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UAC urges city council to limit FY27 gas-rate hike to 7% after debate over decline, grants and reserves
Summary
After hours of questioning staff about declining gas demand, grant conditions and reserve levels, the Utilities Advisory Commission voted 4–3 to recommend the City Council target a lower FY27 overall gas rate increase — no more than 7% — asking the finance committee to identify which levers (including the general-fund transfer) can be used to hit that cap.
Chair Sharf convened the Utilities Advisory Commission to hear staff recommendations on Palo Alto’s FY27 gas utility forecast, a package that initially proposed a 9% overall rate increase (a 14.5% increase in distribution rates) that staff said would translate to about $7.30 per month for a typical residential customer. Utility staff highlighted large, near-term capital needs — including gas main replacement projects (GMR 25 and 26) — and a $16.5 million federal grant that must be spent in the coming two years and that constrains the city’s ability to reduce CIP spending.
Utility Director Alan explained the proposal and why it assumes both lower gas sales and elevated capital spending: “We are federally regulated to ... actively manage and invest and maintain the gas system,” he said, adding the grant-supported main work…
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