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Palo Alto Utilities users: Did you know that:
- The Utilities Department in Palo Alto must turn over to the city’s general fund each year 18 percent of gas revenues and 15 percent of all utility revenues to the city’s general fund, which is used to pay for whatever the city wants or needs, including employee raises. That comes to the whopping figure of $15.1million for electric and $7.7 million for gas for FY 2024, as listed in the city’s 2024 budget.
That’s a total of $22.8 million we utilities ratepayers dole out to the city’s general fund. This item is listed in the budget as an “equity transfer.”
Catherine Elvert, communications manager for the department, wrote: “The projected cost of the (gas) transfer shall be included in the city’s retail natural gas rates as part of the cost of providing gas service.” (Ord. 5582 § 1, 2022)
- The Utilities Department must pay rent to the city for the space it occupies at City Hall and city land it uses. In the 2024 fiscal year that rent comes to $1,245,409 – and this payment is a mandatory annual charge. Of course, we utilities users are also paying for it. That’s space right inside our City Hall that the city owns.
Elvert wrote, “Since rent is one part of the cost of providing utility service, it is funded from rate revenues.”
So, if I add the $22.8 million turnover to the $1.2 million we pay for the rent the Utilities Department owes the city, that comes to about $24 million we ratepayers turn over to the city’s general fund annually, which comes from the utilities bills we pay each month. This sum gets added to the nearly $1 Billion city budget this year.
To get data on these charges, I emailed Elvert nine questions. She promptly responded, which I appreciated.
- Palo Alto utilities users also pay a monthly “utilities users tax,” which you will see on your monthly utilities bill. Mine was $28.17 this month. This tax generates $11M — or about 6 percent of the City of Palo Alto’s General Fund.
Surprised? I certainly was. Maybe almost astounded at the fact that the high rates we are paying and the money from our utility rate collections are not only for the utilities we use, but are being turned over to the city funds.
But guess what? The reason the Utilities Department gave for all these taxes is that we residents authorized them when we voted approval of various measures on our ballots over the years (e.g. Measure L in 2022), and that the city councils over the years agreed to recommendations from that department, or that the increases were necessary, and put approval measures on the ballot. So, in a way, the Utilities Department is suggesting it’s our fault, because we voters approved some of those measures, perhaps too casually.
One of then questions I asked Elvert was whether Palo Alto utilities users would get back the higher rates we were charged the last few months in 2023 to “prepay” for the anticipated very high January 2024 rates. If this January is warm, shouldn’t we get our money back for the overpayments?
No, was her answer, because the council last September “adopted a new natural gas purchasing strategy for the winter months to include insurance against very high prices.” And, this is the “gotcha” sentence: “As with other types of insurance … premiums are not refunded if insurance is not used.”
I remember the council approving the higher rates, but I didn’t know we wouldn’t get our higher payments back if they were not used. And I didn’t comprehend the city was using these extra charges for insurance. I just thought it was a kind act on their part.
Another question I asked Elvert was on the Miriam Green v. Palo Alto suit about extra gas charges we had paid which the court said we ratepayers must get it back in three payments. Would we get our money back in three checks, as the department had stated previously? Elvert said no, the current users would not get a check back, but rather “utility bill credits.” She said that was what Palo Alto settled for in court. Only those who are ill or over 65 can ask for a one-time check, if they wish.
I was once told by a council member that our city fathers long ago agreed to take a “founders fee” because they decided the city will have its own utilities, rather than use those from PG&E.
So, when we wonder why our utilities bill are so high, it’s not only because we are paying for what utilities we use, but also paying for the mandated turnovers the city demands from this department. But, their reasoning went, because they “found” the Utilities Department, they need to get a reward fee for doing so.
Is all this use of your monies paid through our utility bills we pay appropriate? The council, or some outside lawyers, or even a judge need to decide.
Addendum: Just a couple of weeks ago, the Utilities Department announced it us thinking if another increase in our rates, averaging about $30 a month extra per housing unit. That’s $360 more per year for the next umpteen years!
re: “Elvert said no, the current users would not get a check back, but rather “utility bill credits.” ”
Any update on when that will happen?
Regarding the gas pricing limits, the idea is not that we prepay higher prices (still leaving us on the hook if prices go very high as they did last year) but rather that we pay a (smallish) nonrefundable up-front fee to lock in an upper price limit. We then won’t pay more than that price no matter how high the market price goes. This sort of price hedging is common at utilities and large users, so I was surprised PA Utilities wasn’t already doing it.
