Following the discovery of massive errors in multiple years of water-rate increases approved by the City Council in 2012, Glendale Water & Power officials plan to propose a new series of rates that would boost revenue over five years by 5% the first two years and 4% the following three years.
Proposed rates would make structural changes necessary to bring the rates back to what was originally intended in 2012 as well as erase a $9.9 million deficit on the water side of the utility.
Officials plan to present the revenue plan, and possibly other options, to the City Council next week as they consider setting a public hearing for July to discuss ratcheting up rates.
The proposed revenue increases came up during a Glendale Water & Power Commission this week, but information on how the proposal will specifically impact individual customers was not discussed. More details are set to be presented at the council meeting on Tuesday.
The impact that the proposed revenue plan will have on individual customers will depend on the type of customer they are, such as single-family residential versus multifamily residential, how much water they use and the size of their water meters, much like the rates set in 2012.
Those rates were supposed to increase revenue by less than 1% the first fiscal year, 2% the next and then 4% and 5% in the next two years, but they fell short. At the time, Glendale Water & Power was $21 million in the red.
The current rates undercharge customers in single-family homes, but significantly overcharge commercial customers who have fire lines in their building.
At minimum, to get the rates back on track, utility officials would have to increase revenue by 2.9%. That would also impact customers differently. For example, it would reduce the revenue from fire-line charges by 75%, but increase single-family residential by 8.5%.
"The different classes were so out of whack that they're already going to experience an increase," Glendale Water & Power manager Steve Zurn said at a utility commission meeting on Monday. "But what that means ultimately [is that] they haven't been paying what should have been paying."
Some single-family residential customers have actually had their bills reduced since the rate increases took effect in 2012, Zurn said. At the same time, customers who have fire lines, such as car dealerships and office buildings, have seen their rates skyrocket. The business community fought against the fire-line charges before they were approved. Officials said they plan to refund the overcharged customers.
A business that has an 8-inch fire line currently pays about $633 monthly. That would drop to about $114 with the new rates, increasing over time to nearly $135 in fiscal year 2018-2019, according to a city report.
Proposed rates also include an adjustable drought charge, which would allow the utility to still bring in revenue even as customers participate in mandatory conservation.
Glendale Water & Power Commission President Hugh Yao said he didn't think the adjustable drought charge would be welcomed by customers.
"We're pretty much telling people, the more you conserve, you're still going to pay and that doesn't really jive with the public," he said.
But Zurn said the drought charge was necessary to protect the utility's financial health, which took a beating during past conservation efforts.
"We just don't ever want to find ourselves in the situation we're in today," he said.
The proposed rates may also reduce the discount for using recycled water from 25% to 15%.
Before the council votes on the proposed rate changes, which officials aim to implement by September, Glendale Water & Power plans to host several public meetings at various locations throughout the city. The utility has yet to publicize the meeting schedule.
Glendale paid a Berkeley-based consultant, Bartle Wells, $130,000 to draft the new rate proposal. The city paid Willdan Financial Services of Temecula $107,000 to prepare the 2012 water rates. City officials are looking into legally forcing Willdan Financial Services to pay for the new consultant fees.