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by Gennady Sheyner / Palo Alto Weekly
Uploaded: Mon, Mar 20, 2023, 9:57 am 4
Time to read: about 3 minutes
Workers for Palo Alto Utilities repair a power line behind the Rinconada Library in Palo Alto after a storm on Jan. 9, 2023. Photo by Sue Dremann.
After seeing their bills spike earlier this year, Palo Alto’s electric customers could finally see some relief in the months ahead.
The city is expecting to receive about $24 million from the federal government following litigation between a consortium of northern California utilities and the U.S. Bureau of Reclamation. According to a plan that the City Council will consider in the coming weeks, some of that funding could be used to lower electric rates by about 5% starting in July.
Palo Alto is a member of the Northern California Power Agency, which has been in dispute with the federal government over differing interpretations of the Central Valley Project Improvement Act, a 1992 law that governs the giant water storage and transport system known as the Central Valley Project. Members of the consortium have been arguing that the federal government failed to follow federal legislation when it overcharged City of Palo Alto Utilities and other municipal utilities over 28 years — between 1992 and 2020.
At the heart of the dispute with the Bureau of Reclamation, which oversees the Central Valley Project, are “mitigation and restoration” charges that the federal project has been imposing on customers since 1992 to address the environmental impacts of its water projects. Having created a Restoration Fund to restore the fish and wildlife habitats, the agency was authorized to raise about $50 million for it, of which about $30 million is allowed to come from water and power customers. The remainder is expected to come from other sources.
Normally, the Central Valley Project recovers about 75% of its costs from water customers, who get most of the benefits from its massive project. The remaining 25% come from electric customers in jurisdictions that purchase hydroelectric power from the project’s dams and power stations.
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When it comes to mitigation fees, however, the Bureau of Reclamation has imposed a much greater share of the cost on electric customers so that it could meet the $30 million target. Because the water fees are based on usage, which dropped during the recent drought, power customers have been footing a greater proportion of the mitigation costs — roughly half.
The court battle between the utilities consortium and the federal government dragged on for years, with a trial court initially ruling in favor of the bureau in 2018 and a federal circuit court later reversing that ruling and siding with the cities. Last September, the U.S. Court of Federal Claims concluded that the government owes the cities about $81.9 million.
Palo Alto, a major buyer of hydroelectric power, learned earlier this month that its share will be about $24 million.
Now, it is up to the city’s Utilities Department and the council to determine how the money will be used. On Tuesday, March 21, the council’s Finance Committee will consider whether to recommend a proposal to the full council to use $8 million to boost the electric utilities’ depleted reserves and another $10 million to repay loans that the department spent on rate stabilization. The remaining $6 million will be used to reduce electric rates by about 5% starting July 1, according to the staff proposal.
According to a memo from the Utilities Department, the city’s Hydroelectric Stabilization Reserve has dipped to $400,000, well below its target level of $19 million. The city also has a policy of activating a fee known as the “hydro electric adjuster” when the reserves go below $11 million, according to the memo from John Abendschein, assistant director of utilities.
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Even before learning about the $24 million, city officials have been exploring ways to provide customers some relief after a winter marked by soaring bills. Earlier this year, council members agreed to provide rebates to gas customers, some of whom had seen their bills more than triple as commodity prices escalated in December and January.
Council members also agreed that they should also consider ways to lower electricity bills, which have also been on the rise. As the city’s electric reserves dropped because of the drought, the city instituted a “hydroelectric rate adjuster” last December that raised the average residential electric bill by about 20%.
According to Abendschein’s report, the city is considering spending about $720,433 on the electric rebate program and is evaluating two options for distributing the funds. One would be to give a rebate to each residential customer that would be equal to 20% of their electric consumption in January. The other would offer a flat rebate of $27.05 to every customer, an amount based on an average January residential bill of $135.26.
Council member Julie Lythcott-Haims argued in February that the city should look at reducing electric bills. She said that she had made the switch to an electric heat pump water heater and furnace and has seen her household electric bills increase. She also noted that the city had a surplus of about $40 million in fiscal year 2022.
“I think our residents are looking for relief from a city that has had such a massive surplus,” Lythcott-Haims said at the Feb. 15 meeting.
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by Gennady Sheyner / Palo Alto Weekly
Uploaded: Mon, Mar 20, 2023, 9:57 am
After seeing their bills spike earlier this year, Palo Alto’s electric customers could finally see some relief in the months ahead.
The city is expecting to receive about $24 million from the federal government following litigation between a consortium of northern California utilities and the U.S. Bureau of Reclamation. According to a plan that the City Council will consider in the coming weeks, some of that funding could be used to lower electric rates by about 5% starting in July.
