Palo Alto residents who try to limit their waste by switching to smaller trash cans could find their garbage rates spiking dramatically and possibly doubling over the next several years as part of the city's effort to bring financial stability to its troubled refuse operation.

The city has recently completed a "cost of service" study that proposes a radically different rate structure for residential customers. The goal is to stabilize the refuse fund, which has been losing money in recent years, and to get away from the existing system under which commercial customers subsidize through their rates the cost of providing service to residents.

While the sharp rate increases would be phased out over several years, a new proposal from the Public Works Department calls for a 5.3 percent rate increase for all residential customers starting in July along with a $2.09 flat fee that would be tacked on to every residential bill to cover the cost of street sweeping.

The study, which the city initiated in August 2010 and which the City Council's Finance Committee is scheduled to discuss Tuesday night, March 6, offers a rate structure that would affect all residential customers but would have the most dramatic impact on those who conserve the most. Under this model, residents who use mini-cans (about 29 percent of all customers) would see their monthly refuse rates jump from $20.52 to $45.46, a 121 percent increase. The 55.7 percent of residential customers who use the standard 32-gallon cans would see their rates go up from $37.58 to $50.48, a 37 percent increase.

Meanwhile, those who use 64-gallon cans would see their rates decline by 12 percent, from $72.46 to $63.86.

Because of the severity of the spike for customers who use the two smallest containers, staff is recommending phasing out the rate changes over two or three years, according to Brad Eggleston, the city's solid waste manager. The Public Works Department proposes keeping "conservation pricing" in place to encourage smaller cans but to reduce the level of conservation pricing by introducing a flat fee for all customers.

The plummeting revenues in the Refuse Fund can, in many ways, be attributed to the city's success in encouraging conservation through its Zero Waste program. By switching to smaller cans, residents bring down their trash bills and, in doing so, reduce the city's revenues. In addition, more people recycle and compost -- services for which the city has not been charging its residents.

That, however, can soon change. In his report on the cost-of-service study, Eggleston notes that the city's refuse rates have been traditionally based on garbage-can size but are "expected to fund a broad range of programs including garbage collection and disposal, yard trimming collection and processing, recycling collection and processing, commercial organics collection and processing, street sweeping, household hazardous waste, the Palo Alto landfill, and the annual clean-up day."

"As residents switched to smaller garbage can sizes through the success of the Zero Waste programs and as the economic downturn impacts services provided to businesses, revenues declined sharply," Eggleston wrote.

The council began dealing with this problem last year when it approved a flat rate hike of $4.62 percent for all customers, regardless of can size. The new rate structure, however, would bring much more significant changes. Under the cost-of-service model, the city would start charging all residential customers $7.66 for recycling, and $10.99 for picking up their yard trimmings and $6.71 for street sweeping.

While the city is unlikely to introduce all these fees in the short term, the street-sweeping fee would kick in as early as July under the staff proposal. Because the council already added the $4.62 fee last year, it would need to tack on another $2.09 fee to achieve the $6.71 rate required to meet the cost of providing street-sweeping services.

The model, in short, proposes a major shift from a system that provides pricing incentives for customers who switch to smaller cans (thanks in large part to subsidies from commercial customers) to one in which rates reflect the actual cost of services. Under the model in the study, the difference between the rates for those who use minicans and those who use standard cans is only $5.02. Under the current structure, this difference is $16.96.

Eggleston wrote that "given the magnitude of the rate increases that are needed for minican and 32-gallon service to reach the cost of service model rates, staff recommends that rate increases be phased in over some number of years." On Tuesday, the Finance Committee is scheduled to review the staff recommendation and consider an array of other options, including some of which extend the rate increases over a longer period of time and others that would eliminate conservation pricing.

Continued testing on PG&E's Line 132 is expected to cause traffic along Alma Street to be redirected for 10 days starting Jan. 18, City of Palo Alto Utilities spokeswoman Debra Katz said Tuesday morning (Jan. 17).

The work involves checking the outside casing surrounding the pipe for flaws. The 55-mile Line 132, which runs from Milpitas to South San Francisco, is the one involved in the San Bruno explosion and fire. The California Public Utilities Commission required PG&E to use hydrostatic (water pressure) testing to find leaks in the pipeline after the explosion.

