Utilities Rates
NEW! Rate Changes Effective July 1, 2024
At their June 17, 2024, the City Council approved financial plans and utility rate changes effective starting July 1, 2024. This is estimated to increase the median residential bill by around 9% compared with the rates that went into effect July 1, 2023.
The estimated overall monthly bill changes for a median residential customer are below.
Median Residential Bill Changes
Utility
|
Bill Change Amount1
|
% Rate Change
|
| Electric |
$7.00 |
9% |
| Gas |
$8.80 |
12.5%2 |
| Water |
$9.80 |
9.5% |
| Wastewater |
$7.30 |
15% |
| Stormwater |
$0.40 |
2.6%3 |
| Refuse |
No Change |
No Change |
| Monthly Bill Change4 |
$34.50 |
9% |
- Rounded to the nearest ten cents.
- Assuming commodity rates held constant; actual gas commodity rates vary monthly.
- Stormwater management fees increase by Consumer Price Index (CPI) per approved 2017 ballot measure.
- Includes Utility Users Tax.
Why Utility Rates Are Changing
There are some common reasons affecting utilities that are driving rate changes in fiscal year 2025.
- The City protected customers from utility cost increases during the pandemic. Increased costs for construction, operations, energy, and water were not fully passed through to customers in 2020, 2021, and 2022 and were instead absorbed from reserves. As a result, revenues are too low to maintain normal operations in all utilities.
- Reserves are lower than expected. The City intended to phase in rate increases slowly using reserves, but spiking energy prices, drought, and other factors led to very low reserve balances.
- Costs continue to rise. Inflation remains elevated throughout the Bay Area, including construction projects and energy and water prices. The cost to transport energy is also forecasted to rise in coming years.
- Aging infrastructure. Investment is needed to maintain the health of utilities and improve reliability. View current Utility Projects.
While these factors are impacting utilities throughout California, Palo Alto consistently provides utility services at a more affordable rate compared to surrounding communities. During Fiscal Year 2023-24, Palo Alto’s projected residential median electric bill is about 50% lower than PG&E.
Even though our energy rates are low, CPAU continually endeavors to control costs. These efforts include competitively procuring utility resource supplies, collaborating with regional partners to efficiently provide services, and providing energy efficiency programs for customers.
We Are Here to Help
CPAU staff are here to answer any questions you may have and assist with resources to help manage your utility usage and expenses. You may be eligible for financial assistance through the City’s Rate Assistance Program if you experience hardship or unexpected medical expenses.
Frequently Asked Questions
How Do Our Utility Rates Compare
Palo Alto residents pay about 50-60% less for electricity than PG&E customers when comparing the median residential bill. Residential customers in Palo Alto also pay about half the cost for electricity than those in neighboring communities served by Silicon Valley Clean Energy (SVCE), Peninsula Clean Energy (PCE), and San Jose Clean Energy (SJCE).
Electric Rate Comparison ($/kWh)
Fiscal Year July 1, 2023-June 30, 2024
|
Palo Alto |
PG&E1 |
Combined
SVCE2+ PG&E
|
Combined
SJCE3+ PG&E
|
Combined
PCE4+ PG&E
|
|
Average Residential
Total Electric Rate ($/kWh)
|
$0.21 |
$0.47
(56%)
|
$0.47
(55%)
|
$0.46
(55%)
|
$0.45
(54%)
|
- PG&E (Pacific Gas & Electric) rates as of April 1, 2024.
- SVCE (Silicon Valley Clean Energy) rates as of January 1, 2024.
- SJCE (San Jose Clean Energy) rates as of February 15, 2024.
- PCE (Peninsula Clean Energy) rates as of March 1, 2024.
How Do Our Bills Compare to Neighboring Cities
Median Residential Utility Bill Comparison
FISCAL Year 2024 ($/month)
While most of our utility bill costs are lower than or competitive with neighboring communities, CPAU continually strives to control costs while ensuring that we deliver safe and reliable utility services.
Schedule for Council Consideration of Fiscal Year 2025 Rates
Rate changes are typically made once a year at the start of the City’s fiscal year on July 1. Public meetings provide customers with opportunities to learn about proposed rate changes and to participate in the process.
Find links to meeting agendas and staff reports delivered throughout the rate setting process for fiscal year 2025.
- June 17, 2024: City Council - Approval of Financial Plans and Rate Change Proposals (agenda item #29)
- April 23, 2024: Finance Committee - Financial Plans (agenda items #1, #2, #3, #4, and #5)
- March 6, 2024: Utilities Advisory Commission – Financial Plans (agenda items #3, #4, #5, and #6)
- February 21, 2024: Finance Committee – Preliminary Rates (agenda item #1)
- January 3, 2024: Utilities Advisory Commission – Preliminary Rates (agenda item #2)
Proposition 218 and Public Hearing Notice
In April 2024, the City mailed a Proposition 218 notice(PDF, 3MB) to all utility customers, detailing proposed increases to water and wastewater rates. Following discussions at the Finance Committee meeting on April 23, 2024, Committee members approved a lower overall water rate increase of up to 9.5%. Therefore, staff revised and proposed lower water distribution rates and water monthly service charges as part of the rate proposal to the City Council on June 17, 2024. This proposed overall rate increase will be lower than stated in the Proposition 218 notice.
City Council approved the proposed rate changes on June 17, 2024.
Changes to the City's Natural Gas Purchasing Strategy
In winter 2022-2023, the natural gas market experienced unprecedented price levels. On September 18, 2023, the City Council opted for a revised natural gas procurement strategy for the 2023-2024 winter season. This strategy includes the introduction of an insurance mechanism aimed at mitigating exposure to exceedingly high gas prices. As of November 1, 2023, customers began paying an additional cost of $0.055 per therm on their gas bills, allocated specifically for safeguarding against sharp spikes in market rates.
Staff will present Council with alternatives to manage short-term gas market price spikes in the future.
Utility Resources Information
The mission of the City of Palo Alto Utilities (CPAU) is to provide safe, reliable, environmentally friendly and cost-effective utility services. Read more below about these services.
How Can I Save on Utility Costs?
Visit cityofpaloalto.org/waystosave or call (650) 329-2241 for information on energy and water efficiency services, rebates, and other resources to keep utility costs low. Rate assistance is available for qualified residents at cityofpaloalto.org/financialassistance.
Electricity
Effective January 2013, Palo Alto achieved an "all green" carbon neutral electric supply portfolio. Palo Alto gets its electricity from several sources. The exact numbers from each source vary annually.
Gas
The City uses a "market-based" purchase strategy. Find the latest City Council action regarding natural gas purchases. This means that gas rates change every month based on market prices. The City of Palo Alto adopted a carbon neutral gas portfolio in 2017.
Water
Palo Alto is fortunate to get its water through the Hetch-Hetchy water distribution system, from Sierra Nevada snowmelt. Like all Californians, we face the risk of experiencing water shortages during drought cycles. Learn more about our water supply through the City's Urban Water Management Plan and Water Resources websites.
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