Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 residential BEU customer. The current bill includes an estimated PCAF charge of $0.0075/kWh for all years, while the actual PCAF will change according to BEU’s policy. The total current bill for this residential customer was estimated based on an assumption of 511 kWh of energy per month, which equates to approximately $118.00. As indicated herein, the rates for electric services are proposed to increase on November 1, 2025, resulting in a monthly total bill increase of approximately $15.00. The proposed changes for residential electric services in November 2026 would increase that portion of the bill by approximately $26.00 per month (based on the estimated usage). As noted herein, the subsequent rate changes are relatively modest, however, the impact of the November 1 rate change is evident in the percentage increases shown for the estimated residential customer monthly bill impact in Table 5.
Table 5
Estimated Residential Customer Monthly Bill Impact
Bill Component Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Energy Use (kWh) (1) $117.66 $132.56 $159.08 $177.91 $183.24 $188.73 Difference ($) N/A $14.89 $26.53 $18.82 $5.34 $5.49
Difference (%) N/A 13% 20% 12% 3% 3%
(1) Assuming 511 kWh monthly energy consumption, based on average BEU residential customer.
Recommendations
Based on the analysis developed in coordination with the City and BEU for this Study, NewGen recommends the following:
The City and BEU should adopt the recommended rate changes proposed herein to address the immediate cash reserve needs of the utility.
The City and BEU should monitor the performance of its new rates on an annual basis to ensure that revenues are sufficient to meet its cash reserve needs and related policy objectives. The City and BEU should establish a Working Capital Reserve fund that is equal to 1/8th of its estimated annual O&M expenses (excluding fuel costs) by 2030.
The City and BEU should establish a policy for a minimum 90 DCOH. This DCOH policy should be calculated using the total fund balance of the Electric Operations and Rate Stability Funds, as discussed herein.
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 113320
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 We greatly appreciate the assistance of the City and BEU staff throughout the development of this Study.
If you have any questions regarding our methodology, analysis, and recommended rates, please contact me directly at (720) 259-1762 or [email protected].
Sincerely,
NewGen Strategies and Solutions, LLC
Scott Burnham
Partner
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 113421
SEPTEMBER 2
6, 2025
www.newgenstrategies.net
ELECTRIC RATE
TRENDS STUDY
FINAL REPORT
Prepared for:
Banning Electric Utility
99 E Ramsey St.
Banning, CA 92220
© 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
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Economics | Strategy | Stakeholders | Sustainability BEU Rate Trends Study_Final Report Table of Contents
Section 1 Introduction....................................................................................................1-1 Cost of Service Study .....................................................................................................1-1 Rate Trends Study..........................................................................................................1-1 Section 2 General Rate Making Principles.......................................................................2-1 Alignment with Policies and Strategic Objectives.........................................................2-2 Appropriate Rate Levels................................................................................................2-2 Energy Efficiency and Conservation ..............................................................................2-2 Customer-Sited Distributed Energy Resources .............................................................2-2 Electric Utility Business Challenges...............................................................................2-3 Electric Vehicles.............................................................................................................2-4 Embedded, Marginal, and Market-Based Pricing..........................................................2-4 Energy Storage...............................................................................................................2-4 Equity and Fairness........................................................................................................2-5 Fixed and Variable Costs................................................................................................2-5 Functional Unbundling ..................................................................................................2-5 Low-Income Rate Programs ..........................................................................................2-5 Rate Design Objectives..................................................................................................2-6 Time-of-Use Power Costs..............................................................................................2-6 Section 3 Electric Rate Alternatives.................................................................................3-1 BEU’s Current Rate Structure ........................................................................................3-1 Recent Developments ...................................................................................................3-2 Power Cost Adjustments...............................................................................................3-3 Electric Impact Fee ........................................................................................................3-3 Power Factor Charges....................................................................................................3-3 Mobile Home Park Master Metering ............................................................................3-4 Commercial Demand Charges.......................................................................................3-4 Electric Vehicle Time-of-Use Rates and Charging Stations............................................3-5 kVA Reactive Billing .......................................................................................................3-6 Community Solar...........................................................................................................3-6 Real-Time and Critical Peak Pricing ...............................................................................3-6 Time-of-Use Pricing for All Residential and Commercial Customers ............................3-7 Advanced Metering Infrastructure................................................................................3-8 Summary Rate Matrices................................................................................................3-8 Section 4 General Recommendations .............................................................................4-1 Summary Rate Matrix....................................................................................................4-1 Section 5 General Implementation Considerations..........................................................5-1 Customer Acceptance....................................................................................................5-1 Customer Usage Patterns..............................................................................................5-1 Technology Considerations ...........................................................................................5-1 1137
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Barriers..........................................................................................................................5-1 Risks...............................................................................................................................5-2 Costs and Benefits.........................................................................................................5-2 Next Steps and Moving Forward ...................................................................................5-2 List of Appendices
A-1 Types of Rates Offered by California Utilities
A-2 Rate Structure Rankings
A-3 Voltage Cutoffs for General Service Classes
List of Tables
Table 3-1 City of Banning – Current and Future Electric Rates................................................3-2 Table 3-2 Commercial Demand Rate Thresholds.....................................................................3-5 List of Figures
Figure 3-1 Summer TOU Periods..............................................................................................3-7 Figure 3-2 Winter TOU Periods................................................................................................3-8 Figure 3-3 Banning Electric Utility Rate Trends Study Rate Structure Rankings......................3-9 © 2025 NEWGEN STRATEGIES AND SOLUTIONS, LLC
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Economics | Strategy | Stakeholders | Sustainability BEU Rate Trends Study_Final Report Section 1
INTRODUCTION
Banning Electric Utility (BEU) generates, transmits, and distributes electricity throughout its 22 square mile service territory within the City of Banning (City). BEU is the sole provider of electric service within its territory and, with only a few exceptions, serves virtually no customers outside of its boundaries.
BEU currently serves approximately 13,500 electric customers with approximately 150,000 megawatthours (MWh) annually.
Cost of Service Study
This report is part of an Electric Cost of Service (COS) Study (COS Study) prepared by NewGen Strategies and Solutions, LLC (NewGen). BEU faces difficult challenges with the ever-changing electric industry, such as changes to national and regional energy policies, as well as changes in operating costs and customer behavior. It is important for BEU to recognize these challenges while continuing its work in evolving its electric rates and rate structures to ensure customer equity, to remain competitive among other electric utilities, and to ensure the long-term financial stability of the utility.
BEU’s goal is to develop and adopt a series of electric rate designs that are based on COS principles. The goals of this COS analysis are to:
1. Improve the Electric Fund Balance to positive by the end of fiscal year (FY) 2028.
2. Perform a comprehensive review of BEU’s power system costs, allocations, and categories.
3. Assess customer characteristics and classifications.
4. Design and evaluate the impact of various rate structures and their impacts on customers.
5. Develop and produce a flexible non-proprietary working model that will be conveyed to the City and the public.
The COS Study is intended to recognize and implement solutions to challenges arising from regulatory mandates, customer choice, and customer behavior. As customers have more options for their electricity usage, BEU must be able to quickly respond to its customers’ needs and changing behaviors.
Rate Trends Study
The purpose of the Electric Rate Trend Study (Study) within the COS Study was to evaluate and analyze different rate structures in the electric utility industry and how they could influence, impact, or apply to BEU currently and in the future. The different rate structures and industry concepts researched for this Study included emerging technologies and their future implications, electricity pricing, customer classification, and new customer choices, among others. The Study included analysis of current rate offerings from investor-owned utilities (IOUs) and various municipal utilities with similar attributes as BEU.
The use of multiple IOUs and municipal utilities is intended to best inform BEU of the different rate trends and rate structures in the California area.
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The goal of this Study was to help BEU develop rates that are both COS-based and a reflection of the industry. With the COS results and the knowledge gained from this Study, BEU will be in the best position to design electric rates with the future of the utility and the industry in mind.
