Utility Rate Projections
and Changes
Facility Managers Meeting
February 11, 2015
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Preliminary Rate Projections
FY 2016
Electric Utility
Gas Utility*
Wastewater
Water Utility
0%
3%
9%
7%
FY 2017 FY 2018
5%
4%
9%
7%
5%
4%
9%
7%
FY 2019
FY 2020
3%
4%
9%
7%
2%
4%
7%
3%
*Gas rate changes are shown with commodity rates held constant. Actual gas commodity
rates will vary monthly with wholesale market fluctuations
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Cap-and-Trade
 Part of California’s Global Warming Solutions Act
– Goal is state-wide greenhouse gas reduction – “cap”
decreases each year
– One allowance = authorization to emit one metric ton of
carbon dioxide equivalent
– Covered entities purchase “allowances” for emitting
greenhouse gases
– Allowances can be traded between entities
3
Electric Utility Subject to Cap and Trade
since November 2012
 Generators have to purchase allowances, will
pass on costs to wholesale buyers (like Palo
Alto)
 Palo Alto gets free allowances and sells to
counteract increased cost to rate payers
– Purchases in renewable resources
– keeping our electric resource mix 100% carbon
neutral;
– Programs and rebates to improve energy
efficiency; and
– Rebates to electric ratepayers.
4
Gas Utility Subject to Cap and Trade
since January 2015
 Palo Alto has to purchase allowances to cover
greenhouse gas emissions from gas customers
 Palo Alto also gets some free allowances and
sells to counteract increased cost to rate
payers
– Programs and rebates to improve energy
efficiency;
– Purchases of or investment in bio-gas;
– Investment in carbon reduction activities including
projects to reduce emissions caused by leaks; and
– Rebates to gas ratepayers.
5
Adopted Gas Rate Changes
 New line item to reflect Cap-and-Trade costs
– Pass-through of the cost of allowances
– Updated quarterly
– Range of $0.00 to 0.25 per therm
 Combine Administration and Transportation
rate components with Distribution
– Administration ($0.0074 per them) and
Transportation ($0.0435 per therm) added to each
distribution rate tier
– Change is revenue neutral
– Simplifies bill presentation
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