Between September and November 2011, PG&E performed the tests on sections of the Line 132 pipe, which runs through Palo Alto. The pipe has been fully tested and was returned to full service in December, the city noted on its pipeline update page.

Related story: PG&E repairs leak in Palo Alto pipeline (Nov. 11, 2011)

The surrounding casing inspection would not cause impacts to service or any odors, Katz said. The main effect will be on commuters traveling southbound on Alma from Jan. 18 through Jan. 28. The work will be done between Alma and the Caltrain railroad tracks, just before the intersection with Oregon Expressway, Katz said.

Katz said commuters should consider taking alternate routes.

PG&E has three main transmission pipelines that traverse Palo Alto -- Lines 101, 109 and 132. Line 132 is the only one of the three pipelines required to be tested in PG&E's current hydrostatic testing project, the city noted.

Line 109 runs along Middlefield Road from Mountain View but then turns up East Charleston/Arastradero Road, continuing north along Foothill Expressway. It has had about two thirds of its length replaced in recent years and is believed to have been hydrostatically tested already but paper record verification of that is still underway, according to PG&E.

Originally installed portions of this pipeline -- running along Charleston between Alma and Middlefield -- are scheduled for replacement sometime between 2012 and 2014. That schedule is currently being prepared, according to PG&E.

Line 101 runs roughly parallel to Highway 101. All of the Palo Alto portions of this pipeline have been replaced since the requirement for hydrostatic testing was in place and there are validated records of passing this test, according to PG&E.

PG&E intends to install a permanent "in the pipeline inspection device" launching station on East Bayshore Road that will allow future regular, ongoing inspections. Construction of this device could start as early as summer of 2012.

If Palo Alto residents notice their tap water turning white or milky in the coming month, it's not just their imagination at work.

The San Francisco Public Utilities Commission (SFPUC), which supplies water to San Francisco, Palo Alto and 26 other cities, is warning that tap water on the Peninsula and in the East Bay may turn cloudy between Dec. 5 and early January because of routine maintenance and seismic upgrades in the Central Valley. According to the SFPUC, the change in the water is "only aesthetic, with water continuing to meet all state and federal regulatory requirements."

During the time of the maintenance work, customers will not be receiving water from the Hetch Hetchy Reservoir -- the SFPUC's usual source -- but from local reservoirs.

According to the water agency, the increased treatment of the local-reservoir water at the SFPUC's Sunol Valley Water Treatment Plant will cause air to be mixed into the water, which makes water appear "cloudy or milky." The cloudiness dissipates if the water is allowed to stand for a few minutes, which causes the air bubbles to rise to the surface and dissipate.

Water officials expect water to return to normal when the work is completed in the week of Jan. 7.

A natural gas pipeline that exploded during safety testing near Woodside Sunday afternoon (Nov. 6), causing a mudslide that shut down northbound Interstate Highway 280, had a pre-existing dent at the point where it ruptured, according to PG&E.

Pacific Gas & Electric was conducting hydrostatic pressure tests on a 3- mile section of the 24-inch transmission line between Menlo Park and Woodside at the time of the rupture, said utility spokesman Brian Swanson.

The tests involve emptying the pipe of gas and pumping water through at high pressure to check for any leaks or weak points.

The pipeline, Line 132, which runs from Milpitas to San Francisco, including through Palo Alto, is the same line that ruptured in San Bruno in October 2010, killing eight people and injuring many more. It normally operates at a pressure somewhere lower than 375 pounds per square inch but has been operating at a reduced pressure of less than 300 pounds per square inch, Swanson said.

"In order to help meet higher winter demands, we want to bring the pressure level back up to normal levels, around 375, but before we do that we need to ensure that the pipeline is safe," Swanson said.

Pressure in the pipeline had been raised to around 550 pounds per square inch at the time of Sunday's rupture, well above normal operating levels, he noted.

The rupture, which occurred around 3:20 p.m., was first reported as a large geyser of water that was getting cars wet on Interstate Highway 280 near Farm Hill Boulevard. A short time later an explosion was reported in the same area, along with a large volume of flowing water, according to Woodside Fire Battalion Chief Kevin Butler.

The rupture had caused a mudslide, sending mud, rocks and debris across the northbound lanes of the freeway. Several lanes on the freeway were closed by the slide, some for more than four hours.

There were no injuries, but one vehicle was damaged by pieces of dirt and rock, Butler said.

