Recently, there has been a great deal written about Glendale Water & Power in the press. Much of it has been controversial — smart meters, leadership changes, a budget deficit, proposed rate increases, poor public outreach, the revenue transfer to the city's general fund. In the absence of straightforward and concise answers, folks are tempted to believe the worst.
As the city manager, I understand why folks may be concerned. Just as important, I know that my city council and community expect answers, success and stability — and they expect it now. Thus, over the last six months, I have come to the following conclusions:
One, SmartGrid technology is a valuable tool for serving our customers in the future. Such technology is expensive in this early stage, but it is hardly “bleeding edge.” Moreover, with the offset of federal grant funds, Glendale's investment will be proven more cost-effective than other utilities that hesitated in entering the digital age.
Two, a change in leadership at GWP reflects the change in the nature of utility operations. In the past, we have largely been immune to the swings of the economy. This economy, however, is unlike anything anyone has seen in the last 80 years. Cost containment and management control are now paramount. Interim General Manager Steve Zurn and his developing management team give us the best shot at being effective and competitive in this new economy.
Three, GWP has historically been flush with cash reserves. Despite regular and prudent rate increases, the city has not always wanted to issue bonds. This lack of bond funding, however, did not impede our pursuit of new infrastructure investments; and while prudent, such investments are expensive. Over the last several years, we have converted cash reserves into infrastructure and we now need to replenish GWP's coffers.
Four and Five, rates are essential to any utility and I believe most folks understand that. People generally expect rates to go up, but they demand value for their dollars. GWP needs to do a better job of explaining that value. Folks appreciate the effort, safety and security GWP provides after a windstorm or other major event. But if we expect customers to accept rate increases, then the entire GWP team must demonstrate value to our customers every day of the year.
Six, the General Fund transfer of nearly $21 million is a lawful expense of the utility, and exists for the benefit of all Glendale residents and businesses. When GWP revenues were peaking in the mid-2000s, the transfer was less an issue because it represented less as a percentage of operating revenue. When revenues fell due to the recession, cooler weather and conservation efforts, the percentage grew in proportion to shrinking revenue.
Over the years, as allowed by our charter, the city allocated funds from GWP to the General Fund for the benefit of all Glendaleans. The city has continued to move these funds in order to preserve police, fire, parks and library services. While the city could have cut these funds in draconian fashion, doing so would have created an inestimable negative impact on the community. The funds transferred are being used efficiently and effectively — our budgets are lean and our employees are not overpaid in this market. Indeed, Glendale leads the pack in employees sharing in the cost of their own employment.
Today, GWP is an organization in transition. We offer a necessary service and good value, and we have great potential for future success. But we must act quickly. That makes the work we are engaged in all the more important and the decisions — especially the difficult ones — all the more significant. We are changing the culture at GWP, and that takes time. But as always we will remain safe, smart and reliable. We are your trusted community utility.
SCOTT OCHOA is the Glendale city manager. He can be reached at (818) 548-4844.