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Glendale reviews water rates

As the City Council took the first step to hike water rates — albeit lower than proposed — some on the dais grilled their newest colleague for opposing increases altogether.

Four council members said they were in favor of ratcheting up rates by a compounded 20.1% on average over four years on Tuesday, while Councilwoman Paula Devine, who took her seat earlier this month, said raising water rates while residents have conserved water runs counter to her beliefs.

"I just feel that, at this time, it's unfair," Devine said.

By refusing to consider any rate jump at all, Devine was inferring that the financially distraught Glendale Water & Power had other options, her colleagues said, although utility officials repeatedly stated the company would collapse in four to five years without a revenue boost.

"'No' is implicit that there's another way out of this mess or we're just trying to stick it to the people," Councilman Ara Najarian said. "This is, for me, the very last resort that I'm going to."

The water side of the utility is currently $10.1 million in the red, partially due to spending tens of millions of dollars on capital improvements despite not having the money to do so and the bungled 2012 rates, said City Manager Scott Ochoa.

Water rates have been a hot-button issue in Glendale for months. The council approved multiyear increases in 2012 that were riddled with errors and charged some customers more and others less than their fair share. The city filed a lawsuit last week seeking $9.3 million from the consultant that created those rates, Willdan Financial Services of Temecula.

This time around, officials promised, the numbers had gone through extreme accuracy checks, unlike last time when Glendale depended too much on the consultant.

The proposed rates, which still must be voted on by the council next week, would impact customers differently depending on how much water they use, their customer class and the size of their meters. The 2012 water rates undercharged single-family customers, but overcharged customers with large fire lines.

According to a city report, a single-family customer using 19 hundred cubic feet of water, or 14,212 gallons, with a 3/4-inch water meter, would see their monthly $72.12 bill increase by $6.70, or 9%, the first year and by $17, or 24% to $89.12, by fiscal year 2017-18.

A commercial customer using 100 hundred cubic feet of water, or 748,000 gallons, with a 2-inch water meter, would see their monthly $382.38 bill decrease by $33.72, or 9%, the first year and increase by $11.09, or 3%, to $393.47 by fiscal year 2017-18.

Those changes would boost city revenue by 4% over four years, bringing cash reserves up to $4.4 million by 2018, which is still less than the $11.3 million required by city mandate.

"It's a lot less sticker shock for people," Councilwoman Laura Friedman said, adding that she understood the option doesn't get Glendale Water & Power to its optimum position, but she believed utility management could make it work.

Glendale utility officials had proposed revenue increases of 5% the first year, followed by three years of 4% hikes, which would drive cash reserves up to $6 million.

But residents still complained at the meeting that Burbank Water and Power charges single-family customers less than Glendale Water & Power. An average Burbank single-family customer, even after a recent rate increase, pays $67.39 a month, according to a Glendale report. Glendale officials said they didn't know how Burbank was able to keep its prices so low.

While percentage increases played a role in determining the hikes, the legality of the rate structure also took center stage during council discussion.

Utility critic Harry Zavos, speaking on behalf of the Glendale Coalition for Better Government — an advocacy group that sued the city earlier this year over utility rates and transfers — contended that the proposed rate structure conflicts with a state law that requires that utilities set water rates parallel to the cost of providing the service.

The utility can create categories, he said, but by collapsing 15 commercial classes, including small business and the city, into one group, which the rate structure does, the utility is making those that cost less to serve subsidize others who may cost more.

But Michael Colantuano, an attorney hired by the city and an expert in the state law underpinning water rate setting, known as Proposition 218, said Glendale can lump customers together into one class as long as it is reasonable and the council, as the policy making body, gets to decide what's fair.

In addition, officials had originally proposed a fee that would boost rates even more during a drought, but officials suggested holding off on that adjustable charge for six months as state officials iron out their response to low water supplies.

The council is slated to also vote on postponing the drought charge next week. If the council approves the introduced rate changes next week, the increases will take effect after 30 days.

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