EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: May 2, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Humza Javed, Public Works Director
Greg Henry, Senior Management Analyst
SUBJECT: San Francisco Public Utility Commission Wholesale Water Rate Increases Recommendation
Receive and file update on expected wholesale water rate increase.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Ensure Our Financial and Organizational Health
Background
According to a notice (attached), the San Francisco Public Utility Commission (SFPUC) is currently projecting a 9.7% increase in the wholesale cost of water to $5.21/ccf (centum cubic feet or a hundred cubic feet) to be effective July 1, 2023. This increase follows last year’s increase bringing the rate from $4.10/ccf to $4.75/ccf in FY 2022-23.
The planned rate increase is slightly less than the rate SFPUC anticipated last year which would have brought the wholesale rate to $5.28/ccf in FY 2023-24.
Analysis
The City included a “pass-through” provision in the last Proposition 218 rate-setting process found in Resolution 5154. This 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.
Last year, the City followed the pass-through process immediately following the planned increase by SFPUC, increasing rates for our customers. However, following the annual true-up process with Veolia, rates were adjusted again downward on October 18th. This year, staff intend to conclude the annual true-up with Veolia prior to adjusting rates to incorporate the increase in wholesale water.
Once the rates for FY 2023-24 are finalized by SFPUC and the City has completed annual true-up review with Veolia, staff will calculate the required rate increase and return to the City Council.
Because any increase beyond the published rates will be due to the wholesale rate increase, the City Council needs only approve the rate increase by resolution and staff must notify all customers via a mailed notice consistent with Resolution 5154.
It should be noted that 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 the ability to use any other sources of water that could avoid these increases.
Fiscal Impact
There is no fiscal impact in hearing this report. No increase in the retail rate of water for our customers can be estimated until the annual true-up process with Veolia is completed.
Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.
Environmental
The proposed action does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and (5) in that it is a governmental fiscal, organizational or administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. SFPUC FY 2023-24 Wholesale Rate Notice Letter and Attachments