Palo Alto residents may begin to see higher utility bills this month and next.
The City Council earlier this year approved rate changes for the city's water, wastewater, gas, electric, storm drain and refuse services, which went into effect on July 1.
The average City of Palo Alto Utilities residential customer will see an increase of approximately 3%, or about $11 per month.
These changes are part of a new city strategy intended to keep rates for Palo Alto's municipally owned utility steadier going forward following last winter's sharp spike in utility bills caused by fluctuating natural gas prices. In proposing these increases, Palo Alto Utilities is looking to replenish utility reserves that the city depleted during the pandemic to prevent passing along rate increases to customers.
So what does this mean for customers?
Utility bill explainer
Dean Batchelor, director of City of Palo Alto Utilities (CPAU), explains the billing changes, what it means to customers and where to find financial assistance:
As CPAU’s director, I can assure you our team is committed to working hard to balance our community’s demand for safe, reliable, cost-effective, and sustainable services. There are, however, some forces beyond our control, including market prices and extreme weather events.
Inflation continues throughout the Bay Area and costs are rising for labor and materials, energy supplies and energy transportation fees. To assist our customers with rising utility costs, CPAU offers a wide variety of free or low-cost energy and water efficiency programs, plus rebates, to help you keep utility costs low. Financial assistance is available for customers facing hardship and difficulty paying utility bills.
Why are my utility rates going up?
CPAU strives to keep utility rates as low as possible while providing safe and reliable service. The costs to continue providing safe and reliable service, however, have gone up due to several factors. The City dipped into reserve funds to protect you from rate increases during the height of the COVID-19 pandemic in 2020, 2021 and 2022.
There was a lot of uncertainty around the pandemic and concerns about the impacts to our community’s financial well-being. We did not want to overburden our customers with rate increases to pay for ongoing construction, operations, energy and water costs. With those reserves depleted, the City’s revenue can no longer continue to support safe and reliable operations in all utilities without an immediate adjustment to what we charge to deliver service.
Construction costs throughout the Bay Area continue to increase, impacting CPAU’s infrastructure maintenance and improvement projects. Energy and water prices remain high. The transportation costs for energy and water are expected to climb. Climate change will increasingly impact energy usage, prices and infrastructure.
Other utilities throughout California also are experiencing the impact of these rising costs.
At CPAU, we’re proud to say that we continue to provide services to you at lower rates than many other providers. We also provide cost-saving options to help improve your energy and water efficiency to reduce your utility use, and as a result, keep your utility bill costs low.
How and when are my utility rates changing?
New utility rates went into effect on July 1. The increase for the median residential customer bill is projected to be around $11 a month overall across the six utility services. Here are the estimated changes:
• Electric will decrease by 5% for most residential customers.
• Natural gas is expected to increase by 8%, not including changes in gas market prices.
• Wastewater will increase by 9%.
• Water will increase by 5%.
• Storm drain will increase by 5%.
• Refuse will have a 0% increase.
If natural gas projections are accurate, we expect the average monthly residential gas bill next winter will be lower than what gas customers saw last winter due to market price increases.
What help is available for utility costs?
To help with your bill, CPAU has expanded its financial assistance options. In spring, the city provided rebates between $70-$100 to residential utilities customers to help offset high winter energy costs. Other options for eligible customers include:
• Rate Assistance Program (RAP): Qualifying residents can receive a 25% discount on gas and electricity fees and a 20% discount on storm drain service fees.
• Residential Energy Assistance Program (REAP): If you are an existing Rate Assistance Program (RAP) customer, use this one-time free service to get our help to improve your home’s efficiency and bring your bill down.
• High Bill Financial Assistance Rebate: For medical or financial hardship during January
2023. This one-time program ends on Oct 31.
• Extended Payment Plans: 6-8 month payment plans are available.
• Free Home Efficiency Genie energy advisor assessments: Now available to help you save money by reducing your utility consumption.
• Project PLEDGE: A donation-supported program that offers one-time assistance for residents experiencing unexpected hardship.
What is CPAU doing to keep rates as low as possible?
CPAU is committed to keeping rates as low as possible. To achieve this goal, we are:
• Investing in energy efficiency measures to reduce energy consumption, which helps keep your utility rates down.
• Promoting renewable and sustainable energy sources, such as solar and wind power, to reduce our reliance on fossil fuels when prices are driven up by unpredictable climate change and supply chain issues.
• Developing more programs and resources to help you save energy, such as home
energy audits, energy efficiency rebates, and payment assistance programs.
To ensure Palo Alto is prepared for a changing energy future, we are taking other steps to ensure our utilities services continue to be reliable and affordable. This includes: investing in long-term supply purchase plans to keep costs low; providing energy efficiency programs; scheduling routine infrastructure upgrade projects to reduce costly repairs or replacement; and promoting renewable energy to help you avoid price swings due to climate change impacts.
All of us at CPAU are here to help you through the transition to a more sustainable future.