Regarding your trenchant points on all the siphoning of utility money to the general fund, we as voters are indeed responsible – we approved the transfers and the Council members who support them.
My user fees are now 2X my actual usage fees. I’m rarely home, turned off the gas pilots, unplugged the microwave, and my alarm clock. The only thing that runs while I’m not here is the fridge. Considering it’s nearly vacant my bill shouldn’t be near $90 per month. But it is. My electric usage hovers around 200 kwh/month. I am never here to flush the toilet but have to pay almost $50 for the privilege of having a shiny looks-like-it-was-never-used porcelain bowl worthy of a king’s hiney awaiting the arrival of King Phillip, should he want to drop by. I believe in conserving ALL of our planet’s resources. Sewage fees should be measured and charged accordingly, as well as power. Punishing people who go above and beyond to conserve disincentivizes most people. God forbid I should ever need to USE the utilities here. Just paying for them to be ready to deliver is usurious.
Diana Diamond — Momdoman — From my reading of the court decision on Miriam Green v. City of Palo Alto, the refunds will occur in three stages, and completed by the end of the year..
My Feelz — Yes, utility costs are quite high in Palo Alto. And a comparison of our rates to those of PG&E are an apple v. orange comparison, since PG&E has had those massive fires in their area and are now doing a lot of expensive undergrounding of their wires.
Well, I think the thrust of the article is correct: Palo Alto users pay MORE than the cost of consumption and costs of delivering utilities because THEY AGREED to it! And it wasn’t just the actions of the City Council. Residents AGREED to these arrangements in the Gas fund very recently in a ballot measure that was passed with a wide margin. Yes, residents give City Administration an increase in their allowance (outside of statutory limits (prop 13) on tax increases) every year — money they are free to use any way they believe meets the needs of Palo Alto. Including staff raises.
Yes, our utility rates may be lower than other regions served by PG & E. But our residents are indeed forced to pay more in utility costs (a “tax” which is then taxed AGAIN through the utility tax on the total bill) than they would otherwise pay without these transfers.
I wonder if Diana asks her home insurance company to refund her premiums after every year when her home did not burn down.
Whether it was approved by voters or not (it was), this still feels like the utility is overcharging because there is a disconnect on the how the money is collected and how it is spent. The utility is charging us for electric/gas/water service but millions of those dollars are getting transferred to the general fund with no restriction on how it is used. It absolutely is a back door tax that is designed to obscure the source.
Since commercial users use 80% of the electricity and 60% of the gas, they are paying for the majority of this transfer.
Measure L received 77% vote from the residents of Palo Alto. The voters have spoken. It said:
A “yes” vote supported continuing the existing city policy of transferring at most 18% of the city’s revenue from the natural gas utility to a general fund for city services.
All the utilties are ripping people off. PG&E declares a $2 BILLION in PROFITS and claims they still need more even money from their customers. https://abc7news.com/pge-rate-increase-2023-earning-2-billion-dollar-profit/14483425/
Palo Alto rakes in $24,000,000 from us — about $1,00.00 per household to fund its gravy train of consultants and its highly paid staffers AND its appeal of the lawsuit against over-charging us WHILE taking almost a DECADE to pay us our pittance of a settlement without even paying us interest.
Our multi-million $$$$$ communications staff can’t even sent out notifications of important meetings like the absurd and dangerous El Camino Bike Lane proposal while our City Council worries more about rules and handbooks for censuring its members.
WHERE IS THE COMMON SENSE AND RESPECT FOR TAXPAYERS AND UTILITY CUSTOMERS??
In all my decades of living here, I have never once heard of making fiscal responsibility or providing COST-EFFECTIVE services a priority — instead we get virtue-signalling babble while they pat themselves on the back while picking our pockets.
Re: “important meetings like the absurd and dangerous El Camino Bike Lane proposal ”
Yes; the good news on that is that the head Caltrans (regional?) official there (based in Oakland) effectively admitted at the meeting that implementing bike lanes on El Camino through Palo Alto will require approval by the Palo Alto City Council. Time for us to lobby the Council against this!
I found Sherry’s blog post on utilities to be very helpful. As a side note, our utility bill was lower this year than the same period last year. For some reason, CPAU didn’t bill me in January so the February bill was for two months.