1 MINUTES
CITY COUNCIL - SPECIAL MEETING (WORKSHOP)
CITY OF BANNING, CALIFORNIA
The following information comprises the minutes for the special meeting of the Banning City Council, a joint meeting of the City Council and Banning Utility Authority, and the Banning City Council sitting in its capacity as the Banning Successor Agency Board.
September 9, 2025 Council Chambers
4:00 p.m. 99 E. Ramsey Street
In Chambers Banning, CA 92220
COUNCIL MEMBERS PRESENT: Council Member Cynthia Barrington Mayor Sheri Flynn
Council Member Leroy Miller
Mayor Pro Tem Richard Royce
Council Member Colleen Wallace
COUNCIL MEMBERS ABSENT: None
OTHERS PRESENT: John O. Pinkney, City Attorney
Arturo Vela, Acting City Manager
Vickie Sellers, City Clerk
Sandra Calderon, Acting Administrative City Clerk
1. CALL TO ORDER – 4:13 p.m.
COUNCIL MEMBER PRESENT ABSENT
Barrington, Cynthia X
Flynn, Sheri X Miller, Leroy X
Royce, Richard X
Wallace, Colleen X
2. PUBLIC COMMENTS - Agenda Items Only
Frank Connelly expressed support for the recommended option, noting it benefits the City, residents, and the utility.
3. WORKSHOP
3.1 Presentation on the Banning Electric Utility Cost of Service Analysis and Rate Design Study prepared by NewGen Strategies and Solutions, LLC
Recommendation: Discuss the Banning Electric Utility - Cost of Service Analysis and Rate Design Study and provide feedback to staff's recommended electric rate increases and next steps.
2 Art Vela, Acting City Manager provided background on the Electric Utility’s financial challenges, including declining cash balances and capital expenses, noting a negative $9 million balance as of June 30, 2023. Council previously approved two 13.9% rate increases (effective November 2024 and November 2025). He summarized meetings with the Budget and Finance Committee on May 20 and July 15, 2025, regarding rate scenarios. The Committee recommended proceeding with a rate design process to achieve a positive cash balance by fiscal year 2028.
Consultant with NewGen Strategies was invited to present further details.
NewGen provided the presentation.
4. ADJOURNMENT
A motion to adjourn the meeting was made by Councilmember Wallace, seconded by Councilmember Miller.
Motion carried unanimously 5-0, and the meeting was adjourned at 4:42 p.m.
Minutes prepared by:
Sandra B. Calderon
Acting Administrative City Clerk
These minutes have been prepared as Summary Minutes in accordance with City Council Resolution 2025-22 and Government Code Sections 36814, 40801, and 54953(c)(2).
The entire discussion of this meeting may be viewed here:
https://banningca.granicus.com/player/clip/231?view_id=1&redirect=true Attachment:
Exhibit A – Agenda Item 3.1: Presentation
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
BANNING ELECTRIC UTILITY
COST OF SERVICE/RATE STUDY WORKSHOP
September 9, 2025
Exhibit A
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC 2
AGENDA
2 1 Rate Study Process
2 Rate Study Assumptions
3 Recommended Rate Changes
4 Bill Comparisons and Bill Impacts
5 Conclusions and Next Steps
RATE STUDY PROCESS
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC 4
RATE STUDY
PROCESS
OVERVIEW
4 STEP 1
STEP 2
STEP 4
STEP 3
STEP 5
Determine the revenue
requirements of the utility
Unbundle costs by functions and services
(power supply, transmission and
distribution, customer)
Classify costs (demand, energy, customer
costs, etc.)
Allocate costs among customer classes
Design rates
Test Year Revenue Requirement
Cost Allocation
Rate Design
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC 5
COST OF
SERVICE
MODEL
DESIGN
5 © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
RATE STUDY PROCESS:
COST OF SERVICE TO RATE DESIGN
6 Cost of Service Ratemaking Rates
• Revenue Requirement:
− Functionalize
− Classify
− Allocate
Guide for cost-based rates,
subject to Proposition 26 by
class.