In this report, Section 2 summarizes the general ratemaking principles and Section 3 discusses the various electric rate alternatives based on recent and emerging trends in the electric utility industry. Section 3 highlights various summary rate matrices which show the rate structures of the utilities researched, their advantages and disadvantages, and rankings of the alternative rates. Section 4 of this report provides general recommendations, including the results of the rate rankings and a summary matrix. Finally, implementation considerations such as customer acceptance, usage patterns, technology, and costs and benefits are discussed in Section 5.
This Study was developed by NewGen with input from BEU management and staff. We wish to express our appreciation for the spirited cooperation and valuable assistance given to us throughout this Study by each member of BEU’s management and staff.
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Economics | Strategy | Stakeholders | Sustainability BEU Rate Trends Study_Final Report Section 2
GENERAL RATE MAKING PRINCIPLES
Rate design is the process of establishing electric rates and charges using a completed COS Study. The electric rates are designed to recover the revenue requirement of the system in an equitable manner. The rates must be consistent with the COS results and applicable standards and/or requirements of local, state, and federal regulations. Rates should be designed to best reflect overall revenue stability, financial health, historical rate structures, energy efficiency and conservation, competitiveness among neighboring electric utilities, and the management and operations policies of the utility.
General ratemaking principles proposed by James Bonbright are often referenced in rate cases throughout the country. Bonbright’s Eight Utility Rate Design Principles, which he first identified in his text titled Principles of Public Utility Rates (released in 1961 and updated in 1988), are as follows:
1. Practical: simple, understandable, acceptable.
2. Uncontroversial as to interpretation.
3. Should meet revenue requirements.
4. Should provide stable revenues.
5. Should provide stable rates.
6. Fairness among customer classes.
7. Avoidance of undue discrimination.
8. Should be economically efficient.
These ratemaking principles are not concrete or absolute, which has allowed them to stay relevant for many years. Ratemaking must be flexible as there can be instances where these principles conflict with one another. For municipal utilities, electric rates should be based on a rate policy targeting the lowest possible prices consistent with fulfilling customer requirements and producing quality service.
BEU’s ratemaking principles establish that rate structures will be designed to provide a transition to rates that align with the transformational changes occurring in the electric industry. Specifically, BEU’s rates should be designed to achieve the following goals:
Achieve full recovery of costs.
Equitably allocate costs across and within customer classes. Encourage efficient use of electricity.
Provide rate stability.
Offer flexibility and options.
Maintain rate competitiveness in the region.
Be simple and easy to understand.
The following subsections provide a discussion of various ratemaking considerations that will be incorporated into BEU’s rate design process.
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Alignment with Policies and Strategic Objectives
The COS Study lays the foundation for the development of electric rates and provides an opportunity to confirm that the electric rates are aligned with the policies and long-term goals of BEU. The policies and objectives of a utility will determine how that utility approaches COS methodology and rate design.
Common utility policies impacting COS methodology and rate design are those that avoid cost subsidization across the classes, enhance community energy goals, and promote transparency between the customer and the utility. The rate design must have a balance between the economics of operating a utility, the policies and objectives of the utility and its governing bodies, and the unique needs and preferences of the community. In California, state-specific regulationssuch as Proposition 26, feed-in tariff compliance, greenhouse gas (GHG) reduction, renewable portfolio standards, solar power initiatives, and others will impact the utility in its rate setting policies.
Appropriate Rate Levels
The revenue authorized for a utility to collect through its electric rates and charges is the rate level. The rate levels among different customer classes differ based on the nature of the customer class. Customer class attributes, such as unique costs, usage characteristics, and delivery requirements, create differing rate levels. A utility’s overall rate level should ensure revenue adequacy and meet the revenue requirement. In setting appropriate rate levels, there are trade-offs among the rate design policies and objectives which must be considered.
Energy Efficiency and Conservation
In the past, regulators and rate designers have had a desire to adopt rates that encourage conversation and energy efficiency. However, as the electric utility industry has evolved and energy efficiency of buildings, homes, and appliances has drastically increased, energy conservation has become a result of most updated and/or innovative rate structures. For example, time-of-use (TOU) rate structures are typically implemented with the goal of overall load flattening on the system, but the same price signals sent to the customer to impact their behavior to flatten the load curve also promote energy conservation for the customer. As people continue to monitor and improve their own energy efficiency, energy conservation will increase as a result, allowing electric utilities to focus the intent or goal of a rate structure on other elements of the electric utility industry.
Customer-Sited Distributed Energy Resources
Distributed energy resource (DER) systems are small-scale on-site power sources located at or near a customer’s premises. Examples of DER systems include rooftop solar panels, energy storage devices, small-scale wind turbines, combined heat and power systems, and fuel cells. Customers with DER systems are connected to the local electric grid. These customers use the electric grid to both buy and sell power depending on whether the DER system is meeting their power supply needs. When the DER system produces more power than is used by the customer, the excess power is generally sold to the utility. When the DER system produces less power than is used by the customer, the remaining power that they need is purchased from the utility. The use of DER systems at customer locations has the potential to reduce energy sales without reducing the fixed costs of the system. As customers change their usage patterns and introduce on-site generation, the utility may not be assured of full fixed-cost recovery through variable energy rates alone.
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Alongside customer-sited DER systems, utility scale DER systems have become a more common utility practice. A popular example of a utility scale DER system is community solar, in which a utility pays a larger solar provider for its energy generated.
Self-Generation Program
In response to the increased popularity of DER systems and the potential risks to a utility based on outdated net metering rates, BEU introduced a new self-generation program for renewable DER customers called the Distributed Self-Generation Buy-Back Rate Rider. In this self-generation program, customers use a bidirectional meter to measure energy consumption from the grid and excess energy generation supplied to the grid. The Distributed Self-Generation Buy-Back Rate is set at the average price of the California Independent System Operator (CAISO) Day-Ahead Wholesale energy prices during the hours when solar is producing. All energy returned to BEU’s distribution system is credited at a rate of $0.028/kilowatt-hour (kWh). BEU is monitoring the Distributed Self-Generation Buy-Back Rate.
Periodically reviewing the methodology behind this rate ensures that it continues to adequately collect revenue as the usage characteristics and price of solar continues to change.
An emerging method to determine the rate at which excess electricity is purchased is sometimes called the “value of solar.” When evaluating the value of solar, the goal is to identify the cost of only the electricity supplied to the grid. From a utility’s perspective, purchasing power from DER customers at the retail electric rate is a financial detriment because the current retail energy rate includes fixed costs of the system. BEU’s self-generation program was created as the successor to the Net Energy Metering Surplus Production Rider. Instead of paying the electric retail rate, BEU pays the customer the Distributed SelfGeneration Buy-Back Rate.
Electric Utility Business Challenges
The electric industry, as with many other industries, is facing increasing business challenges. In particular, many utilities are relying on rate structures created years ago that do not address any of the new trends and changes in the electric industry. These outdated rate structures may be creating a misalignment between fixed and variable costs incurred by the utility and costs recovered by the utility through rates.
Utilities now offer rates to encourage high load factor use and energy efficiency which, as a result, increases energy conservation. As mentioned earlier in this report, DER systems also create a unique business challenge as these systems lead to reduced energy sales without a reduction in utility fixed costs.
Since utilities have relied on variable energy charges to collect a majority of their fixed costs for so long, these historical rate structures have hindered their ability to recover revenue. Ideally, a utility’s fixed and variable costs should be able to recover required revenue regardless of customer actions, such as increased energy efficiency or installed on-site generation.
One challenge BEU faces is excess solar generation. One step to mitigating this issue is updating the avoided cost rate. Adjusting the price signal sent to customers can shape customer behavior and reduce excess generation during less desirable times. During the next study, BEU can conduct a TOU analysis.
Creating TOU rates would allow BEU to tailor their rates to their own system. This will further mitigate the issue of excess solar generation.
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Electric Vehicles
As the electric vehicle (EV) market continues to grow and gain popularity across the country, electric utilities need to understand the impacts on their systems from EV charging. There are two key elements for a utility to consider regarding the charging and use of EVs: first, the size of service needed to charge the vehicle or vehicles, and second, the time periods when charging is occurring. Older electric distribution systems that typically support single transformer homes generally do not have the capacity at a local level to support a large influx of EV charging. Additionally, charging EVs during on-peak times (afternoon/evening hours), either at home or at a public charging station, places added strain and cost on the utility system. These added costs to the system are generally not recovered through typical electric rates. A connection charge for EV customers is a reasonable way to recover the additional investment costs. As the use and popularity of EVs continue to grow, it is sensible for a utility to prepare for high EV penetration in the future.
