1 Your Utility Services: The Bottom Line Facilities Managers Meeting November 5, 2015

2 Our Service Delivery Objectives  Safe, Reliable Service  Competitive Cost  Financially Stable  Environmentally Sound

3 Electric Service  No rate changes since 2009  Carbon neutral electric supply provides clean energy supply at low cost  Low outage rates relative to other utilities  Exploring new distribution system technologies to reduce costs and provide better service  Costs will increase in coming years as new renewable projects come online, then are likely to stabilize

4 Gas Service  Competitive gas supply costs  Seeking long term “gas prepay” contract to obtain favorable gas supply pricing  Gas distribution system investment and maintenance plans emphasize safe operation  With PG&E beginning to invest more in maintenance and upgrades, rates becoming more competitive each year

5 Sewer Service  Regional Water Quality Control Plant reaching end of life, will require replacement, like many other treatment plants in the Bay Area.  Collection system maintenance and replacement is being improved to reduce lateral overflows and attendant impacts on businesses and residents  Improving maintenance processes rather than increased staffing  Increasing capital investment in lateral and main replacement

6 Water Supply  Hetch Hetchy system delivers high quality, water supply  Water System Improvement Project: $4.6 billion seismic retrofit to regional water system  Cost monitoring provided by Bay Area Water Supply and Conservation Agency  Palo Alto rehabilitated and expanded emergency water supplies to meet DPH requirements

7 Water Service  O&M and staffing costs: increased by inflation  Evaluating supplemental water supply (recycled water)  Recent Water System Master Plan (capital investment plan) emphasized cost-efficient replacement strategy  Drought rates in place, but customers will still save if they conserve

8 Last Year’s Rate Projections

9 Your Utility Services: The Bottom Line Facilities Managers Meeting November 5, 2015