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Resolution No.
Resolution of the Council of the City of Palo Alto Approving the Fiscal Year 2026 Electric Utility Financial Forecast and Reserve Management Practices, and Amending Utility Rate Schedules E-1 (Residential Electric Service), E-2 (Residential Master-Metered and Small Non-Residential Electric Service), E-2-G (Residential Master- Metered and Small Non-Residential Green Power Electric Service), E-4 (Medium Non-Residential Electric Service), E-4-G (Medium Non- Residential Green Power Electric Service), E-4 TOU (Medium Non-Residential Electric Time of Use Service), E-7 (Large Non-Residential Electric Service), E-7-G (Large Non- Residential Green Power Electric Service), E-7 TOU (Large Non- Residential Electric Time of Use Service), E-14 (Street Lights), E-16 (Unmetered Electric Service), E-EEC-1 (Export Electricity Compensation), and E-NSE-1 (Net Metering Surplus Electricity Compensation)
R E C I T A L S
A. Each year the City of Palo Alto (“City”) regularly assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequat e to recover these costs. It does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates.
The City adopts Financial Forecasts or Plans to summarize these projections.
B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices (Exhibit 3) and Financial Forecast (Exhibit 1) attached to and made part of the staff report presented to the City Council.
C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges.
D. On June 16, 2025, the City Council heard and approved the proposed rate increase at a noticed public hearing.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby approves the fiscal year (“FY”) 2026 Electric Utility Reserve Management Practices (Exhibit 31) and Financial Forecast (Exhibit 12) presented to the
1 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-d-exhibit-3-fy26-electric-reserves-management- practices.pdf
2 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/2/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/finalized-attachment-d-exhibit-1-fy26-electric-utility-financial-forecast- and-cip-detail.pdf
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Finance Committee on April 15, 2025 (Meeting Agenda Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16042) as updated by the June 16, 2025 Council report, which are attached to and made a part of the staff report presented to the City Council;
SECTION 2. The Council hereby approves a transfer of up to $5 million from the Electric Utility Supply Operations Reserve to the Distribution Operations Reserve by the end of FY 2025, as described in the FY 2026 Electric Utility Financial Forecast presented to the Finance Committee on April 15, 2025 (Meeting Agenda Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16042), Attachment C Table 12, lines 21 and 24;
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-1 (Residential Electric Service) is hereby amended to read as shown in Exhibit 23.
Utility Rate Schedule E-1, as amended, shall become effective July 1, 2025;
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-2 (Residential Master-Metered and Small Non-Residential Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-2, as amended, shall become effective July 1, 2025;
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-2-G (Residential Master-Metered and Small Non-Residential Green Power Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-2-G, as amended, shall become effective July 1, 2025;
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E -4 (Medium Non- Residential Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-4, as amended, shall become effective July 1, 2025;
SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-4-G (Medium Non-Residential Green Power Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-4-G, as amended, shall become effective July 1, 2025;
SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-4 TOU (Medium Non-Residential Time of Use Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-4 TOU, as amended, shall become effective July 1, 2025;
SECTION 9. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-7 (Large Non-Residential Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-7, as amended, shall become effective July 1, 2025;
3 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-d-exhibit-2-fy26-electric-rate-schedules.pdf Attachment D * NOT YET APPROVED *
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SECTION 10. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-7-G (Large Non-Residential Green Power Electric Service) is hereby amended to readas shown in Exhibit 2. Utility Rate Schedule E-7-G, as amended, shall become effective July 1, 2025;
SECTION 11. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-7 TOU (Large Non-Residential Time of Use Electric Service) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-7 TOU, as amended, shall become effective July 1, 2025;
SECTION 12. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-14 (Street Lights) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-14, as amended, shall become effective July 1, 2025;
SECTION 13. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-16 (Unmetered Electric Service) is hereby amended to read as shown in Exhibit 2.
Utility Rate Schedule E-16, as amended, shall become effective July 1, 2025;
SECTION 14. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E -EEC-1 (Export Electricity Compensation) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-EEC-1, as amended, shall become effective July 1, 2025;
SECTION 15. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E -NSE-1 (Net Surplus Electricity Compensation Rate) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule E-NSE-1, as amended, shall become effective July 1, 2025;
SECTION 16. The Council finds that the revenue derived from the adoption of this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.
SECTION 17. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product.
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SECTION 18. The Council finds that approving the Electric Reserve Management Practices, Financial Forecast, and Reserve transfers does not meet the California Environmental Quality Act’s (CEQA) definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental assessment is required. The Council finds that changing electric rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and CEQA Guidelines Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that suffi cient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services