• What factors determine your water rates?

    The District predicts its revenues, maintenance costs, operations costs, and capital improvement costs in setting water rates. There are three elements in this process:

    The first element is forecasting water usage, which determines the basis for establishing rates. This is a lot like predicting the weather – two years in advance.

    The second element is forecasting costs. The largest components of our costs are water and the energy to pump that water throughout the District. We buy all our water from the San Francisco Public Utilities Commission (SFPUC). Some costs are predictable and stable, such as salaries, insurance, rents, and fees. Other costs are difficult to determine, such as repair costs which we cannot know in advance. Thus, we estimate repair costs from the number and severity of water main breaks and facility and equipment failures in the recent past.

    The last element of the planning process is the Capital Improvement Program (CIP). The main reasons we emphasize our CIP are to reduce repair costs and to increase the efficiency, reliability, fire worthiness, and seismic resilience of our water system. This comprehensive program is continually updated and prioritized. The excess of revenue over operating costs pays for this program. If revenue falls short of estimates (or costs increase), there is less money for the CIP, so we typically modify it accordingly. If revenue exceeds estimates (or costs decrease) we typically spend the amount budgeted for the CIP, and the excess serves to lessen future water rate increases. The overall goal of capital improvement projects is to reduce our operating and maintenance costs and to provide the level of service our customers expect.

  • Why do I pay more for using less water?

    Over the past two years, water use decreased in the District, as well as throughout the Bay Area. The lower water use increases the cost of a unit of water for both the District and the San Francisco Public Utilities Commission (SFPUC) Hetch Hetchy system, our only source of water. Since less than half of the District’s water system costs are variable, the remaining costs and capital spending requirements tend not to decrease when demand decreases. With these fixed costs spread over fewer units, higher rates result.

  • Why is the Hetch Hetchy water so expensive?

    The San Francisco Public Utilities Commission (SFPUC) sells about one-third of its Hetch Hetchy water to retail customers in San Francisco. It sells the other two-thirds wholesale to 26 San Francisco Peninsula agencies, including the District.

    Through higher water rates, all SFPUC customers, including the District, fund the payments on the bonds issued by SFPUC, with increments to the rates occurring nearly every year based upon the additional projects that were completed. 

  • What is the Readiness-to-Serve charge?

    The readiness-to-serve charge (or meter charge, or service charge) is a fixed monthly charge that is based on the size of the customer’s meter. It is important for the District because it provides steady income in the winter months when water usage is at its lowest. This readiness-to-serve charge requires all our customers, heavy and light users alike, to pay a portion of the fixed costs of the system, in proportion to the capacity of their connection.

  • What is the District doing to control its costs?

    Except for the cost of water from the San Francisco Public Utilities Commission (SFPUC) and rising healthcare costs, most of our remaining costs have been stable. Our CIP has kept insurance claims low by curbing property damage and has allowed us to rely primarily on off-peak pumping to decrease energy costs.

    There are obstacles to cost control unique to the District, for example our zoning of one-acre minimum lots and the hills. The low density of Los Altos Hills increases the distance between meters, so fewer customers share the capital cost. The topography requires a substantial investment in pumps as well as the expense of pumping our water uphill. Many water agencies in the flat lands can use system pressure from their supplier to serve their customers, an economy not available to us. Another topographic factor is that high-pressure water mains, needed to provide excellent fire protection, are costly to repair if they break.

    Our installation of AMI technology (Advanced Metering Infrastructure) to allow virtual reading. We now read virtually all our meters in one day (compared to five days previously), freeing staff to perform work necessary to meet regulatory requirements. In addition, the wireless meters allow us a limited capability to detect unknown homeowner system leaks.

    Our investments in capital improvement and maintenance projects have helped reduce the amount of unbilled water generally attributed to unknown system leaks. 

    The District also pursues grant opportunities when available. 

  • What process does the PHWD follow in establishing its water rates?

    The District follows an extensive public process to set its rates. Before any rate changes, the District Board of Directors considers alternative rates and capital spending levels, and discusses and analyzes various options. The Board then sets a date for a public rate hearing and mails hearing notices to all customers/property owners 45 days before the public hearing. In addition, we post notices of the public hearing within the District, put the notice on our website, and publish it in local newspapers. At the public hearing, the Board considers all comments received regarding proposed changes in rates.

    Before the public rate hearing the District completes a water rate study, which evaluates our historical and projected income and costs. The goal of the water rate study is to ensure that we have sufficient income to cover our costs.

    The District exceeds the legal requirements for notification.

  • How do the PHWD water rates compare to the water rates of other retail water providers in the area?

    Rising wholesale water prices caused most San Francisco Peninsula water agencies to raise their retail rates in recent years. 

  • Why does the District have a tiered rate structure?

    The District has a tiered rate structure, with rates increasing as usage increases, to promote conservation. The start of the tiers with increased rates is set well above typical needs for indoor usage; high rates apply primarily for water used for irrigation. Customers using large amounts of water on landscaping pay a much higher rate for usage above 45,000 gallons per month (61 units). The higher rates provide a strong incentive to reduce landscaping demands on our drinking water system. Our Office team is available to assist customers with ways to use water more efficiently.

  • Why are the water rates for some residents of the Town of Los Altos Hills different from other residents of the Town of Los Altos Hills?

    The San Francisco Public Utilities Commission (SFPUC) serves the Peninsula north of Los Altos. Both SFPUC and Santa Clara Valley Water District (SCVWD) serve the southern Peninsula. Depending on facility locations, groundwater availability, and contractual agreements, most agencies buy water from either SFPUC or SCVWD, and in some cases, both.

    The District and California Water Service (CWS) serve Los Altos Hills. The District buys its water from SFPUC. CWS-Los Altos buys its water from SCVWD. 

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