This story was originally published by the Daily Post on March 9. We’re repeating it here because one of our competitors has re-written this story and posted it on their website, trying to pass it off as original reporting. Please don’t support publications that engage in plagiarism.
BY ELAINE GOODMAN
Daily Post Correspondent
Palo Alto residents could see their water bills go up 8% starting in July, in part due to rising costs of Hetch Hetchy water the city buys from the San Francisco Public Utilities Commission.
The city’s Utilities Advisory Commission voted 5-2 last week to recommend the 8% increase. The rate hike isn’t final: It will go to council’s Finance Committee for review and then to the full City Council for a vote in June.
The 8% increase recommended by the commission is less than a previously proposed 10% increase that would add about $12.60 to a typical resident’s monthly water bill. With an 8% increase, the monthly bill would go up by about $10.
The new water rate hike would follow a 10% increase for the current fiscal year, which ends June 30. In each of the previous two years, the city raised water rates by 5%.
Other utility rate hikes for Palo Alto residents this year included a 6% increase for electric, 5% for gas, and 20% for wastewater.
The city of Palo Alto buys its water from the San Francisco Public Utilities Commission, which runs the water system that brings water to the Bay area from the Hetch Hetchy reservoir in Yosemite National Park. Palo Alto has its own distribution system to deliver the water to its residents and businesses.
The wholesale water expense is roughly half of the city’s total cost to provide water.
The city has no control over wholesale water prices charged by the San Francisco PUC and passes those costs to Palo Alto customers. SFPUC has been raising the price of Hetch Hetchy water to pay for $4.8 billion in improvements to the water system. The Water System Improvement Program includes seismically strengthening parts of the system, with a goal of being able to resume service within 24 hours of a major earthquake.
Lower usage reduced revenues
On top of the water system improvements, SFPUC brought in less money over the summer because customers used less water due to relatively cool weather.
In May 2025, SFPUC said its wholesale water rate increase would be about 1%; but in January, the PUC said the increase would be between 5.9% to 9.1%. Palo Alto Utilities estimated the SFPUC increase at 7.6% for purposes of calculating its own rate increase.
Other cities facing the same problem
Palo Alto isn’t alone in facing the rising cost of Hetch Hetchy water. Twenty-five other agencies buy water from the San Francisco PUC, including Menlo Park, Redwood City, East Palo Alto and Mountain View. Menlo Park council will discuss tomorrow sending a notice to residents of an impending water rate increase.
Members of Palo Alto’s Utilities Advisory Commission said they were frustrated by the SFPUC’s rate changes.
“It’s all over the map,” Commissioner Chris Tucher said.
Commission Chair Greg Scharff said there wasn’t much the city could do.
“As long as they’re charging us that, we have to pay it,” Scharff said.
But Palo Alto can try to reduce the impact of SFPUC cost increases by reducing its costs on the distribution side of the equation. That might mean postponing work on the distribution system or not filling job vacancies.
Reducing reserves
To reduce the amount of the rate increase, the commission recommended moving less money to a reserve account than the utility department had proposed. Commission members said they want to further discuss the policies surrounding reserve funds.
Councilman Ed Lauing, who is council’s liaison to the commission, agreed that reserve amounts are a key issue.
“Customers have to pay more if we have a bunch of cash sitting around that we may or may not need,” Lauing said.
“The new water rate hike would follow a 10% increase for the current fiscal year, which ends June 30. In each of the previous two years, the city raised water rates by 5%.
Other utility rate hikes for Palo Alto residents this year included a 6% increase for electric, 5% for gas, and 20% for wastewater.”
Do the rate hikes never end?? And why the huge rate hike for wastewater? Is that to fund PA’s disgusting “toilet to tap” program?
So… everyone is using less, so the rates are going up? This is ridiculous!
Could we at least get fishing access to all those lakes the District owns? Whatever became of that legal suit?
[Portion removed — Terms of Use violation. Please, no links.]
One thing missing from this story: “The Bay Area Water Supply and Conservation Agency is governed by a 26-member Board of Directors comprised of respected community leaders representing the 24 cities and water districts that are member agencies of BAWSCA, and two private utilities that also have appointees to the board, Stanford University and California Water Service Company.” I’d post a link if that weren’t against the rules. Apparently Councilmember Greer Stone is Palo Alto’s representative.
Councilmembers are saying there’s nothing they can do, but there exists a forum for negotiating with the SF water department and it seems like that increase was worked out last year.
BAWSCA’s board consists of “respected” community leaders? Really, where did you get that? Are you aware that East Palo Alto’s Webster Lincoln sits on this board? Yep, that guy. No wonder the SFPUC just laughs at BAWSCA.
Carlos Romero should be recalled. He was just outed for writing a character reference letter to have an alleged pedofile released back into the public.
So when did the water under our homes become the property of water districts? I’m not getting paid for that but instead being charged for it.