News Release News Release The City of Palo Alto
Communications Department
250 Hamilton Ave
Palo Alto, CA 94301


Subject :

City of Palo Alto Finance Committee to Consider Rate Adjustments for Water and Wastewater Utilities
Contact : Ipek Connolly, Senior Resource Planner, Utilities    650.329.2193


City of Palo Alto Finance Committee to Consider Rate Adjustments for Water and Wastewater Utilities 

Palo Alto, CA – The Finance Committee of the City of Palo Alto will consider adjustments to water and wastewater collection rates at its regular meeting on Tuesday, March 1, at 7:00 p.m.  The meeting will be held in Palo Alto’s City Hall, 250 Hamilton Avenue, Palo Alto, in the first floor City Council conference room.
The recommended adjustments for water rates, as proposed by the City of Palo Alto Utilities (CPAU), represent an overall increase of 12.5 percent and an increase in revenue of $3.4 million for the water utility.  The recommended adjustments also include an increase of 13 percent for residential wastewater rates.  This translates to a monthly bill increase of $3.41 for customers using the lowest levels of water and a monthly increase to wastewater bills of $3.26 for all residential customers.   

The recommended adjustments for wastewater collection are to modify rates based on cost incurred by customer class.  Changes in commercial customer bills will vary depending on the type of business and individual water usage levels.  

The proposed rate changes for water are driven largely by a significant rise in the cost of water purchased from the City’s principal supplier, the San Francisco Public Utilities Commission (SFPUC), which has undertaken a $4.6 billion infrastructure improvement project. The Palo Alto City Council supports this program to improve water reliability in case of natural disaster.  The cost of the upgrade is shared by all of the SFPUC’s water customers. 

CPAU’s water supply costs are projected to increase by 36 percent in the next fiscal year and to double over the next five years.  Customers’ water rates will reflect those changes in cost.  In addition, the City has planned capital improvement projects including necessary seismic retrofitting of Palo Alto’s water tanks. 

CPAU’s recommendation for water rates includes increases in usage rates as well as an increase in monthly service charges.  Service charges are needed to cover a portion of the water utility’s fixed costs, that is, those costs that do not vary by customer water usage.  All these adjustments follow a study conducted by an independent third party, which highlighted the City’s need to modify these charges to bring them into line with the cost of providing water and wastewater services. The City’s action adheres to Proposition 218’s requirement that water and wastewater rates reflect the cost of services provided. 

The proposal before the Finance Committee reflects the comments of the Utilities Advisory Commission in their February 2, 2011 meeting, including the Commission’s recommendation to mitigate the impact of rate adjustments on residential customers who use the lowest volumes of water.   

Following the Finance Committee’s review, and in compliance with the requirements of Proposition 218, the City will mail notices to all water customers of the proposed rates.  The rates changes will be reviewed at a public hearing by the City Council, which will vote on the proposal in June.  If a majority of customers file written protests with the City Clerk opposing the proposed fees, the City may not impose the fees.    

The Finance Committee and City Council meetings are open to the public and offer Palo Alto citizens an opportunity to understand the basis for these proposed changes, as well as to comment on them. 

If approved by the Council, these changes will take effect on July 1, 2011. 

For further information about Palo Alto’s utilities, including information on how to reduce your water bill, visit CPAU’s web site at or go directly to water saving tips at