• Policy decisions
• Incentivize behavior
• Rates do not always match
COS, subject to Proposition
26 • Industry practice is to move
toward or align with COS
• Collect sufficient revenue
• Support community goals
• Price signal to customers:
− Convey information
− Change behavior
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
RATE PLAN RECOMMENDATIONS
• Difference between “rate revenue”
changes and “rate element” changes:
̶ Rate revenue is set by COS for class.
̶ Rate elements are set by policy
considerations.
• Move toward COS over time:
̶ Gradualism is an effective strategy.
• Proposed changes to base rates:
̶ Power charge adjustment factor (PCAF)
changes quarterly based on the market price
for power and transmission.
7 RATE STUDY ASSUMPTIONS
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
TEST YEAR REVENUE REQUIREMENT AND ASSUMPTIONS
• Test Year Period:
̶ 2026–2030 (5 years).
• Study Assumptions:
̶ Annual load growth (kilowatt-hour [kWh]) of 2.4% applied to all classes. ̶ Average capital plan is $5.7 million per year.
̶ Propose creating Working Capital Reserve.
̶ Anticipated change to Wholesale Distribution Access Tariff (WDAT) agreement not included:
• Could increase utility costs (TBD).
̶ Rate revenues will be reviewed annually and adjusted as necessary. 9 © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
NOVEMBER 1 RATE INCREASES:
IMPACT TO FISCAL YEAR REVENUES
10 • All rate increases were implemented on November 1. • Revenue increase targets on a fiscal year (FY) basis. • Each FY will have two sets of rates:
̶ July 1 through October 31 (prior FY year rates).
̶ November 1 through June 30 (current FY year rates).
Fiscal Year Revenue
Prior Fiscal Year
Rate Increase
Current Fiscal Year
Rate Increase
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
MONTHLY ELECTRIC USAGE NOT CONSTANT
THROUGHOUT FISCAL YEAR
• First 4 months of FY have 42% of
system sales.
̶ Billed on prior year’s rate increases.
• Next 8 months of FY have 58% of
system sales.
̶ Billed on current year’s increased rates.
11 © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
REVENUE REQUIREMENT BY COMPONENT
12 Items
FY 2026
($000)
Test Year ($000)
Average
2026–2030
Operating Expenses
Purchased Power $23,214 $25,773
Supplies and Services $1,399 $1,464
Labor Expenses $7,346 $7,689
Interfund Services $5,480 $5,736
Other Expenses (Revenues) $194 $203
Debt Service $2,390 $2,375
Other
Other Income ($5,784) ($5,804)
Contributions to Funds $1,677 $9,047
Capital from Cash $0 $0
Total Revenue Requirement* $35,916 $46,483
*Total may not be equal to sum of the parts due to rounding.
Revenue Requirement Drivers:
• Cash needed to meet positive funds in 2028
• $9 million for test year (average)
• Other cash needs/annual adjustments:
− Power Supply Expense: 5.2%
− Supplies and Services: 2.2%
− Labor Expenses: 2.2%
− Interfund Services/Other: 2.2%
− Debt Service:
• No new debt, no debt refinancing
− Other Income: 2.2%:
• Non-rate revenue (CAISO market revenues):
held flat
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
TARGET KEY PERFORMANCE INDICATORS
13 Target FY System Revenue Increases: 20.0% 20.0% 3.0% 3.0% 3.0% Key Performance Indicators FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Meet Debt Service Coverage Target? (1.20x) YES YES YES YES YES Meet Days Cash on Hand Target? (90 Days) NO NO YES YES YES Electric Utility Fund (Collective) Year End Balance ($8,995,426) ($1,194,150) $8,892,005 $21,434,769 $33,754,983 Total Fund Contributions from Rate Revenues $1,677,000 $7,702,000 $10,952,000 $12,452,000 $12,452,000 Summary:
• Utility needs large cash infusion from rates in FY 2026/2027. • Projected to meet financial metrics in FY 2028.