Rates applicable to customers with EV charging should include a TOU component to reflect the accurate cost to serve those customers and to decrease the potential strain on the system caused by EV charging during peak periods. The increase in EV charging offers an opportunity to introduce true marginal cost considerations into rate design, as EV charging is a unique addition to the system. With a TOU rate, customers can pay a lower rate for charging their EV during off-peak times (at night) compared to a higher rate for charging during on-peak times (during the day). For public charging stations, a TOU rate can be designed to collect system costs incurred from the station. Controlling when a public charging station is available (i.e., only during off-peak periods) can accomplish the same cost recovery goals as the TOU rates.
In addition to rates for public charging stations and residential EV charging rates, it is important to discuss the potential for commercial and industrial EV charging rates (i.e., EV fleet rates). In a typical commercial or industrial rate, the customers are charged for their demand as well as their energy. This creates a potential concern where, when adding EV fleet charging to these customers’ systems, the customers’ demand charges may increase substantially. EV charging rate design for fleet charging must include a special focus on the demand charges. One option to address this issue is to offer a voltage discount to customers on a dollars per kilowatt (kW) basis where the discount is larger for higher voltage usage. This option is currently in place at some IOUs.
Embedded, Marginal, and Market-Based Pricing
There are three types of pricing methodologies typically associated with rate development for electric utilities: embedded (or average), marginal (incremental), or market-based (which may be incremental as well). Embedded pricing is the most traditional pricing method in which prices are based on an average historical cost incurred by the utility to serve its customers. Marginal pricing is based on the marginal cost of supply, meaning that the cost of supply is the cost for the next incremental amount of energy produced.
Generally, marginal prices are often higher than current average costs, given increased costs of equipment and commodities. Market-based pricing is based on the current price of electricity in a given market. These prices vary significantly with the time of year and the time of day Energy Storage
As renewable energy resources and the use of DERs continue to expand in the electric industry, technology used to store energy from these types of intermittent power sources has been a major breakthrough.
Energy storage devices can manage the amount of power supplied to a utility’s customers and the time at which it is supplied, meaning energy storage devices can provide some or all of the power requirements 1144
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to a customer during peak periods. Energy storage makes renewable energy sources dispatchable with much smoother operation.
Utility programs for renewable DER customers that have TOU-based rates provide a strong incentive for those customers to install an energy storage device. This allows customers to decide if energy generated onsite will be immediately supplied back to the grid or stored for usage during a different time, such as an on-peak period with higher energy rates.
Equity and Fairness
Equity is a term commonly used in state statutes and laws that authorize publicly owned utilities and define utilities’ regulatory objectives. Equity can be described or characterized in the electric industry as rates that are cost-based, assigned to customer classes in proportion to their costs (cost causation), and produce no undue discrimination between customers. Developed rates should be able to demonstrate they are fair and are not unduly discriminatory to any customer or customer class. Additionally, California law requires that charges for electric service should not exceed the reasonable cost for providing that service (Proposition 26).
Fixed and Variable Costs
An important aspect of the COS analysis is the classification of costs into fixed costs and variable costs.
Fixed costs are costs associated with labor, equipment, debt service, and infrastructure. They are related to the generation, transmission, and distribution services of the utility with little to no correlation to the amount of energy sold. Variable costs are costs associated with fuel, some aspects of generation and transmission, and variable operations and maintenance (O&M). These costs vary with the amount of energy sold. The rate design process accounts for variable and fixed costs when determining energy and demand charges; however, for many customer classes, such as residential, fixed costs have historically been recovered through the energy charges.
Functional Unbundling
In the COS analysis, costs are divided into generation, transmission, and distribution costs to help determine the rates for each class of service. The process of functional unbundling is done to ensure that customers are charged for the costs on the system that they incur and are not charged for costs on the system that they do not incur. This allows the utility to better understand its cost to serve customers for each of its functions or business units. The COS analysis will unbundle the costs of providing electric service and will provide BEU with insights for the rate design process.
Low-Income Rate Programs
Historically, the electric industry tries to keep rates for low-income customers, especially residential customers, as low as possible. More specifically, utilities typically try to keep the monthly customer charges as low as possible to protect low-usage customers who may be both low income and/or fixed income. On a percentage basis, increased customer charges have the greatest impact on low-usage and low-income customers. In 2006, California adopted AB1890, which requires all utilities, including BEU, to establish a surcharge on electric usage to fund public benefit programs. This surcharge is commonly referred to as the Public Benefits Surcharge.
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BEU offers a Low Income Discount Rider, which provides qualifying customers with a discount of up to $32.50 per month on their electric bill. The Low-Income Discount Rider is funded by the revenues collected in the Public Benefits Surcharge. BEU also offers rebate incentives for energy-efficient products such as Energy Star appliances, smart thermostats, and air conditioner replacements.
BEU is currently exploring an opportunity to increase equity in EV charging rates within the community.
In partnership with GRID Alternatives (a national nonprofit installer of clean energy technologies), BEU would receive a $1.5 million grant over 24 months. The project would be split into two stages: planning and implementation. This program would provide analysis and community support to roll out discounted EV rates for income-qualified customers in BEU’s territory.
Rate Design Objectives
In the rate design process, the policies and objectives of the utility and the regulatory bodies must be considered along with the cost of electric service. For example, there may be objectives to modify customer electricity usage behaviorto improve the efficient use of the system or respond to varying utility costs. These objectives can be accomplished by implementing TOU rates. Before these policies and objectives can be included in the rate design and implemented in electric rate structures, the utility must decide which policies and objectives are desirable, acceptable, and to what degree they should be enacted.
Time-of-Use Power Costs
With the use of advanced metering and smart grid technologies, the electric utility industry is increasingly moving to rates based on when the energy is consumed rather than how much energy is consumed. Using rates based on TOU can reduce a utility’s exposure to market costs that are based on real-time wholesale power markets. TOU periods that are easy to understand, such as on-peak, mid-peak, and off-peak periods, allow customers to react to the varying power costs that the utility experiences while also incentivizing customers to shift load to off-peak periods. The economic incentive provided to the customer for shifting load to the off-peak period must be noticeable. Generally speaking, on-peak prices need to be at least 2–3 times higher than off-peak prices for customers to effectively respond to the pricing signal. 1 TOU power costs allow the utility to use existing generators more efficiently, as well as to optimize transmission lines, distribution lines, and customer systems to hopefully defer the construction of additional resources.
1 Source: Energy News Network – https://energynews.us/2019/12/02/survey-customer-education-needed-fortime-of-use-rates-to-be-successful/ 1146
Economics | Strategy | Stakeholders | Sustainability BEU Rate Trends Study_Final Report Section 3
ELECTRIC RATE ALTERNATIVES
BEU’s Current Rate Structure
Residential Service (RS-1) is provided as a single-phase service for primary residences, including singlefamily homes, mobile homes, and multi-occupancy buildings, at 120/240 volts or 120/208 volts, with a maximum 400-amp panel. These customers are billed a monthly service charge of $34.00 that recovers a portion of the utility’s fixed costs. The Schedule RS-1 energy charge is a variable charge reflecting energy usage billed on a dollars per kWh basis. BEU’s RS-1 rate is $0.1619 per kWh and does not vary by season.
General Service (GS-1) offers single-phase service for small businesses, as well as low-use applications like irrigation or street lighting at 120/240 volts or 120/208 volts, with a maximum 400-amp panel and 12,500 kWh monthly usage. Schedule GS-1 customers are billed a monthly service charge of $67.00 and a flat energy rate of $0.1369 per kWh.
Small Commercial Service (SC-1) offers multi-phase service for small-scale non-residential applications at 120/208 volts, with up to a 400-amp panel or 50 kW monthly demand. The Small Commercial monthly rate includes a basic service charge (monthly charge of $67.00/meter), an energy charge ($0.1369/kWh), and a multi-phase service charge (for customers taking multi-phase power) of $4.52 per meter (in addition to the basic service charge).