Palo Alto is a member of the Northern California Power Agency, which has been in dispute with the federal government over differing interpretations of the Central Valley Project Improvement Act, a 1992 law that governs the giant water storage and transport system known as the Central Valley Project. Members of the consortium have been arguing that the federal government failed to follow federal legislation when it overcharged City of Palo Alto Utilities and other municipal utilities over 28 years — between 1992 and 2020.
At the heart of the dispute with the Bureau of Reclamation, which oversees the Central Valley Project, are “mitigation and restoration” charges that the federal project has been imposing on customers since 1992 to address the environmental impacts of its water projects. Having created a Restoration Fund to restore the fish and wildlife habitats, the agency was authorized to raise about $50 million for it, of which about $30 million is allowed to come from water and power customers. The remainder is expected to come from other sources.
Normally, the Central Valley Project recovers about 75% of its costs from water customers, who get most of the benefits from its massive project. The remaining 25% come from electric customers in jurisdictions that purchase hydroelectric power from the project’s dams and power stations.
When it comes to mitigation fees, however, the Bureau of Reclamation has imposed a much greater share of the cost on electric customers so that it could meet the $30 million target. Because the water fees are based on usage, which dropped during the recent drought, power customers have been footing a greater proportion of the mitigation costs — roughly half.
The court battle between the utilities consortium and the federal government dragged on for years, with a trial court initially ruling in favor of the bureau in 2018 and a federal circuit court later reversing that ruling and siding with the cities. Last September, the U.S. Court of Federal Claims concluded that the government owes the cities about $81.9 million.
Palo Alto, a major buyer of hydroelectric power, learned earlier this month that its share will be about $24 million.
Now, it is up to the city’s Utilities Department and the council to determine how the money will be used. On Tuesday, March 21, the council’s Finance Committee will consider whether to recommend a proposal to the full council to use $8 million to boost the electric utilities’ depleted reserves and another $10 million to repay loans that the department spent on rate stabilization. The remaining $6 million will be used to reduce electric rates by about 5% starting July 1, according to the staff proposal.
According to a memo from the Utilities Department, the city’s Hydroelectric Stabilization Reserve has dipped to $400,000, well below its target level of $19 million. The city also has a policy of activating a fee known as the “hydro electric adjuster” when the reserves go below $11 million, according to the memo from John Abendschein, assistant director of utilities.
Even before learning about the $24 million, city officials have been exploring ways to provide customers some relief after a winter marked by soaring bills. Earlier this year, council members agreed to provide rebates to gas customers, some of whom had seen their bills more than triple as commodity prices escalated in December and January.
Council members also agreed that they should also consider ways to lower electricity bills, which have also been on the rise. As the city’s electric reserves dropped because of the drought, the city instituted a “hydroelectric rate adjuster” last December that raised the average residential electric bill by about 20%.
According to Abendschein’s report, the city is considering spending about $720,433 on the electric rebate program and is evaluating two options for distributing the funds. One would be to give a rebate to each residential customer that would be equal to 20% of their electric consumption in January. The other would offer a flat rebate of $27.05 to every customer, an amount based on an average January residential bill of $135.26.
Council member Julie Lythcott-Haims argued in February that the city should look at reducing electric bills. She said that she had made the switch to an electric heat pump water heater and furnace and has seen her household electric bills increase. She also noted that the city had a surplus of about $40 million in fiscal year 2022.
“I think our residents are looking for relief from a city that has had such a massive surplus,” Lythcott-Haims said at the Feb. 15 meeting.
After seeing their bills spike earlier this year, Palo Alto’s electric customers could finally see some relief in the months ahead.
The city is expecting to receive about $24 million from the federal government following litigation between a consortium of northern California utilities and the U.S. Bureau of Reclamation. According to a plan that the City Council will consider in the coming weeks, some of that funding could be used to lower electric rates by about 5% starting in July.
Palo Alto is a member of the Northern California Power Agency, which has been in dispute with the federal government over differing interpretations of the Central Valley Project Improvement Act, a 1992 law that governs the giant water storage and transport system known as the Central Valley Project. Members of the consortium have been arguing that the federal government failed to follow federal legislation when it overcharged City of Palo Alto Utilities and other municipal utilities over 28 years — between 1992 and 2020.
At the heart of the dispute with the Bureau of Reclamation, which oversees the Central Valley Project, are “mitigation and restoration” charges that the federal project has been imposing on customers since 1992 to address the environmental impacts of its water projects. Having created a Restoration Fund to restore the fish and wildlife habitats, the agency was authorized to raise about $50 million for it, of which about $30 million is allowed to come from water and power customers. The remainder is expected to come from other sources.
Normally, the Central Valley Project recovers about 75% of its costs from water customers, who get most of the benefits from its massive project. The remaining 25% come from electric customers in jurisdictions that purchase hydroelectric power from the project’s dams and power stations.
When it comes to mitigation fees, however, the Bureau of Reclamation has imposed a much greater share of the cost on electric customers so that it could meet the $30 million target. Because the water fees are based on usage, which dropped during the recent drought, power customers have been footing a greater proportion of the mitigation costs — roughly half.