• Utility to review annually and adjust rates accordingly.
RECOMMENDED RATE CHANGES
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RESIDENTIAL CLASS:
EXISTING AND PROPOSED RATES
15 Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 Basic Service Charge $/month $34.00 $43.00 $43.00 $43.00 $43.00 $43.00 Energy Charge $/kWh $0.16190 $0.18780 $0.23660 $0.24130 $0.24610 $0.24610 PCAF $/kWh To Be Calculated Quarterly
All proposed rates implemented on November 1 of the FY.
Rate Design Summary:
• Increase fixed cost recovery from Basic Service Charge in FY 2026. • Increase Energy Charge in FYs 2026, 2027, and 2028.
• No increase to rates in FY 2029; anticipated growth in FY 2030. • Competitive with neighboring utilities throughout rate plan. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
SMALL COMMERCIAL CLASS:
EXISTING AND PROPOSED RATES
16 Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 Basic Service Charge $/month $67.00 $80.00 $80.00 $80.00 $80.00 $80.00 Energy Charge $/kWh $0.13690 $0.16360 $0.20780 $0.24730 $0.25720 $0.25720 Multi-Phase Service Charge $/month $4.52 $4.52 $4.52 $4.52 $4.52 $4.52 PCAF $/kWh To Be Calculated Quarterly
Rate Design Summary:
• Class for multi-phase customers up to 50 kilowatts (kW) of monthly demand. • Increase fixed cost recovery from Basic Service Charge in FY 2026. • Increase Energy Charge in FYs 2026, 2027, and 2028.
• No change to Multi-Phase Service Charge.
• No increase to rates in FY 2029; anticipated growth in FY 2030. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
GENERAL SERVICE CLASS:
EXISTING AND PROPOSED RATES
17 Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 Basic Service Charge $/month $67.00 $80.00 $80.00 $80.00 $80.00 $80.00 Energy Charge $/kWh $0.13690 $0.16360 $0.20780 $0.24730 $0.25720 $0.25720 PCAF $/kWh To Be Calculated Quarterly
Rate Design Summary:
• Class for single-phase customers with less than 12,500 kWh per month. • Increase fixed cost recovery from Basic Service Charge in FY 2026 in line with Small Commercial Basic Service Charge.
• Increase Energy Charge in FYs 2026, 2027, and 2028.
• No increase to rates in FY 2029; anticipated growth in FY 2030. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
MEDIUM COMMERCIAL CLASS:
EXISTING PROPOSED RATES
18 Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 Basic Service Charge $/month $228.00 $290.00 $290.00 $290.00 $290.00 $290.00 Energy Charge $/kWh $0.12590 $0.15740 0.19680 $0.19880 $0.20480 $0.20480 Demand Charge $/kW $19.42 $20.00 $21.00 $22.00 $23.00 $23.00 PCAF $/kWh To Be Calculated Quarterly
Rate Design Summary:
• Class for multi-phase customers with monthly demand between 50-500 kW. • Increase fixed cost recovery from Basic Service Charge in FY 2026. • Increase Energy and Demand Charges in FYs 2026, 2027, and 2028. • No increase to rates in FY 2029; anticipated growth in FY 2030. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
INDUSTRIAL SERVICE CLASS:
EXISTING AND PROPOSED RATES
19 Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 Basic Service Charge $/month $456.00 $525.00 $525.00 $525.00 $525.00 $525.00 Energy Charge $/kWh $0.11500 $0.13800 $0.16150 $0.18090 $0.18450 $0.18450 Demand Charge $/kW $16.52 $20.00 $23.50 $26.00 $26.50 $26.50 PCAF $/kWh To Be Calculated Quarterly
Rate Design Summary:
• Class for multi-phase customers with monthly demand greater than 500 kW. • Increase fixed cost recovery from Basic Service Charge in FY 2026. • Increase Energy and Demand Charges in FYs 2026, 2027, and 2028. • No increase to rates in FY 2029; anticipated growth in FY 2030. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
WELL SERVICE CLASS:
EXISTING AND PROPOSED RATES
20 Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 Basic Service Charge $/month $342.00 $400.00 $400.00 $400.00 $400.00 $400.00 Energy Charge $/kWh $0.11980 $0.14380 $0.16970 $0.19520 $0.21470 $0.23620 Demand Charge $/kW $15.38 $18.50 $21.50 $24.50 $27.00 $29.50 PCAF $/kWh To Be Calculated Quarterly
Rate Design Summary:
• Increase fixed cost recovery from Basic Service Charge in FY 2026. • Increase Energy and Demand Charges in all years.