Medium Commercial Service (MC-1) offers multi-phase service for non-residential applications at 208, 277, or 480 volts, and supports 50–500 kW monthly demand that exceeds 400 amps. The Medium Commercial monthly rate includes a basic service charge ($228/meter), a flat energy charge ($0.1259/kWh), and a demand charge ($19.42/kW)
Industrial Service (IS-1) offers multi-phase service for large industrial needs at 208, 277, or 480 volts, and supports over 800 amps and a monthly demand greater than 500 kW. Billed demand is the largest demand over a 15-minute interval within any one hour during the billing period. These customers are billed a monthly customer charge ($456.00/meter), a demand charge ($16.52/kW), and a flat energy charge ($0.1150/kWh).
BEU also offers Lighting Service and Interruptible Well (IW-1) Service. Lighting Service customers are charged a monthly fee that differs depending on their light type. Street Lighting Service charges a monthly rate per light with a rate designation, including unmetered lighting such as streetlights, park lights, freeway lights, decorative pathway lights, or other lighting fixtures. The IW-1 Service rate designation generally includes multi-phase electrical service for transmitting or pumping water for the City’s water system. The IW-1 service monthly rate includes a basic service charge, an energy charge, and a demand charge.
A summary of the current rate structure, current rates, and rates for November 2025 are provided below in Table 3-1. For the purpose of brevity, the Lighting Service rates have not been included in the rate summary table below.
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Table 3-1
City of Banning – Current and Future Electric Rates*
Rate Class Units
Current Rates
11/01/2024
Potential Rates
11/01/2025
Residential Service (RS-1)
Basic Service Charge $/meter $34.00 $39.00
Energy Charge – All kWh $/kWh $0.1619 $0.1843
General Service Single Phase (GS-1)
Customer Service Charge $/meter $67.00 $76.00
Energy Charge – All kWh $/kWh $0.1369 $0.1559
Small Commercial Multi-Phase (SC-1)
Basic Service Charge $/meter $58.50 $67.00
Energy Charge – All kWh $/kWh $0.1202 $0.1369
Multi-Phase Service $/meter $3.97 $4.52
Medium Commercial Service (MC-1)
Basic Service Charge $/meter $228.00 $259.00
Energy Charge – All kWh $/kWh $0.1259 $0.1434
Demand Charge – All kW $/kW $19.42 $22.12
Industrial Service (IS-1)
Basic Service Charge $/meter $456.00 519.00
Energy Charge – All kWh $/kWh $0.1150 $0.1310
Demand Charge – All kW $/kW $16.52 $18.81
Interruptible Well Service (IW-1)
Basic Service Charge $/meter $342.00 $389.00
Energy Charge – All kWh $/kWh $0.1198 $0.1365
Demand Charge – All kW $/kW $15.38 $17.51
*Excludes Lighting Service rates ($/lamp by lamp type).
Recent Developments
In the electric utility industry, the ongoing developments surrounding rates for customer-owned renewable DERs and Net Energy Metering (NEM) are increasingly important. On December 15, 2022, the California Public Utility Commission (CPUC) adopted D.22-12-056, establishing NEM 3.0. The decision is referred to as the Net Billing Tariff and is the third revision to the NEM tariffs in California. It immediately applied to the IOUs in the state and provides guidance for municipal utilities who are improving and/or adopting NEM tariffs. The Net Billing Tariff is based on the avoided cost concept and creates an average hourly value or price of energy at each hour of a given month. This avoided cost concept is intended to compensate customers for the value of the energy they export to the grid based on the cost to the utility of buying clean energy from another source.
The Net Billing Tariff includes two additional components: a grid participation charge and a market transition credit. The grid participation charge is designed to ensure that net billing customers are paying the same fixed costs to the utility as non-net billing customers. This charge is based on the size of the 1148
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customer’s DER (primarily solar systems). The market transition credit is an added credit to the customer that is designed to help customers pay back the costs of both a solar system and an energy storage system within the first nine years after the purchase. The Net Billing Tariff incentivizes customers to install and use solar energy storage by both issuing a credit to help the payback of the system and by motivating customers to limit energy consumption from the grid during on-peak periods with higher energy prices.
NEM 3.0 also increases the allowable size of rooftop solar systems to cover 150% of a customer’s electricity usage. NEM 1.0 is capped at 5% of the utility’s demand, which BEU reached in 2018. NEM 2.0 is capped at 1,000 kW per system. This meansthat the prevalence of solar energy will continue to increase.
Currently, about 11% of BEU’s customers are solar users and about 5% of BEU’s total energy load is from solar customers.
As solar usage continues to increase among BEU’s customers, the shape of BEU’s load will begin to change.
This shift may push the peak time later into the evening. Monitoring the avoided cost rate will be important to ensure revenue sufficiency.
Power Cost Adjustments
A power cost adjustment is a clause or rate rider that adjusts retail rates to reflect the variations and volatility of power supply costs that are outside the control of the utility. If power supply costs (such as fuel) increase, the power cost adjustment rate increases, and vice versa. Most California utilities, including BEU, have a power cost adjustment applied to some or all of their rate structures. BEU currently has a power cost adjustment in its General Provisions which is called the Power Cost Adjustment Factor (PCAF).
BEU currently has many procedures in place to mitigate the risks of cost fluctuations typically included in power cost adjustments, including BEU’s current fiscal and reserve policies, maintenance of reserve levels, long-term financial planning, and long- and short-term power supply planning. Although cost adjustment mechanisms can provide cost recovery certainty to a utility, they can also provide rate uncertainty to customers and become an administrative burden.
BEU and NewGen have discussed the policies and methodology related to the PCAF. BEU’s PCAF is updated quarterly to reflect the changing purchased power costs used in the calculation for determining the PCAF.
Electric Impact Fee
An impact fee is a charge levied against new development to generate revenue for the purpose of funding capital improvements necessitated by that development. This fee can help fund expansion of the electric system. Typically, it is charged up front to help fund development. BEU is currently undergoing an Impact Fee Study as a part of its Electric Master Plan. If BEU implemented an electric impact fee, it would be rolled out in a new rate tariff and would apply to new customers connecting to BEU’s system. This is not a recurring fee and would have minimal impact on the majority of BEU’s existing customers.
Power Factor Charges
The power factor is a ratio of kW to kilovolt-amperes (kVA) that is used to measure or quantify the efficiency of energy used by a facility or customer. Large service customers often pay a power factor charge if the power factor is below a certain ratio, typically 95%. BEU has a power factor charge for large customers that consistently have a power factor below 90%. The charge is $1.90 per kVA. 1149
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Most of the California utilities reviewed in this Study include power factor charges, as shown in Appendix A-1. Monitoring power factors of the entire system, as well as individual customers, is a practice that is highly benefited by the use of advanced metering infrastructure (AMI) because of the amount and timeliness of the data.
Mobile Home Park Master Metering
Customers in a mobile home park typically have either master metering or submetering. Submetering requires a meter on each home. This approach allows the utility to charge each customer for their home’s electric usage. Under master metering, a single meter is set up for the entire mobile home park. The utility generates a total bill for the mobile home park, and it is the responsibility of the property manager to distribute the costs among the individual homes in the park. BEU has mobile home park master metering and will set up a meter with the appropriate service voltage and characteristics for the mobile home park.
The park will be put on the appropriate non-residential schedule based on the park’s usage and demand.
BEU is considering making a change to its mobile home park master metering schedule by including this as a Residential Service offering. This would make it easier for customers to review their bill and understand how it is calculated.