Fire crews located a 5 foot by 5 foot crater on the hillside east of the freeway, in an easement running behind a group of homes. The closest home was about 100 yards away, Butler said.

PG&E has tested around 120 miles of pipeline this year, Swanson said. Last week the utility found a 1 millimeter leak in Line 132 in Palo Alto, and last month a line ruptured in Bakersfield during testing. However, Sunday's rupture was far more disruptive.

"We'll definitely look into what happened today," Swanson said, noting that there were crews on the scene. "Obviously we don't want a hydrostatic test to disrupt traffic on 280 like it did today, and we will look at ways to minimize disruption."

PG&E will remain on the scene for several more days to make repairs and complete testing on the pipeline.

Palo Alto's water rates would spike by 25 percent for the average residential customer if the City Council approves the latest proposal from the Utility Department tonight (Monday).

The rate change, which would take effect Oct. 1, aims to cover the rising costs of the city's water supply and to help pay for the $4.6 billion effort by the San Francisco Public Utilities Commission to upgrade and repair aged Hetch Hetchy infrastructure.

The new rates would increase the water bills for the largest residential customers by 28.6 percent, from $190 to $244. Residential customers in the medium category would see a 25.4 percent jump, while the smallest customers would see a 10 percent increase.

Staff is proposing an average rate increase of 21 percent for all customers. This would add $18.31 to the average residential bill and $31.55 to the bill of the average medium commercial customer.

According to a report from the Utilities Department, the city already has some of the highest water bills in the area. While Menlo Park's monthly residential bill is about 14 percent higher than Palo Alto's, Redwood City, Mountain View and Santa Clara all have much lower rates. The average residential customer in surrounding cities pays about 14 percent less than the average Palo Alto customer, the report states.

The reasons for the higher bills include Palo Alto's older infrastructure, higher rent payments of use of real estate in the service territory and lack of access to cheaper water supply, the report states.

The new rates are expected to add $3.4 million in revenues to the city's water utility, which has a projected $6.2 million shortfall in the current fiscal year, according to a report from Ipek Connolly, a senior resources planner in the Utilities Department. The balance of the deficit would come from the reserves.

The city's water supply costs are projected to increase by 37 percent this year and to double by 2016, largely because of the major infrastructure project. Palo Alto is one of 27 municipalities that draws its water from the Hetch Hetchy system.

The council meeting will begin at 6 p.m. tonight in the Council Chambers at City Hall (250 Hamilton Ave.).

The PG&E gas-pipeline-testing project began with staging and excavation Thursday (Aug. 11) and will continue through late September, according to a schedule released by the City of Palo Alto Utilities department.

Gas line segments T-29 and T-30, which run through Palo Alto, will be vented of unused gas in order to conduct hydrostatic pressure-testing.

People in north Palo Alto can expect to smell gas on Friday, Aug. 19, when venting for pipeline segment T-29 will begin. T-29 stretches from Alma Street to Middlefield Road, with dig sites located at 2573 Alma, 3672 Middlefield and 3860 Middlefield.

Residents of south Palo Alto may notice a smell on Monday, Aug. 29, when segment T-30 will be vented. T-30 starts at the intersection of Alma and Page Mill Road and continues up Page Mill to Foothill Expressway. Dig sites are located at 650 Page Mill, 925 Page Mill, the corner of Page Mill and Hanover Street and 500 feet north of the intersection of Page Mill and Foothill.

Hydrostatic testing subjects pipes to water pressure 150 percent greater than the pressure allowed under normal gas use.

Tests will "validate a safe operating pressure for the pipeline" and hopefully "reveal weaknesses that could lead to defects and leaks," PG&E officials said last month. Weakened pipes will be repaired or replaced.

The testing schedule is as follows:

■ Friday, Aug. 19: Venting for pipeline segment T-29 begins (Alma Street to Middlefield Road); smell noticeable in Menlo Park and north Palo Alto

■ Thursday, Aug. 25: Hydrostatic testing of T-29 begins; air movers operate near Oregon Expressway and Alma Street, noise and slight smell noticeable

■ Monday, Aug. 29: Venting for pipeline segment T-30 begins (Alma and Page Mill Road, up Page Mill to Foothill Expressway), smell noticeable in Mountain View and south Palo Alto

■ Monday, Sept. 5: Hydrostatic testing of T-30 begins

After a delayed start date, PG&E will begin to prepare this week for testing its natural gas transmission pipeline that runs through Palo Alto, according to Debra Katz, acting communications manager with the City of Palo Alto Utilities Department.

