Five years worth of proposed electricity rate increases announced by city officials at a community meeting on Wednesday are far more drastic than those considered last year.
Glendale Water & Power officials say they need to boost rates by an average of 24% over the next five years, rather than the 2012 proposal to hike rates over four years by 14.7%, partially because the City Council postponed voting on the issue due to the then-pending municipal election.
"The problem is the hole just got deeper," Mike Bell, the utility's financial consultant said at the meeting at Dunsmore Community Room.
Under the current proposal, customers could see average system-wide increases of 8%, 7%, 5%, 2% and 2%, respectively, over the next five years, which means a single-family homeowner who pays $103.15 could see roughly $30 more added to the bill by July 2017.
If the rate change isn't approved by the City Council come August, the electric side of the utility is expected to burn through its reserves and be $28 million in the red within five years, according to the presentation made to about 25 people — 11 of them city officials.
The rate hike is needed to pay for $94 million in capital improvements planned over a five-year period that includes work on the Grayson Power Plant. The utility must also cover the increasing costs of state mandates to use expensive energy generated by solar, wind and other renewable sources, officials said.
Absent from the presentation, though, was a roughly $21-million annual transfer from the electric side of the utility to the city's General Fund, which pays for police, parks and other general public services. City critics, who consider the transfer a backdoor tax, were frustrated that the transfer — which saps about 12% of sales revenues from the electric utility — wasn't included in the presentation.
While officials have pledged to slightly decrease the transfer over time, they consider it a cost of doing business, so they did not include it in the presentation, unlike during rate hike discussions last year. During the April elections, a city measure to simplify how the transfer is made failed at the ballot box.
Several residents at the meeting said they were upset that officials are proposing such large rate hikes and placing a bigger burden on residential customers.
When broken up by customer class, rather than as a system average, the first rate jump would be 8.8% for residents, but 7.9% and 7% for commercial and small commercial customers. The rates were designed differently because it costs the utility more to provide for residential customers and the city must remain competitive to attract business, officials said.
"I think it's kind of unfair that they're charging residents more," said Zograb Akelyan.
Another resident, Elliott Graham, agreed, adding that he believed the rate hikes should be more gradual.
But officials said they need to accelerate revenues during the next few years because there hasn't been a rate change since 2007. Electricity rates increased an average of 11.7% in 2006 and 5.1% in 2007.
In addition to the rate increases, officials will be asking the council to approve a $60-million bond to pay for capital improvements over the next three years. The bond costs are incorporated into the rates.
Last year, the council approved $35 million in water bonds and $24 million in electric revenue bonds.
There are five more community meetings scheduled from 7 p.m. to 8:30 p.m. on the following dates:
June 12: , Police Community Room, 131 N. Isabel St.
June 13 , Boy Scouts of America, 1325 Grandview Ave.
June 26 , Glendale Youth Center, 211 W. Chestnut St., Suite 302
June 27 , Pacific Edison Community Center, 501 S. Pacific Ave.