On June 15, 2026, the Palo Alto City Council approved an 8% overall utility rate increase for the fiscal year starting July 1, 2026: wastewater 16%, gas 9%, water 8%, electric 4.5% and refuse 3%. The City estimated the change at about $35 per month for the median household, including $7.30 for gas and $4.00 for electricity.
What changed
The City of Palo Alto’s June 2026 bill insert listed the proposed changes, and the Palo Alto Daily Post reported that City Council approved them on June 15, 2026.
| Utility | Increase | Median monthly change |
|---|---|---|
| Wastewater | 16% | $10.70 |
| Gas | 9% | $7.30 |
| Water | 8% | $10.00 |
| Electric | 4.5% | $4.00 |
| Stormwater | 3% | $0.50 |
| Refuse | 3% | $1.50 |
| Total | 8% | $35.20 |
The City’s gas estimate holds commodity prices constant; actual gas commodity rates change monthly.
The longer trend
In April 2026, the Daily Post reported City projections that the average utility bill could rise from $441.50 to about $615.70 per month by 2031. The same report noted that the City transfers 18% of gas revenue to the general fund, and that utilities staff are studying a transition away from gas while still maintaining the gas system.
What it means for heating and cooling
- Gas heat costs more each year. With gas rising faster than electricity, furnaces and gas water heaters get more expensive to run relative to heat pumps.
- Palo Alto’s electricity is carbon neutral, so a heat pump cuts both cost exposure and emissions.
- Rebates offset the upfront cost. CPAU’s Heat Pump HVAC rebate is $2,500, or $5,000 for income-eligible households, when a heat pump replaces gas heat.
Run the numbers for your home with our heat pump cost guide, or see heat pump installation.
Sources
- City of Palo Alto Utilities: June 2026 rates bill insert (PDF)
- Palo Alto Daily Post: Palo Alto Council approves 8% utility rate increase (June 15, 2026)
- Palo Alto Daily Post: Palo Alto planning to raise utility rates $174/month over five years (April 9, 2026)
Published by the ComfortFlow HVAC Palo Alto team. Event date: .