EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: May 17, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Patrick Heisinger, Interim City Manager
BY: Greg Henry, Senior Management Analyst
SUBJECT: Pass-Through of San Francisco Public Utility Commission Wholesale Water Rate Increases
Recommendation
Adopt a Resolution authorizing the pass-through increase of $0.78, to be effective July 1, 2022, to the water usage charges in the rate schedule adopted by Resolution 5154 and directing staff to issue a notice of the change to all water service customers within the City of East Palo Alto water system no less than 30-days prior to increase.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority #2: Enhance Economic Vitality
Priority #4: Improve Public Facilities and Infrastructure Priority #6: Create a Healthy and Safe Community
Background
The City’s wholesale water provider is the San Francisco Public Utility Commission (SFPUC).
SFPUC provides essentially all water used by the customers of the City’s water system.
As reviewed in the April 4, 2022 informational item, the City included a “pass-through” provision in the last Proposition 218 rate-setting process found in Resolution 5154 adopted July 16, 2019. This provision is codified in Government Code section 53756 and allows the City to adjust the retail water rate as needed to “pass-through” the cost increase of the wholesale water to our customers without another Proposition 218 process. Specifically, for each 1 cent increase by SFPUC, the retail rate of water is scheduled to increase by 1.2 cents.
Usage water rates from SFPUC and to the City’s customers are in terms of centum cubic feet (ccf) or a hundred cubic feet. There are 748 gallons per ccf. This represents a square 10 ft by 10 ft that is then a 1 foot deep.
On May 10, 2022, SFPUC approved an increase in the wholesale rate from $4.10 to $4.75 per ccf, a 65-cent increase (staff report attached). As described in Resolution 5154 (attached), the “pass-through” increase is 1.2 times that increase, (1.2)*($0.65) = $0.78. This increase will go into effect on July 1, 2022 and will be in addition to the planned increase in the water usage charge from $7.66 to $7.77. The approved water usage charge for July 1, 2023 will also be increased by $0.78. Below is the new Water Rate Schedule. The changes from the previous schedule are to “Water Usage Charges.”
Current
Water Rates
Effective
July 1 July 1
2022 2023
Water Usage Charges ($ per ccf)
Base $7.66 $8.55 $8.67
Monthly Single Family Residential Meter Chart
5/8” - 1” $17.79 $18.06 $18.33
Monthly All Other Meter Charge
5/8” $26.24 $26.63 $27.03
3/4” 39.35 39.94 40.54
1” 65.6 66.58 67.58
1-1/2” 131.19 133.16 135.16
2” 209.91 213.06 216.26
3” 393.57 399.47 405.46
4” & large 655.94 665.78 675.77
Monthly Fire Service & Emergency Intertie Charge
5/8” $5.25 $5.33 $5.41
3/4” 7.87 7.99 8.11
1” 13.12 13.32 13.52
1-1/2” 26.24 26.63 27.03
2” 41.98 42.61 43.25
3” 78.72 79.89 81.09
4” & larger 131.2 133.15 135.15
When SFPUC notified the City of the FY 2022-23 increase, it also included an expectation that rates will increase further in 2023 to $5.28/ccf in FY 2023-24. Staff will monitor this additional increase and will update the Council next year.
Analysis
This rate increase is necessary for the City’s water utility to cover the cost of operations, specifically the cost to purchase the water which is provided to customers.
Because the City is using the pass-through provision of Government Code section 53756.1, as opposed to prior instances where the City proposed to increase water rates, the City need not follow the full Proposition 218 process. Instead, the City Council need only approve the rate increase by resolution and all customers must be notified by mailed notice. While this process won’t diminish the burden on customers, it will allow the City itself to respond quickly to this unanticipated and extreme rate increase by SFPUC.
Attached is the proposed English language letter which will go out to customers.
The City has limited control over the cost of water it receives. The City is simply a customer of SFPUC and does not currently have any other sources of water.
Fiscal Impact
On July 1, 2022, the water usage charge is scheduled to increase to $7.77 per ccf from the current rate of $7.66. With the additional pass-through rate of $0.78, the water usage charge will be $8.55 per ccf.
Public Notice
N/A
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. PassThrough Rate Incrase Resolution
2. Proposed Public Notice
3. Reso 5154 Water Svc Rates Increase
4. SFPUC Wholesale Water Rates Increase Staff Report