Commercial Demand Charges
Commercial customers, as well as Residential customers, can be billed for their maximum monthly demand. Demand charges are designed to collect more fixed costs directly rather than trying to collect fixed costs through energy charges. The demand charges can be used to address issues such as fixed cost recovery from NEM customers. Billing demand charges to Residential and Small Commercial customers requires AMI technology capable of measuring demand. Residential demand charges are not common in the electric utility industry; however, they have been applied by various utilities across the country with many more utilities proposing the concept. BEU does not have a Residential demand charge and is not considering one as part of this Study. Typical Commercial demand charges start in the range of 20 kW to 30 kW. Table 3-2 shows the threshold for demand charges for various California utilities as of January 2025. Appendix A-3 provides further information on the demand cutoffs for Small, Medium, and Large General Service offerings from various California utilities. 1150
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Table 3-2
Commercial Demand Rate Thresholds
Demand Threshold Schedule
Banning 50 kW MC-1
Alameda 500 kW A-2
Anaheim 15 kW GS-1B
Azusa 20 kW G-2
Burbank 20 kVA D
Colton 20 kW GS-1
Glendale 20 kW LD-2-A
Los Angeles 30 kW A-2(B)
Palo Alto 1,000 kW E-4
Pasadena 30 kW M-1
PG&E 75 kW B-10
Redding 25 kW E7
Riverside 20 kW A
SCE 20 kW GS-2
SVP 200 kW CB-1
Electric Vehicle Time-of-Use Rates and Charging Stations At-home EV charging is sometimes placed on a separate meter from the customer’s premise. This allows the utility to develop TOU rates specifically for the EV charging system. These EV TOU rates most commonly offer lowerrates during off-peak periods and higher rates during on-peak periods. Submetering the EV charging system helps prevent the customer from reaching higher energy tiers with more costly energy charges since the EV charger usage is not included on the main electric meter.
Electric utilities must have a vested interest in the adoption of EVs while ensuring that EVs are charged at times that support the efficiency of the grid. In the second quarter of 2024, California had approximately 26% of the country’s EV charging ports and had increased the number of EV charging ports by 4.9% from Q4 2019 to Q2 2024.2 This suggests that EV charging and infrastructure in the state of California is a critical service for utilities. Many California utilities offer an EV TOU rate. However, BEU does not currently have EV TOU rates. These rate options will be further explored as part of the COS and rate studies.
As established above, the state of California has a relatively high rate of EV adoption. TOU rates allow utilities to send pricing signals to anyone charging. This is a tool for managing the often-erratic usage patterns of EV charging stations. EV TOU rates for at-home charging allow utilities to incentivize customers to charge during off-peak times, such as the early hours of the morning. 2 Source: “Electric Vehicle Charging Infrastructure Trends from the Alternative Fueling Station Locator: Second Quarter 2024” – National Renewable Energy Laboratory.
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kVA Reactive Billing
As mentioned above, power factor is a ratio of kW to kVA that is used to measure or quantify the efficiency of energy used by a facility or customer. Large Service customers often pay a power factor charge if the power factor is below a certain percentage; for BEU, this percentage is 90%. Reactive billing differs from a power factor charge in that it is always applied to customers. Reactive billing is not a corrective measure; it is a different way of billing energy usage that accounts for the customer’s power factor. Customers are billed on apparent energy consumption measured in kVA hours. This eliminates the need for a power factor correction because this rate structure incentivizes maximizing power factor by basing the charge on apparent power, more closely aligning customer bills with the costs they incur on the system.
BEU does not currently use reactive billing. While there are a few utilities in California that do use reactive billing, it is not widespread.
Community Solar
Community Solar is a voluntary solar-electric system program that is owned by multiple community members. The Community Solar members receive power and/or financial benefits through the program.
The main driver for Community Solar programs is the fact that not all customers of a given energy market have the ability to install on-site solar facilities. A 2016 report by the National Renewable Energy Laboratory found that only 25% of residential rooftop space is useable for on-site photovoltaic systems that could support the average household. Issues such as the structure of the residence, the shading on the rooftop space, or ownership conflicts are attributed to the low percentage of usable rooftop space.
Solar options are needed for renters, those with shaded roofs, and those who choose not to install an onsite photovoltaic system at their residence for their own personal reasons. These solar incentive programs are funded by ratepayers and/or taxpayers. In the spirit of equity, solar energy programs need to be designed to allow all contributors to participate. Community Solar programs are typically owned and operated by the utility and are open to voluntary participation.
Currently, several California utilities, listed in Appendix A-1, and other utilities across the country have Community Solar programs in which their customers are able to participate voluntarily.
Real-Time and Critical Peak Pricing
Rates based on market prices that vary hourly are called real-time pricing rates. These types of pricing rates encourage customers to react to the real-time variations in the market price. Los Angeles Department of Water and Power (LADWP), Southern California Edison (SCE), and Pacific Gas and Electric Company (PG&E) offer real-time pricing options. Real-time pricing rates are not as common because of the technological barriers to implementation. Real-time pricing rates require AMI, communications, and increased administrative costs.
Critical Peak Pricing (CPP) is employed by utilities to reward customers for voluntarily reducing electricity usage during the highest peak demand periods and/or shifting electricity usage to off-peak periods. There are a few critical peaks per year due to weather or system conditions. In a CPP rate, the critical peak times are limited to specified days and times. There is a limit to the frequency and total number of hours per year that are considered critical peak. For example, SCE’s critical peak times are weekdays between 4 p.m. and 9 p.m., with 12–15 CPP events per year. SCE is one of the few California utilities with CPP.
The barriers for BEU to implement CPP are similar to the barriers to implement real-time pricing—it requires AMI, communications, and increased administrative costs. BEU is considering the real-time and 1152
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CPP concepts as it looks to utilize the capabilities of its AMI infrastructure. These rate options will be further explored as part of the COS and rate studies.
Time-of-Use Pricing for All Residential and Commercial Customers TOU rates are usually optional for utility customers, but some utilities have made these rates mandatory.
Most of the California utilities shown in Appendix A-1 have TOU rates. As AMI technologies have become more accessible, some California IOUs are moving toward collapsing tiered rates and transitioning to only TOU rates. In these California IOUs, the TOU rate is the default rate for all customers.
The figures below compare TOU periods for utilities across California. Unless otherwise stated, TOU periods in Figures 3-1 and 3-2 are residential. As shown in Figures 3-1 and 3-2, PG&E and SCE have onpeak rates from 4 p.m. to 9 p.m. in the summer. In the winter, PG&E has on-peak rates from 4 p.m. to 9 p.m., while SCE offers super off-peak rates from 8 a.m. to 5 p.m. and mid-peak rates from 5 p.m. to 8 p.m.
The municipal utilities considered in the Study tend to have on-peak hours between 4 p.m. and 9 p.m. in the summer. Silicon Valley Power is an outlier and has on-peak rates from 6 a.m. to 10 p.m. In the winter, the municipal utilities tend to have on-peak rates between 4 p.m. and 9 p.m. There is more variance in the on-peak period windows in the winter. Municipal utilities do not utilize seasonal mid-peak rates as frequently as IOUs do.
Figure 3-1
Summer TOU Periods
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Figure 3-2
Winter TOU Periods
Advanced Metering Infrastructure
AMI is a metering system that records electric consumption on an hourly or more frequent basis and transmits data back to a central collection point. AMI technology is becoming more common for IOUs and public utilities across the country as the benefits it provides to a utility outweigh the costs and time associated with installation. AMI provides a massive amount of data regarding items like cumulative kWh usage, peak demand, load profile, and TOU and peak energy readings. This data can be used to transmit demand response messages, automate net metering, discover and/or verify power outages, and provide tamper notifications, among other things. AMI data is not only incredibly informative and helpful to an electric utility, it is also required to implement innovative rate structures. Rate structures, such as residential or commercial demand charges and critical-peak or real-time pricing, are not possible without AMI. Other rate structures, such as TOU rates, EV charging rates, and virtual NEM rate programs, are greatly enhanced by AMI systems. Appendix A-2 describes the advantages and disadvantages of the different rate structures and designates which rate alternatives are benefited by AMI and which rate alternatives require AMI to operate.
BEU implemented its AMI infrastructure in July 2023. By the beginning of 2024, the AMI rollout was completed, and the City has been collecting AMI usage data by class since January 2024 with the help of a third-party meter data management system (MDSM).
