The Glendale Water & Power Commission unanimously recommended to the City Council this week a proposed water-rate plan that would boost revenue, on average, by a compounded 21.8% over four years.
The lower-level commission’s endorsement of the increases, which are meant to fix bungled water rates, came after General Manager Steve Zurn outlined steps the city has taken to ensure Glendale doesn’t get egg on its face once more.
In 2011, the council approved multiple years of water-rate increases that in the end overcharged some customers and undercharged others, prompting the utility to collect $8.8 million less than expected and to dig deeper into a budget hole.
“Given everything that I’ve seen… I think this is reasonable and I would feel comfortable recommending this,” said Terry Chan, president of the Glendale Water & Power Commission.
The proposal was recommended on a 3-0 vote. Commissioners Hugh Yao and Armen Adjemian were absent.
Zurn said during the meeting that a team of internal experts, from the legal, audit and utility departments, as well as hired outside legal counsel, reviewed the water rates proposed by Berkeley-based consultant Bartle Wells. The slipshod rates from the previous consultant, Willdan Financial Services of Temecula, did not go through such stringent vetting because the utility didn’t have experts to review the numbers, Zurn said at a previous public meeting.
“We weren’t afraid to let anybody and everybody take a look at this,” Zurn said. “We certainly don’t want to make the same mistake.”
While Zurn convinced the commission, his vows to get it right this time around didn’t ease concerns of residents at a public meeting about the rates held last week. At the time, residents said they had lost trust in the utility.
Zurn said after the previous rates took effect, customer service was getting hundreds of calls from customers, mostly those with fire lines. Those customers were significantly overcharged and the utility plans to refund them in the future.
Chan said while she supports the rate plan, she advised utility officials to keep a closer eye on rate revenues on a monthly basis, describing it as “ridiculous” that it took two years for the utility to respond to the previous failed rates.
The proposed rates will impact customers differently, depending on how much water they use, their type — such as single-family residential, multifamily residential and commercial — and the size of their meter. The plan breaks down to an average revenue increase of 5% the first year followed by three years of 4% jumps.
That would, on average and compounded over four years, lead to increases of 29.6% for single-family residential, 35.1% for multifamily residential and 23.7% for commercial, according to a city report. It would prompt a 65% decrease for customers with fire lines, who were overcharged the most by the old rates.
For example, under the proposed plan, monthly water bills for average single-family residences, five-unit multifamily complexes and commercial customers would increase by $17.98, $46.04 and $16.67, respectively, by fiscal year 2017-18.
The plan would also generate $9.7 million for capital improvements and boost the water side of the utility’s cash reserve to $4.7 million. It was $10.2 million in the hole in June. The council-required reserve is about $11 million.
The council is scheduled to vote on the plan on July 22. If approved, it would take effect on Sept. 1.