Years Long Litigation Abruptly Ends with $24M Payment to Palo Alto
Published on March 16, 2023
News Release: Years Long Litigation Abruptly Ends with $24 million Payment to Palo Alto
Proposed Funding Plan to Reduce Electric Customer Rates by Five Percent and Improve Fiscal Health of the Electric Utility
For Immediate Release | March 16, 2023
PALO ALTO, CALIF. ---- After several years of litigation with the federal government, the City of Palo Alto announced today the anticipation of receiving approximately $24 million as part of Northern California Power Agency litigation. The City’s Finance Committee will consider recommendations to use these funds to reduce electric rates to customers by 5% starting July 1, 2023, and improve utilities reserves depleted due to the recent drought and Council’s commitment to customers through the pandemic to minimize rate increases.
On March 8, the City of Palo Alto learned about the timing of a financial payment in the City’s favor related to the litigation of the Central Valley Project Improvement Act (CVPIA) operated by the U.S. Bureau of Reclamation and anticipates receiving approximately $24 million in the coming months. The payment comes after years of litigation by Northern California Powers Agency members that the United States government did not follow the CVPIA legislation and overcharged Palo Alto Utilities $24M when collecting CVPIA on an annual basis from 1992-2020.
The timing, amount, and form of repayment were unknown until March 8. The funding plan will present recommendations for Council consideration anticipating this additional revenue. The proposed use of the funds includes rate changes resulting in a 5% rate reduction that customers will benefit from beginning July 1, 2023. To facilitate this, staff is proposing to use the $24 million in revenues from the CVPIA payment to stabilize and improve the City’s electric utility by restoring reserves, repayment of internal loans and other fiscal actions.
The proposed plan would allocate $6M for future electric rate relief, repay loans in the amount of $10M, and transfer $8M to stabilize reserves.
The Finance Committee, made up of three City Council members, will review this proposed funding plan at their next meeting set for March 21. To review meeting materials and participate in this public meeting, go to www.cityofpaloalto.org/councilagendas.
Also slated for release today is a recommendation for Council consideration establishing a gas rate rebate program to support gas residential customers through the recent gas rate spike seen in January and February. On the same Finance Committee agenda, the Committee will consider other utility rate items including information on a potential electric rebate program.
The City of Palo Alto owns and operates utility services including electricity, natural gas, water, sanitary sewer, and commercial fiber optic services.
For more about the City of Palo Alto, go to www.cityofpaloalto.org
ABOUT THE CITY OF PALO ALTO
Palo Alto, known as the “Birthplace of Silicon Valley,” is home to 69,700 residents and nearly 100,000 jobs. Unique among city organizations, the City of Palo Alto operates a full-array of services including its own gas, electric, water, sewer, refuse and storm drainage provided at very competitive rates for its customers. The City of Palo Alto offers robust community amenities including 36 parks, 39 playgrounds, five community and youth centers, 41 miles of walking/biking trails and five libraries. The City also manages a regional airport and provides fire, police and emergency services. Palo Alto is an award-winning City recognized nationally as innovative and well-managed, one of a small number of California cities with a AAA bond rating. City services and performance also receive high marks from community members in the annual citizen survey conducted by Polco (previously National Research Center).
As the global center of technology and innovation, Palo Alto is the corporate headquarters and/or research facilities for many world-class companies such as VMWare, Hewlett-Packard, and Tesla. Home to Stanford University and a top-ranked public school system, Palo Alto also features beautiful and historic residential neighborhoods, vibrant shopping and retail districts. Palo Alto has a highly educated and culturally sophisticated citizenry that is actively engaged in making a difference both locally and globally.
For more information, visit the City of Palo Alto’s website at www.cityofpaloalto.org, or follow the City on Twitter, Facebook, Medium, Next Door and Instagram, by going to www.cityofpaloalto.org/connect. Sign-up for City newsletters at www.cityofpaloalto.org/newslettersignup.
Chief Communications Officer
City Manager's Office
Office Phone: (650) 329-2607