Summary Rate Matrices
The electric rate alternatives are summarized in Appendices A-1 and A-2. Appendix A-1 summarizes the various types of rates offered by some California utilities and selected utilities outside the state of California. Appendix A-2 grades the rate alternatives on a desirability scale from 1–3 relative to customer acceptance, changes in customer usage patterns, technology required and its costs, barriers to new rates, risks, and the costs and benefits to both the utility and the customer. 1154
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As shown in Appendix A-1, most California utilities offer a variety of rate alternatives. No utilities were found to have a residential demand charge, and some rate alternatives were only offered by a few utilities.
All the California utilities included in the Study have a NEM rate. Currently, only SCE, PG&E, and LADWP offer both real-time pricing and CPP.
Appendix A-2 evaluates the rate offerings on a scale of 1–3, with 1 being not desirable and 3 being desirable, based on customer acceptance, changes in customer usage patterns, technology required and its costs, barriers to new rates, risks, and the costs and benefits to both the utility and the customer. For example, reliability charges and power cost adjustments are ranked as desirable (3 on the scale) in terms of the costs and benefits from the utility perspective, while the same rate alternatives are ranked as not desirable (1 on the scale) in terms of the costs and benefits to the customer. This is because these types of charges help the utility collect fixed costs and ensure revenue stability, but from a customer’s perspective, they may only be viewed as extra charges and line items on the electric bill.
On the far-right side of Appendix A-2 are cumulative and average scores for each rate alternative. These scores are color coded from red to yellow to green for low to high scores to help easily identify the highest scoring rate alternatives. The highest scoring rate alternatives in terms of the desirability scale are economic development rates, power factor correction, EV public charging, and mobile home park master metering.
Figure 3.3 below summarizes the scoring of the rate alternatives not currently offered by BEU. The highest scoring rate alternatives are unbundled rates, EV rates, EV submetering, and TOU rates. The lowest scoring rate alternatives that are not currently used by BEU are residential demand charges, real-time pricing, and CPP.
Each rate offering was scored on this scale across nine dimensions: customer acceptance, change in customer usage, technology required, customer costs of technology, utility costs of technology, barriers to new rates, risk – utility perspective, costs and benefits – utility perspective, and costs and benefits – customer perspective. The cumulative and average scores are the last two columns on the right in Figure 3-3.
Figure 3-3
Banning Electric Utility
Rate Trends Study
Rate Structure Rankings
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Economics | Strategy | Stakeholders | Sustainability BEU Rate Trends Study_Final Report Section 4
GENERAL RECOMMENDATIONS
Summary Rate Matrix
NewGen’s recommendations for BEU are as follows:
1. BEU should continue its current practices, monitoring and updating its rate structure as necessary based on COS analyses, economic development discounts, PCAF, and low-income programs. We recommend revisiting the COS and rate design annually. Consistent reviews allow for rapid response to changes in the utility environment.
2. BEU should consider transitioning from a flat energy rate to TOU-based rates for residential customers.
3. BEU should continue its distributed generation buy-back rate. As this rate is analyzed and modified as necessary, BEU should investigate potential aggregated self-generation programs consistent with potential state mandates. BEU should continue to monitor NEM 2.0 customers and pay attention to the development of NEM 3.0.
4. BEU should not implement real-time pricing rates or CPP rates at this time but should monitor other utilities’ practices regarding these rate alternatives.
5. BEU should explore a residential rate for individually metered building units, such as mobile homes, to charge customers more equitably for their costs.
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Economics | Strategy | Stakeholders | Sustainability BEU Rate Trends Study_Final Report Section 5
GENERAL IMPLEMENTATION CONSIDERATIONS
When implementing the Study recommendations, the following elements should be considered by BEU’s management and staff. Appendix A-2 summarizes these considerations.
Customer Acceptance
Even though a particular rate structure may be ideal from a utility perspective, the customer acceptance of the new rate or rate structure must be considered. For example, increasing the customer charge helps the utility recover its fixed costs, but the acceptance may be poor for low-usage customers. For low-usage customers, such as those using around 500 kWh per month, an increase in the customer charge will increase the user’s total bill quite dramatically. The desired rate structures of the utility and their outcomes must be balanced with rates that are acceptable to customers. However, some rate alternatives are easy to comprehend by electric customers and have high customer acceptance. Rate alternatives such as EV TOU rates, community solar programs, and seasonal rates typically experience higher levels of customer acceptance.
Customer Usage Patterns
Customer usage patterns must be monitored and analyzed before and after rate changes to see the impact of the rate change on a customer’s energy usage, demand, load factor, and on-peak versus off-peak usage.
One objective of rate design is to influence customer behavior and impact customer usage patterns to achieve the goals of the utility, such as increased efficiency of the system and reduction of overall costs.
However, it is possible that the new rate change impacts customers’ energy usage to an unpredictable degree that leads to lower revenues than expected. An inclining block rate that is intended to promote energy conservation by charging higher energy rates at higher usage tiers has the chance to reduce customers’ usage throughout the system with the consequence of reduced revenues.
Technology Considerations
Technology associated with the implementation of a new rate alternative or rate structure must be considered. Alternative rates, such as TOU rates, require AMI and updated or revised billing systems to properly analyze and bill energy usage at each hour of the day. Newer rate alternatives, such as real-time pricing and CPP, require even more technology, including AMI, updated communications systems, and advanced billing. The technologies for some newer rate alternatives are still being developed or improved while other technologies are currently commercially available.
Barriers
On top of specific technological barriers, there are other barriers such as legal, social, administrative, and regulatory barriers to alternative rates that need to be considered. An example of a social barrier is the impact of increased fixed charges on low-energy users or low-income customers. The administrative barrier to most of these rate alternatives is the increased burden on the administrative staff of the utility. 1159
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Additionally, there is always the opportunity for legal and regulatory barriers to arise from items such as mandates from federal and state regulatory bodies or local municipalities.
Risks
Since there are uncertainties regarding how a new rate alternative may impact customer usage and behavior, the resulting revenues may be not as projected. Revenues that are lower than projected create a financial risk for a utility. Additionally, some rate alternatives may create risks as a result of lower sales and less recovery of a utility’s fixed costs.
Costs and Benefits
The costs and benefits of implementing a new rate alternative must be considered when evaluating potential new rate alternatives. The costs and benefits to both the utility and the customer must be examined. Some rate alternatives may have significant cost barriers to the utility, such as AMI requirements, while other rate alternatives may have low-cost barriers to implementation. Other rate alternatives may benefit the utility through increased cost recovery while also offering specific rate alternatives for specific customer classes.
Next Steps and Moving Forward
After the completion of the COS analysis and development of rates, a more detailed plan for the shortterm and long-term future can be determined. The following is a summary of the next steps.