Staging and excavation preparations will begin "possibly as early as Monday or Tuesday," Katz said. The project is expected to continue for two months.

Testing will not disrupt service, as an alternate source will temporarily provide all necessary gas, according to the Utilities Department website. But residents should expect to see above-ground signs of testing such as detours, traffic cones, testing equipment and machinery, as well as notice "noise and some gas smell," Katz said.

Last month, PG&E announced it would be conducting hydrostatic pressure-testing on its gas lines in order to "validate a safe operating pressure for the pipeline and ... reveal weaknesses that could lead to defects and leaks." Hydrostatic tests involve running water through the pipeline at a much higher pressure than it will ever operate with natural gas.

The pipeline is divided into two sections, known as T-29 and T-30. T-29 starts at Alma Street and zigzags south to Middlefield Road. T-30 starts at the intersection of Alma and Page Mill Road and goes up Page Mill to Foothill Expressway.

Staging and excavation will be carried out on both sections of pipe simultaneously, though T-29 will be tested first on Aug. 15 and T-30 "a week or two later," Katz said.

Dig sites for the T-29 section of pipe are located at 2573 Alma, 3672 Middlefield and 3860 Middlefield. Dig sites for T-30 will be located 500 feet north of the intersection of Page Mill and Foothill Expressway and at 650 Page Mill, 925 Page Mill and the corner of Page Mill and Hanover Street.

Palo Alto isn't spiking its water rates just yet, but residents concerned about rising bills should hold their applause for now.

The City Council was scheduled to approve a new water-rate schedule that would raise rates by an average of 12.5 percent. The council held a public hearing on the rate changes last week and Monday night was scheduled to approve the new rates as part of their adoption of the 2012 budget.

But while the council approved most of the budget without a hitch, members put the brakes on the proposed water-rate increase after Councilman Greg Scharff said the proposed rates would violate Proposition 218, which requires water rates to be consistent with the cost of providing service.

The rates proposed by the Utilities Department, with input from the Utilities Advisory Commission and the council's Finance Committee, included new tiers for heaviest water users in both the residential and commercial customer classes. Currently, there are two tiers for residential and one tier for commercial customers. Under the proposal, which seeks to encourage conservation, the residential customers in the new third tier would pay more per gallon than other customers. So would commercial customers in the new second tier.

But Scharff and the council agreed that the new tiers would conflict with state law and asked staff to come back with a different rate structure. The council voted 7-1, with Gail Price dissenting and Nancy Shepherd absent, to support Scharff's proposal.

"I think it's really important that we move in right direction on Proposition 218," Scharff said.

Though the delay gives concerned ratepayers a temporary reprieve from higher rates, any sense of victory is likely to be short-lived. The council still expects to approve higher rates later this summer, though the way in which these rates are distributed among customers would change.

Palo Alto's Water Fund is facing a $6.2 million budget gap because of the spiking cost of wholesale water. The city's water-supply costs are projected to rise by 37 percent in the next fiscal year and to double by 2016, according to the Utilities Department. The increases are driven largely by a $4.6 billion infrastructure-repair project undertaken by the San Francisco Public Utilities Commission, the city's water supplier.

The council decision to revise the water rates appeared to surprise city staff. City Manager James Keene told the council that its new direction on water rates is a "rather significant change from what you've been considering." Utilities Director Valerie Fong said staff is a "little bit confused" by the council's proposal, which she said appears to conflict with previous direction. Utilities staff is schedule to return to the council with a new proposal on Aug. 1.

Councilman Greg Schmid proposed adopting the proposed rates for six months and then taking a fresh look at the rate structure next spring. This, he said, would give the council time to figure out ways to resolve its two conflicting goals: to comply with state law and to encourage conservation. His proposal fizzled by a 3-5 vote, with Vice Mayor Yiaway Yeh and Price supporting it.

Councilman Pat Burt pointed out that the council's decision to further revise the water rates is unlikely to satisfy the 120 or so customers who had sent in letters protesting the rate hike. The only people who would likely benefit from the next revision are the heaviest users who would have been in the third tier.