*NOT YET APPROVED* Attachment E
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1 Resolution No.
Resolution of the Council of the City of Palo Alto Approving the Fiscal Year 2027 Gas Utility Financial Forecast, Reserve Transfer and General Fund Transfer, and Amending the Gas Utility Reserves Management Practices and Rate Schedules G-1 (Residential Gas Service), G-2 (Residential Master-Metered and Commercial Gas Service), and G-3 (Large Commercial Gas Service)
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, including reserves.
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 adequate 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 (Attachment E, Exhibit 3) and Gas Utility Financial Details ( Attachment E, Exhibit 2) attached to this resolution and made a 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 15, 2026, the City Council heard and approved the proposed rate increase at a noticed public hearing.
The Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council hereby approves the fiscal year (“FY”) 2027 Amended Reserves Management Practices (Attachment E, Exhibit 3) and Gas Utility Financial Details (Attachment E, Exhibit 2) presented to the City Council on June 15, 2026, which are attached to this resolution and made a part of the staff report presented to the City Council.
SECTION 2. The Council hereby approves the transfer of up to $1.5 million from the Gas Utility Operations Reserve to the Distribution Rate Stabilization Reserve in FY 2026.
SECTION 3. The Council hereby approves the transfer of up to 18% of gas utility gross revenues received during FY 2025 to the general fund in FY 2027.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-1 (Residential Gas Service) is hereby amended to read as shown in Attachment E, Exhibit 1. Utility Rate Schedule G-1, as amended, shall become effective July 1, 2026. *NOT YET APPROVED* Attachment E
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2 SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-2 (Residential Master-Metered and Commercial Gas Service) is hereby amended to read as shown in Attachment E, Exhibit 1. Utility Rate Schedule G-2, as amended, shall become effective July 1, 2026.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule G-3 (Large Commercial Gas Service) is hereby amended to read as shown in Attachment E, Exhibit 1. Utility Rate Schedule G-3, as amended, shall become effective July 1, 2026.
SECTION 7. The City Council finds that revenues derived from the gas rates approved by this resolution do not exceed the funds required to provide gas service and shall not be used for any purpose other than providing gas service, and the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto, consistent with any limitations imposed by Article XIII C and Article XIII D of the California Constitution.
SECTION 8. 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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*NOT YET APPROVED* Attachment E
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3 SECTION 9. The Council finds that approving the FY 2027 Gas Utility Financial Forecast 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 gas 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 Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient 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