1. Complete COS Analysis with Proposed Rates
2. Public Involvement and Education for Proposed Rates
3. Implement Proposed Rates
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APPENDIX A-1:
TYPES OF RATES OFFERED
BY CALIFORNIA UTILITIES
SEPTEMBER 26, 2025
ELECTRIC RATETRENDS STUDY
FINAL REPORT
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Appendix A-1
Banning Electric Utility
Rate Trends Study
Types of Rates Offered by California Utilities
Los Palo So.Calif. Silicon Valley
Banning Alameda Anaheim Azusa Burbank Colton Glendale Angeles Alto Pasadena PG&E Redding Riverside Edison Power Current Banning Rate Offerings
1 Distributed Self-Generation Buy-back (NEM Surplus) 2 Economic Development Discount
3 Electric Vehicle Public Charging
4 Industrial Service
5 Interruptible Well Service
6 Low Income Rider
7 Medium Commercial Service
8 Mobile Home Park Master Metering
9 Power Cost Adjustment
10 Power Factor Correction
11 Residential Service
12 Small Commercial Service
Other Innovative Rate Offerings not Currently Offered by Banning 13 Community Solar
14 Critical Peak Pricing and Real Time Pricing
15 EV Rates
16 EV Submetering
17 kVa Reactive Billing
18 Residential Demand Charge
19 Small Commercial Demand Charge
20 Special Rates/Charges (i.e. Wildfire Rate) *
21 TOU Rates
22 Transmission Access Charge
23 Unbundled Rates
* Note: SoCal Edison using previously established DWR Bond Charge to support wildfire fund. 1163
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APPENDIX A-2:
RATE STRUCTURE
RANKINGS
SEPTEMBER 26, 2025
ELECTRIC RATETRENDS STUDY
FINAL REPORT
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Appendix A-2
Banning Electric Utility
Rate Trends Study
Rate Structure Rankings
Customer Change in Technology Customer Costs Utility Costs Barriers to Risks Costs and Benefits Costs and Benefits Cumulative Average Acceptance Customer Usage Required of Technology of Technology New Rates Utility Perspective Utility Perspective Customer Perspective Score Score Current Banning Rate Offerings
1 Distributed Self-Generation Buy-back (NEM Surplus) 3 3 3 1 2 2 2 2 3 21 2.33 2 Economic Development Discount 2 2 1 3 3 3 2 2 3 21 2.33 3 Electric Vehicle Public Charging 2 2 3 3 1 3 2 2 3 21 2.33 4 Industrial Service 3 3 1 3 3 3 3 3 3 25 2.78
5 Interruptible Well Service 2 2 1 3 2 3 2 3 3 21 2.33
6 Low Income Rider 3 2 2 3 2 2 3 2 3 22 2.44
7 Medium Commercial Service 3 3 1 3 3 3 3 3 3 25 2.78
8 Mobile Home Park Master Metering 3 2 2 2 2 3 3 2 2 21 2.33 9 Power Cost Adjustment 2 2 2 3 3 2 3 2 2 21 2.33
10 Power Factor Correction 2 3 2 2 2 2 3 3 2 21 2.33
11 Residential Service 3 3 1 3 3 3 3 3 3 25 2.78
12 Small Commercial Service 3 3 1 3 3 3 3 3 3 25 2.78
Other Innovative Rate Offerings not Currently Offered by Banning 13 Community Solar 3 1 2 2 2 2 3 2 2 19 2.11
14 Critical Peak Pricing and Real Time Pricing 1 3 3 1 1 1 2 3 1 16 1.78 15 EV Rates 3 3 3 2 2 2 2 2 3 22 2.44
16 EV Submetering 1 3 3 2 2 2 3 3 2 21 2.33
17 kVa Reactive Billing 1 3 2 2 2 1 2 3 1 17 1.89
18 Residential Demand Charge 1 3 2 2 1 1 1 2 1 14 1.56
19 Small Commercial Demand Charge 1 3 2 2 1 2 2 2 1 16 1.78 20 Special Rates/Charges (i.e. Wildfire Rate) 2 1 1 3 3 1 3 3 1 18 2.00 21 TOU Rates 2 3 3 3 2 2 3 3 2 23 2.56
22 Transmission Access Charge 1 1 2 3 3 2 3 3 1 19 2.11 23 Unbundled Rates 2 1 1 3 3 2 3 3 3 21 2.33
Color Scale Cumulative Score Average Score
3 = Desirable 14 - 20 1.5 - 2.2
2 = Moderate 20 - 23 2.2 - 2.5
1 = Not Desirable 23 + 2.5 +
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APPENDIX A-3:
VOLTAGE CUTOFFS FOR
GENERAL SERVICE CLASSES
SEPTEMBER 26, 2025
ELECTRIC RATETRENDS STUDY
FINAL REPORT
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Banning Electric Utility
Rate Trends Study
Voltage Cutoffs for General Service Classes
50 15 20 20 20 20 30 30 25 20 20 0
100
200
300
400
500
600
700
Banning Anaheim Azusa Burbank[6] Colton Glendale Los Angeles Pasadena Redding Riverside SCE[4] kW Utility
Voltage Cutoffs for Small, Medium, and Large General Service Small Medium Large
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225 Union Blvd, Suite 450, Denver, CO 80228
Phone: 1-720-259-1762
Email: [email protected]
www.newgenstrategies.net
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Banning Cost of Service
Description Total Allocation Factor Residential Small Commercial Medium Commercial General Service Industrial Service Well Service Security Lighting Street Lighting Master Metering Total Power Supply
Energy 7,965,203 NEFL 4,138,723 324,455 1,003,786 370,017 1,733,034 188,224 3,142 90,149 113,674 7,965,203 Demand 10,828,514 12 CP 6,818,550 328,783 1,020,729 383,746 1,903,171 131,256 1,852 53,147 187,278 10,828,514 Power Cost Adj. (1,100,000) NEFL (571,561) (44,807) (138,624) (51,100) (239,333) (25,994) (434) (12,450) (15,698) (1,100,000) Open - NA - - - - - - - - - -
Open - NA - - - - - - - - - -
Open - NA - - - - - - - - - -
Total 17,693,716 10,385,713 608,430 1,885,891 702,663 3,396,872 293,486 4,560 130,846 285,254 17,693,716 -
Transmission
Load Dispatch 864,050 12 CP 544,079 26,235 81,448 30,621 151,862 10,473 148 4,241 14,944 864,050 Substations - 12 CP - - - - - - - - - -
Lines 64,804 12 CP 40,806 1,968 6,109 2,297 11,390 786 11 318 1,121 64,804 Demand 7,542,584 12 CP 4,749,450 229,013 710,987 267,298 1,325,651 91,426 1,290 37,020 130,448 7,542,584 Transformers - NA - - - - - - - - - -
Open - NA - - - - - - - - - -
Total 8,471,437 5,334,335 257,216 798,544 300,215 1,488,902 102,685 1,449 41,579 146,513 8,471,437 -
Distribution
Demand Related
Substations 13,009,578 12 NCP - Primary 7,465,092 526,392 1,226,714 473,675 2,714,361 257,479 4,743 136,087 205,036 13,009,578 OH-Lines 284,395 12 NCP - Primary 163,190 11,507 26,817 10,355 59,337 5,629 104 2,975 4,482 284,395 UG-Lines 698,075 12 NCP - Primary 400,566 28,245 65,824 25,417 145,649 13,816 254 7,302 11,002 698,075 Transformers 371,020 SMD 235,272 14,829 30,245 14,257 62,159 5,176 88 2,532 6,462 371,020 Customer Related
Meters 86,222 W. Meters x/Lighting 6,159 12,317 12,317 18,476 18,476 12,317 - - 6,159 86,222 Services 502,041 W. Meters x/Lighting 35,860 71,720 71,720 107,580 107,580 71,720 - - 35,860 502,041 Lighting 311,860 Lighting NEFL - - - - - - 10,502 301,358 - 311,860 Total 15,263,191 8,306,139 665,011 1,433,637 649,760 3,107,562 366,137 15,691 450,254 269,001 15,263,191 -
Customer
