The City Council this week approved a series of electric rate increases proposed by Glendale Water and Power to assist in funding the Grayson Repower Project, Scholl Canyon Biogas Renewable Generation Project and city solar projects, as well as to cover the general increases in energy costs.
These rate adjustments will take place Dec. 1 and July 1, 2024, and July 1, 2025, averaging 14.8%, 11.3% and 11.3% respectively, although the exact rates will vary based on customer classification, with residential properties and small businesses taking the biggest hits.
Over the next few months, energy consultant NewGen Strategies and Solutions will complete a cost-of-service analysis to determine the exact increases for each classification, or consumer tier.
Tony Georgis, a managing partner at NewGen, explained why small businesses and residential properties will have greater increases in electric rates than large businesses and industrial classes.
“While large businesses do use a lot more electricity than a single-family residence or multifamily dwelling [and small businesses], they use it in a more stable manner which has less of a variable impact on the system,” Georgis said during the Tuesday night meeting. “That’s why you see that sort of teeter-totter.”
Georgis gave an example of what this may look like, saying residents may experience rate increases of 20%, while large commercial businesses may see 10%. He emphasized that these numbers were simply illustrative as the cost-of-services analysis has not been completed yet.
Throughout October, GWP will hold community meetings with residents to explain the rate increases and the reasoning behind them.
In addition to the increase in costs of renewable energy and wholesale purchased power and fuel, the delays in city energy projects are a significant contributing factor to these rate increases, said GWP General Manager Mark Young.
He explained that the Scholl Canyon project was originally going to be paid for entirely in cash and be completed in either 2018 or 2019. However, it now must be paid for in bonds and with “skyrocketing” interest rates, and the project will now cost double what staff first anticipated. Without the projected energy Scholl would have created if the project had been finished in its original timeframe, the city must compensate for this deficit.
“When you add the loss of the energy that we had to purchase in order for us to be whole, that was tremendous,” Young said.
The Scholl Biogas project was delayed in September 2022 to address concerns from residents and the Glendale Environmental Coalition. The city staff was tasked with assuring the City Council that the project would not put the Glenoaks Canyon neighborhood at a higher risk for wildfires and committing to not developing the biogas into a natural gas plant in the future but prioritize a shift toward solar panel implementation.
Following the presentation from GWP and NewGen, Councilwoman Paula Devine said she was “devastated and shocked by this report,” however, she, along with Mayor Dan Brotman and Councilman Ara Najarian all voted to approve the increases. Councilwoman Elen Asatryan voted against it and Councilman Ardy Kassakhian was not present.
“I’m not going to support this,” Asatryan said. “I voted against Grayson and I voted against Scholl not only because it was environmentally unfriendly, but I thought it was fiscally irresponsible.”
Najarian called the increases “terrible news” and predicted that “our residents are going to go bananas.”
In 2021, it was predicted that the annual revenue requirement for power supply in 2023 would be $122.3 million. That number has gone up to $186.1 million based on the city’s required levels of cash reserve and debt service coverage, Georgis explained.
Georgis also said that the decrease in electric utility being sold — a statewide trend — is also driving rates up.
“Any reduction in overall sales essentially equates to a necessary rate increase or puts upward pressure on the rates,” Georgis said. “Many of the costs for an electric utility are fixed so they don’t really decline with less usage or less consumption, so you still have to cover those costs.”
One contributing factor to this decrease in sales is California’s commitment to implementing rooftop solar panels, Young added.
Brotman questioned why the increase in electric car use was not helping increase the electrical load. Young said the resulting increase from electric cars has not taken effect yet and will not be visible for a few years.
First published in the September 30 print issue of the Glendale News-Press.