Palo Alto approves electric rate increase

Rates set to jump by 6 percent in July

Utility rates in Palo Alto are set to go up by 6 percent in July, an increase that utilities officials attribute largely to growing transmission costs and new renewable energy projects coming online.

The rate change was part of a wider package of adjustments that the Palo Alto City Council approved on Monday night. As part of its 8-1 vote, with Councilman Greg Tanaka dissenting, the council also raised water rates by 3 percent and raised wastewater rates by 11 percent.

The council adopted the rate changes with little discussion. Its Finance Committee had reviewed all the rate changes last month, during its review of the fiscal year 2019 budget. After requesting and considering different alternatives for rate structures, the committee ultimately endorsed most of recommendations from city of Palo Alto Utilities staff.

In the case of water rates, the Finance Committee recommended that the increase be brought down from the proposed level of 4 percent to 3 percent, a suggestion that the council approved Monday.

In discussing the rising electricity costs during a presentation of the item to the Finance Committee last month, city of Palo Alto Utilities officials cited the cost of transmitting electricity as a major factor in the rate increase.

"One of the main drivers for the electric rate increase that we are requesting is increases to our electric supply costs, mainly driven by transmission costs we're seeing from bringing in renewable power systems throughout the state of California," Rates Manager Eric Kennison told the committee.

In addition to these factors, the city's electric operation has increased its capital spending and has seen its operational costs rise. According to a recent Utilities Department staff report, total electric utility costs were historically around $130 million annually. Between fiscal years 2016 and 2019, annual costs went up to about $170 million and are expected to stay there at least until 2022, according to staff.

The electric rate change is expected to add $2.35 to the median bill in the summer months, raising it from $40.13 to $42.47.

As the sole dissenter, Tanaka said that he cannot support increases to utility rates unless he is assured that operating costs will remain steady and not go up. He said he does not see that in the Utilities operation.

"We simply need to live within our means," said Tanaka, who sits on the Finance Committee.

Others supported the staff recommendation. Councilman Greg Scharff, who chairs the Finance Committee, said the committee had considered all the rate changes over a series of three meetings and concluded that these were the "lowest rates we can get to."

"We need this money to run the utility," Scharff said.

Vice Mayor Eric Filseth, who also sits on the Finance Committee, concurred. He warned against the dangers of underinvesting in utilities, particularly on the capital side.

"The result is something like San Bruno, in an extreme case," Filseth said.


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24 people like this
Posted by Bamboozled
a resident of Greenmeadow
on Jun 13, 2018 at 6:19 pm

The big problem isn't just that the rates (the variable part charged for the use) have gone up yet again, but that fixed service charge (the fixed part of what is paid for the access) also went up massively. This article and the advertising for this meeting neglects to talk about that. Residents in Palo Alto are effectively getting charged double the advertised utilities increase. I think a lot of people are going to be shocked by the amount of this increase.

Is this even legal? The City is already getting sued for transferring utility funds to overpaid employees.

9 people like this
Posted by Green Acres parent
a resident of Green Acres
on Jun 13, 2018 at 8:55 pm

Still no time-of-use billing to encourage electric cars? It's been years since the trial.

27 people like this
Posted by common sense
a resident of Midtown
on Jun 13, 2018 at 9:37 pm

Remember when the city said "green energy" would not cost us anything? this quote from the article says "green energy" does cost us more:

""One of the main drivers for the electric rate increase that we are requesting is increases to our electric supply costs, mainly driven by transmission costs we're seeing from bringing in renewable power systems throughout the state of California," Rates Manager Eric Kennison told the committee."

4 people like this
Posted by JCP
a resident of Old Palo Alto
on Jun 14, 2018 at 10:39 am

JCP is a registered user.

Obviously most of the people in Palo Alto don't care about city government or utility rates. It's discouraging, but I am guilty of the same, when we had kids at home. It takes the threat of eminent domain (trains) or other immediate threats to one's personal interests before anyone is moved to action.

20 people submitted cards opposed to the rate increase. Wow.

16 people like this
Posted by developers rule
a resident of Crescent Park
on Jun 14, 2018 at 11:32 am

For Councilman Greg Scharff taxing residents is an easy choice. Just don't try to tax developers and big landowners. They are sacred to Mr Scharff.

12 people like this
Posted by Eddie Electron
a resident of Crescent Park
on Jun 14, 2018 at 12:28 pm

The public just gets a new "issue" and then that issue is bamboozled over
and over to charge more and more money. What has been going on with
Palo Alto Energy costs is just another outrage in a City of outrages and
managerial incompetence.

Why people do not get involved is that they know already from experience
issues are made purposefully complex, hard to reply to, and like the FCC
with net neutrality, even if the City gets a 99% negative comment rate they
just go-ahead with whatever plan they want to do anyway.

Someday there is be just the smallest crack in this corrupt and incompetent
system and people will stand up tear it down and demand transparency,
simplicity, fairness and real representation. We used to have that in this city
until somehow Stanford business graduates could not find jobs elsewhere
and decided to cheat their neighbors using all the tricks they learned in college.

9 people like this
Posted by Water rights
a resident of The Greenhouse
on Jun 14, 2018 at 12:32 pm

Wait a sec, I remember that we recently just gave away our water rights to East Palo Alto. If the city is in such dire straights that rates have to be jacked up yet again, why didn't we sell the water rights to EPA like what Mountain view did?

19 people like this
Posted by margaret heath
a resident of Evergreen Park
on Jun 14, 2018 at 12:53 pm

margaret heath is a registered user.

Every year Utilities make enough profit to transfer millions of dollars from Utilities to the city's general fund. This year about $20 million. No wonder they want to raise the rates. It's a cash cow.

5 people like this
Posted by Shocked
a resident of Palo Verde
on Jun 15, 2018 at 9:06 am

Crazy thing here.

We were encouraged to use less electricity, even paid to do so.

Now, since we are using less electricity, there is not enough revenue to pay for system upkeep.

Wow! What a "Catch 22".

Law of unintended consequences reaping its just reward.

6 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jun 15, 2018 at 9:31 am

Online Name is a registered user.

@Shocked, PA Utilities uses the same "logic" to justify raising water rates. They spend a fortune on "conservation" ads and then tell us we conserved too much so they have to raise rates. Also, it's impossible to pick up a paper around town without a huge ad in every issue for Zero Waste "educating" us on how to empty our garbage.

2 people like this
Posted by Hawaii example
a resident of Duveneck/St. Francis
on Jun 15, 2018 at 2:50 pm

I read several years ago that solar panel usage was so widespread and successful in Hawaii that the utility demanded to raise rates on consumers. Why? They needed more money to pay their staff.
Solar was “too successful” in reducing electricity use and payments to the utility.
They never considered reducing their staff, of course.
Penalize the consumer who is doing the right thing, that’s the way to go.
Reminds me of the City of Palo Alto.

2 people like this
Posted by Tony
a resident of Stanford
on Jun 19, 2018 at 7:08 pm

California electricity prices have risen 5 times the national rate in the past 5-6 years. Transmission prices will keep going up because more solar roofs overload the network due to daylight spiking. Excess capacity has to be sent to neighboring states. Think about that. Increasing solar power leads to higher rates. This will only get worse with California solar roof mandates.

Sorry, but further commenting on this topic has been closed.

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