Changes to the City of Palo Alto’s Gas Transportation Charge

Published on October 03, 2024

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On Monday, October 7, 2024 the Palo Alto City Council approved raising the limit on the monthly transportation charge associated with customer natural gas rates.

View the City Council agenda and read the staff report here.

The City of Palo Alto Utilities owns and operates its own natural gas utility within the boundaries of Palo Alto, and purchases gas transported through Pacific Gas and Electric (PG&E) transmission lines to the City’s border. PG&E has increased the rates it charges for transporting gas along its transmission lines. This means it costs more for the City to supply gas to its customers.

The upper limit on the transportation charge the City of Palo Alto Utilities passes along to customers is currently $0.25 per therm of gas usage. Effective November 1, 2024, the new limit will be $0.30 per therm to accommodate for increased costs from PG&E.

PG&E sets rates upon approval from the California Public Utilities Commission (CPUC), which is a separate and distinct process from the City of Palo Alto’s regular rate setting schedule. PG&E increased rates for gas transportation from $0.22 per therm in March 2024 to $0.27 per therm in September 2024. The City’s previously approved limit for the transportation fee passed to customers was $0.25 per therm.

Since PG&E raised its prices to above $0.25 per therm, the City has been undercharging customers to pay PG&E. The City has been using reserve funds from the gas utility to cover this difference in cost. The City is increasing its monthly maximum limit on transportation fees to balance the costs it pays to deliver gas to its customers. Forward-looking, the City anticipates that the gas transportation rate from PG&E will increase approximately 5 percent annually over the next five years.

To help customers offset increases in energy prices, the City of Palo Alto Utilities offers efficiency services and programs, such as home energy audits and rebates to install high efficiency appliances, to help keep utility costs low. Financial assistance is also available to qualifying individuals on limited incomes or those experiencing medical hardships. Please visit the ways to save webpage for access to efficiency resources and this page for information on financial assistance programs.