The court battle between the utilities consortium and the federal government dragged on for years, with a trial court initially ruling in favor of the bureau in 2018 and a federal circuit court later reversing that ruling and siding with the cities. Last September, the U.S. Court of Federal Claims concluded that the government owes the cities about $81.9 million.
Palo Alto, a major buyer of hydroelectric power, learned earlier this month that its share will be about $24 million.
Now, it is up to the city’s Utilities Department and the council to determine how the money will be used. On Tuesday, March 21, the council’s Finance Committee will consider whether to recommend a proposal to the full council to use $8 million to boost the electric utilities’ depleted reserves and another $10 million to repay loans that the department spent on rate stabilization. The remaining $6 million will be used to reduce electric rates by about 5% starting July 1, according to the staff proposal.
According to a memo from the Utilities Department, the city’s Hydroelectric Stabilization Reserve has dipped to $400,000, well below its target level of $19 million. The city also has a policy of activating a fee known as the “hydro electric adjuster” when the reserves go below $11 million, according to the memo from John Abendschein, assistant director of utilities.
Even before learning about the $24 million, city officials have been exploring ways to provide customers some relief after a winter marked by soaring bills. Earlier this year, council members agreed to provide rebates to gas customers, some of whom had seen their bills more than triple as commodity prices escalated in December and January.
Council members also agreed that they should also consider ways to lower electricity bills, which have also been on the rise. As the city’s electric reserves dropped because of the drought, the city instituted a “hydroelectric rate adjuster” last December that raised the average residential electric bill by about 20%.
According to Abendschein’s report, the city is considering spending about $720,433 on the electric rebate program and is evaluating two options for distributing the funds. One would be to give a rebate to each residential customer that would be equal to 20% of their electric consumption in January. The other would offer a flat rebate of $27.05 to every customer, an amount based on an average January residential bill of $135.26.
Council member Julie Lythcott-Haims argued in February that the city should look at reducing electric bills. She said that she had made the switch to an electric heat pump water heater and furnace and has seen her household electric bills increase. She also noted that the city had a surplus of about $40 million in fiscal year 2022.
“I think our residents are looking for relief from a city that has had such a massive surplus,” Lythcott-Haims said at the Feb. 15 meeting.
So, Palo Alto residents were overcharged $24,000,000. but only 1/4 of that will be returned to those who paid the bills? The second headline which indicates residential electric rates may be reduced by 5% is deceptive as the recent recommendation from the Utilities Department and the Utilities Advisory Commission is to raise electric rates on July 1, 2023 by 14% while cutting the 20% raise in electric bills due to hydro surcharges only one half.
Here are the residential rate proposals that were passed with little debate by the Utilities Advisory Commission:
Sewage- 9% per year for each of the next five years.
Water rates- 3% increase
Gas- Transfer 18% of yearly gas revenues to the general fund for the fiscal years 2021 to 2024.
Increase the gas cost rates for tier one and two by 21.4%
Increase gas distribution rates by 8%, 7%, 5%, 5%, 5% for the fiscal years 2024-2028.
Electric- The recent Hydroelectric rate surcharge decreased by 50% on July 1, 2023.
However, all residential electric rates increased by 14% effective July 1, 2023.
I doubt that that I will see a significant drop, if any, in my electric rates after July 1 and will be looking at significant increases to our natural gas, water and sweage rates.
Also coming soon is a 4.75% tax /fee on telecon services lsuch as cable tvl, cell phone, landline and internet service. I guess they forgot about the lawsuit where they were ordered to pay us back similar fees because they had nothing to do with our telecom service.
The pitifully small “rebates” the city is considering “giving” on gas and electric are so small as to be laughable and don’t even scratch the surface of all the increases we’re paying — a $28 rebate on CPAU bills of that doubled to $1,000 a month!??
The ONLY equitable move is to return the money to those who paid it. If that is impossible, the remainder should be spared across all utility bills to benefit the community of utility payers. For too long as the City played games with our money. This money needs to go to the local businesses and residents who paid the now illegal fees. Our businesses need the money as much as the residents. Businesses pay arbitrarily higher rates for the same electricity so the City can generate a profit and sweep the money into the General Fund (yes they lost that lawsuit) to spend as they wish. The City needs to be honest with us and not take our money. They need to stop being the problem as created by Pat Burt who made himself king and decided only he could solve our problems and make our city better…and that has had a terrible outcome. Linda Kou has shown independence from the thumb of Pat and seems to be focused on improving our safety for us all and on being an aid to business instead of blaming business for the city’s challenges. I hope Mayor Kou will lead and others with join her to stop making the city the problem and start making the city a supporter of those who live and work here and want to restore pride and dignity to our city.
Don’t forget the city pads our utility bills by approximately $20 million a year which is siphoned off to the city’s general fund.
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