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
STREET LIGHTING CLASS:
EXISTING AND PROPOSED RATES
21 Street Lighting Class
Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 All Lamps $/Lamp/Month $9.62 $12.51 $13.82 $16.86 $18.38 $21.13 © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
SECURITY LIGHTING CLASS:
EXISTING AND PROPOSED RATES
22 Security Lighting Class
Rate Effective Date
Rate Component Billing Unit Existing 11/1/2025 11/1/2026 11/1/2027 11/1/2028 11/1/2029 100 Watt Equivalent LED $/Lamp/Month $11.07 $14.39 $15.90 $19.40 $21.15 $24.32 250 Watt Equivalent LED $/Lamp/Month $27.68 $35.98 $39.76 $48.51 $52.88 $60.81 100 Watt Sodium Vapor $/Lamp/Month $22.13 $28.77 $31.79 $38.78 $42.27 $48.62 150 Watt Sodium Vapor $/Lamp/Month $33.20 $43.16 $47.69 $58.18 $63.42 $72.93 175 Watt Sodium Vapor $/Lamp/Month $38.73 $50.35 $55.64 $67.88 $73.98 $85.08 200 Watt Sodium Vapor $/Lamp/Month $44.27 $57.55 $63.59 $77.58 $84.57 $97.25 250 Watt Sodium Vapor $/Lamp/Month $55.33 $71.93 $79.48 $96.97 $105.69 $121.55 400 Watt Mercury Vapor $/Lamp/Month $88.53 $115.09 $127.17 $155.15 $169.12 $194.48 20’ or 35’ Wood Pole $/Pole/Month $4.57 $5.94 $6.56 $8.01 $8.73 $10.04
BILL COMPARISONS AND BILL IMPACTS
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
RESIDENTIAL MONTHLY BILL COMPARISONS:
EXISTING AND FUTURE (FY 2025, FY 2026, FY 2027)
Note: All other utility rates are current rates and do not include any future rate increase.
Based on 650 kWh/month of usage in summer months.
24 $126.02
$140.19 $145.82
$160.67 $172.39
$205.01
$211.74
$248.99 $261.87 $267.50
$202.43
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
Riverside Azusa 2025 Banning Colton 2026 Banning 2027 Banning Moreno Valley SCE Glendale PG&E Monthly Bill ($)
Utility
Average Monthly Residential Bill
Average Monthly Bill Average
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
RESIDENTIAL USERS BILL IMPACTS
Average Bill Impacts
for Residential Customers
Fiscal Year
Average Monthly
Bill ($)
Average Monthly
Bill Increase ($)
Average Monthly
Bill Increase (%)
2025 (Current) $139.32 N/A N/A
2026 $162.67 $23.35 17%
2027 $192.06 $29.39 18%
2028 $210.59 $18.53 10%
2029 $213.92 $3.33 2%
2030 $215.57 $1.66 1%
• Average monthly kWh usage of customers: 700 kWh
• Number of customers: 12,000
25 Note: PCAF held constant in bill impact analysis. Public Benefits Charge not included. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
SMALL COMMERCIAL SERVICE USERS BILL IMPACTS
• Average monthly kWh usage of customers: 11,000 kWh
• Number of customers: 45
• Rate Designation: multi-phase service for small service applications 26 Average Bill Impacts
for Small Commercial Customers
Fiscal Year
Average Monthly
Bill ($)
Average Monthly
Bill Increase ($)
Average Monthly
Bill Increase (%)
2025 (Current) $1,543 N/A N/A
2026 $1,812 $269.23 17%
2027 $2,239 $426.64 24%
2028 $2,707 $467.85 21%
2029 $2,951 $243.80 9%
2030 $2,995 $44.08 1%
Note: PCAF held constant in bill impact analysis. Public Benefits Charge not included. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
