adopted a budget Monday night that did not include any rate increases for its electric, gas, water or sewer utilities.  While in a typical year, some rates are stable and others change, this year there has been no changes for all four primary utilities.  

• For the electric utility this is a continuing trend---there have been no rate increases since 2009.  

• For the water utility---which has shouldered the cost of major infrastructure improvements in both the Hetch-Hetchy water supply system and Palo Alto’s own distribution network---this year is a welcome respite from past increases. 

(Of course, we must add the caveat that at any time, a worsening drought could cause San Francisco to impose mandatory cutback requirements, in which case we’d likely need to raise higher tier rates.) 

• The gas utility rates have been lower overall in recent years following the City’s decision to let supply costs fluctuate monthly based on market prices.  Should those market prices trend back up, the gas supply rates would have to follow.  But the key point is that the portion of the gas rates coming from operational costs will not be subject to increases this year. 

• The sewer collection utility has no “supply” costs, so to speak, and operating costs have been stable.

 What made this rate quadfecta possible?

Many factors converged.  City Utilities staff is always looking for ways to keep operating costs down and this past year was no different.  And lower operating costs mean less need for rate increases.  Then there was the added bonus that supply costs are anticipated to be more stable, particularly in the electric and water sectors, which also mitigates against rate increases.  To the extent supply costs increase small amounts, the utility reserves are sufficient to cover those fluctuations. 

Palo Alto Utilities prides itself on its aggressive infrastructure repair and replacement program for all its utilities and that policy will continue.  

Updating the pipelines, wires and other utilities system equipment with high-quality materials increases reliability and puts the City in a better position to withstand emergencies and natural disasters.  To the extent that past and future rate increases support that effort, those increases are certainly justified by their benefits.    

But for now, we can all enjoy the fact that current revenue is sufficient to meet current expenses...and everybody’s wallet gets a break!