MEDIUM COMMERCIAL SERVICE USERS BILL IMPACTS
• Average monthly kWh usage of customers: 28,500 kWh
• Number of customers: 70
• Rate Designation: multi-phase service for a variety of service applications with monthly demands between 50 and 500 kW
27 Average Bill Impacts
for Medium Commercial Customers
Fiscal Year
Average Monthly
Bill ($)
Average Monthly
Bill Increase ($)
Average Monthly
Bill Increase (%)
2025 (Current) $5,196 N/A N/A
2026 $6,058 $862 17%
2027 $7,171 $1,113 18%
2028 $7,759 $588 8%
2029 $7,968 $209 3%
2030 $8,075 $107 1%
Note: PCAF held constant in bill impact analysis. Public Benefits Charge not included. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
INDUSTRIAL SERVICE USERS BILL IMPACTS
• Average monthly kWh usage of customers in table: 120,000 kWh • Number of customers: 5
• Rate Designation: multi-phase service for large commercial, manufacturing, cultivation, and industrial applications
28 Average Bill Impacts
for Industrial Service Commercial Customers
Fiscal Year
Average Monthly
Bill ($)
Average Monthly
Bill Increase ($)
Average Monthly
Bill Increase (%)
2025 (Current) $22,329 N/A N/A
2026 $26,402 $4,073 18%
2027 $31,143 $4,742 18%
2028 $35,208 $4,065 13%
2029 $36,982 $1,774 5%
2030 $37,234 $251 1%
Note: PCAF held constant in bill impact analysis. Public Benefits Charge not included. © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
GENERAL SERVICE USERS BILL IMPACTS
• Average monthly kWh usage of customers in table: 2,500 kWh • Number of customers: 300
• Rate Designation: single-phase service for small business, cottage industries, and low-use utility services 29 Average Bill Impacts
for General Service Commercial Customers
Fiscal Year
Average Monthly
Bill ($)
Average Monthly
Bill Increase ($)
Average Monthly
Bill Increase (%)
2025 (Current) $400 N/A N/A
2026 $469 $69 17%
2027 $568 $99 21%
2028 $676 $108 19%
2029 $735 $60 9%
2030 $747 $11 2%
Note: PCAF held constant in bill impact analysis. Public Benefits Charge not included.
CONCLUSIONS & NEXT STEPS
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
NEXT STEPS FOR THE PROJECT
• Council vote on proposed rates – September 2025.
• Community outreach materials sent out – September 2025. • Review rate revenues annually and adjust rates accordingly. 31 NEWGEN STRATEGIES AND SOLUTIONS, LLC
225 UNION BLVD., SUITE 450
LAKEWOOD, CO 80228
QUESTIONS?
JACK BUCKLEY, SENIOR CONSULTANT
[email protected] | (303) 557-7700
APPENDIX SLIDES
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
CLASS REVENUE CHANGES FOR COST-BASED RATES
34 Residential
Small
Commercial
Medium
Commercial
General
Service
Industrial
Service
Well
Service
Combined
Lighting
Master
Metering Total
Test Year Revenue at
Current Rates ($000)
$19,767 $1,247 $4,371 $1,751 $6,707 $800 $258 $425 $35,326 Cost of Service ($000) $24,387 $2,253 $4,840 $2,736 $9,076 $1,484 $644 $1,062 $46,483 Revenue Increase Needed to
Meet Cost of Service
23% 81% 11% 56% 35% 86% 149% 150% 32%