Customer Service 1,307,073 W. Meters x/Lighting 93,362 186,725 186,725 280,087 280,087 186,725 - - 93,362 1,307,073 Customer Accounting 2,058,358 W. Meters x/Lighting 147,026 294,051 294,051 441,077 441,077 294,051 - - 147,026 2,058,358 Meters 1,689,288 W. Meters x/Lighting 120,663 241,327 241,327 361,990 361,990 241,327 - - 120,663 1,689,288 Open - NA - - - - - - - - - -
Total 5,054,718 361,051 722,103 722,103 1,083,154 1,083,154 722,103 - - 361,051 5,054,718 -
Cost of Service 46,483,063 24,387,238 2,252,760 4,840,174 2,735,792 9,076,490 1,484,411 21,700 622,679 1,061,818 46,483,063 Check -
TY Revenues at Current Rates $19,766,798 $1,246,802 $4,370,598 $1,751,045 $6,707,099 $800,151 $34,039 $224,379 $424,995 $35,325,906 Revenue Increase Needed 23% 81% 11% 56% 35% 86% -36% 178% 150% 32% % of Cost of Service 52% 5% 10% 6% 20% 3% 0% 1% 2% 100% 1174
Banning Financial Forecast
Amended Amended
Actual Budget Budget FY 26 - FY 30
Description Account FY 24 FY 25 FY 26 Escalation FY 27 FY 28 FY 29 FY 30 Test Year Expenses
Purchased Power
Purchased Power
SVC-RESALE / CAPACITY (27-50) $10,671,458 $10,970,000 $10,400,000 Purchased Power $10,945,135 $11,518,844 $12,122,626 $12,758,055 $11,548,932 SVC-RESALE / TRANSMISSION (27-70) $5,134,677 $5,750,000 $6,400,000 Purchased Power $6,735,468 $7,088,520 $7,460,077 $7,851,111 $7,107,035 SVC-RESALE / ENERGY - LOCAL (27-60) $5,448,122 $4,800,000 $5,600,000 Purchased Power $5,893,534 $6,202,455 $6,527,568 $6,869,722 $6,218,656 SVC-RESALE / POWER SCHEDULE/DISPATCHN (27-09) $628,988 $630,000 $630,000 Purchased Power $663,023 $697,776 $734,351 $772,844 $699,599 SVC-RESALE / STATE POWER CHARGE (27-08) $43,733 $45,000 $45,000 Purchased Power $47,359 $49,841 $52,454 $55,203 $49,971 SVC-RESALE / JOINT POLE EXP (27-11) $43,732 $45,000 $47,250 Purchased Power $49,727 $52,333 $55,076 $57,963 $52,470 SVC-RESALE / CAP & TRADE (27-55) $0 $0 $0 Purchased Power $0 $0 $0 $0 $0 Total Purchased Power $21,970,710 $22,240,000 $23,122,250 $24,334,245 $25,609,769 $26,952,152 $28,364,899 $25,676,663 Cost of Goods
SVC-RESALE / CUSTOMER GENERATION (27-20) $102,832 $90,000 $90,000 Inflation $92,160 $94,188 $96,260 $98,377 $94,197 SVC-RESALE / EV CHARGING STATION (27-75) $1,841 $2,000 $2,000 Inflation $2,048 $2,093 $2,139 $2,186 $2,093 Total Cost of Goods $104,673 $92,000 $92,000 $94,208 $96,281 $98,399 $100,564 $96,290 Total Purchased Power Total Purchased Power $22,075,383 $22,332,000 $23,214,250 $24,428,453 $25,706,050 $27,050,551 $28,465,462 $25,772,953 Check - - -
Supplies & Services
Professional Contract Services
PROFESSIONAL SERVICES (33-11) $157,781 $544,641 $63,600 Inflation $65,126 $66,559 $68,023 $69,520 $66,566 LEGAL SERVICES-ENERGY (33-02) $61,842 $136,653 $80,000 Inflation $81,920 $83,722 $85,564 $87,447 $83,731 ELECTRICAL CONSULTANT (33-91) $0 $5,000 $0 Inflation $0 $0 $0 $0 $0 AUDIT SERVICES (33-12) $0 $0 $0 Inflation $0 $0 $0 $0 $0 MEDICAL/PHYSICAL EXAMS (33-32) $0 $307 $307 Inflation $314 $321 $328 $336 $321 Total Professional Contract ServicesTotal Professional Contract Services $219,623 $686,601 $143,907 $147,361 $150,603 $153,916 $157,302 $150,618 Special Utility Costs
SUBSTATION EXPENSE (45-05) $43,495 $199,868 $80,000 Inflation $81,920 $83,722 $85,564 $87,447 $83,731 TOOLS/MISC SUPPLIES (45-16) $39,219 $101,886 $35,000 Inflation $35,840 $36,628 $37,434 $38,258 $36,632 ELEC DISTR LINES-MAINT (45-02) $122,072 $100,000 $50,000 Inflation $51,200 $52,326 $53,478 $54,654 $52,332 POLES/TOWERS/FIXTURES (45-01) $80,109 $100,000 $50,000 Inflation $51,200 $52,326 $53,478 $54,654 $52,332 METERS EXPENSE (45-11) $31,924 $25,041 $20,000 Inflation $20,480 $20,931 $21,391 $21,862 $20,933 LINE TRANSFORMER MAINTENC (45-04) $68,704 $0 $0 Inflation $0 $0 $0 $0 $0 P C B EXPENSE (45-03) $0 $350 $350 Inflation $358 $366 $374 $383 $366 INVENTORY ADJUSTMENTS (45-99) -$35,277 $24,559 $24,559 Inflation $25,148 $25,702 $26,267 $26,845 $25,704 Total Special Utility Costs Total Special Utility Costs $350,246 $551,704 $259,909 $266,147 $272,002 $277,986 $284,102 $272,029 Contractural Services
STAFF TRAINING (23-06) $65,563 $41,200 $128,000 Inflation $131,072 $133,956 $136,903 $139,914 $133,969 DUES/SUBSCRIPTIONS (23-03) $41,584 $87,000 $45,000 Inflation $46,080 $47,094 $48,130 $49,189 $47,098 TRAVEL/CONFERENCES (23-05) $31,813 $25,000 $27,500 Inflation $28,160 $28,780 $29,413 $30,060 $28,782 TREE TRIMMING SERVICE (23-17) $0 $0 $0 Inflation $0 $0 $0 $0 $0 DISPOSAL FEES (23-54) $0 $14,500 $3,700 Inflation $3,789 $3,872 $3,957 $4,044 $3,873 PEST ERADICATION SERVICE (23-24) $815 $2,060 $2,060 Inflation $2,109 $2,156 $2,203 $2,252 $2,156 1175
PRINTING/BINDING (23-02) $2,994 $3,616 $2,625 Inflation $2,688 $2,747 $2,808 $2,869 $2,747 ADVERTISING/PUBLISHING (23-01) $655 $1,250 $800 Inflation $819 $837 $856 $874 $837 ALARM SERVICE (23-19) $434 $1,000 $1,000 Inflation $1,024 $1,047 $1,070 $1,093 $1,047 POSTAGE/MAILING COSTS (23-04) $92 $1,000 $1,000 Inflation $1,024 $1,047 $1,070 $1,093 $1,047 RETURNED CHECK/BANK FEES (23-46) $5 $0 $0 Inflation $0 $0 $0 $0 $0 Total Contractural Services Total Contractural Services $143,955 $176,626 $211,685 $216,765 $221,534 $226,408 $231,389 $221,556 Utility Contract Services
UTILITIES-BANNING (26-01) $47,000 $45,000 $47,500 Inflation $48,640 $49,710 $50,804 $51,921 $49,715 RADIO TRANSMISSION SVCS (26-07) $35,148 $30,000 $31,500 Inflation $32,256 $32,966 $33,691 $34,432 $32,969 TELEPHONE SERVICE (26-05) $26,645 $30,000 $32,500 Inflation $33,280 $34,012 $34,760 $35,525 $34,016 NATURAL GAS SERVICE (26-06) $2,353 $2,250 $2,365 Inflation $2,422 $2,475 $2,529 $2,585 $2,475 SATELLITE TELEVISION (26-09) $758 $2,500 $2,625 Inflation $2,688 $2,747 $2,808 $2,869 $2,747 ELECTRICITY-EDISON (26-04) $1,106 $2,000 $2,000 Inflation $2,048 $2,093 $2,139 $2,186 $2,093 Total Utility Contract Services Total Utility Contract Services $113,010 $111,750 $118,490 $121,334 $124,003 $126,731 $129,519 $124,015 Rental Contract Services
LEASE / LEASE/PURCHASE PAYMENTS (32-06) $61,027 $67,697 $66,550 Inflation $68,147 $69,646 $71,179 $72,745 $69,653 LEASE / EQUIPMENT LEASE/RENTAL (32-05) $4,993 $10,029 $25,000 Inflation $25,600 $26,163 $26,739 $27,327 $26,166 Total Rental Contract Services Total Rental Contract Services $66,020 $77,726 $91,550 $93,747 $95,810 $97,917 $100,072 $95,819 Non-Capitalized Assets
COMPUTER HARDWARE (89-48) $10,280 $40,037 $15,000 Inflation $15,360 $15,698 $16,043 $16,396 $15,699 COMPUTER SOFTWARE (89-49) $44,284 $19,999 $5,000 Inflation $5,120 $5,233 $5,348 $5,465 $5,233 OFF FURN/EQUIP/FIXTURES (89-46) $1,769 $22,000 $10,000 Inflation $10,240 $10,465 $10,696 $10,931 $10,466 MACHINERY/EQUIPMENT (89-56) $0 $10,000 $0 Inflation $0 $0 $0 $0 $0 VEHICLES (89-52) $0 $1,200 $0 Inflation $0 $0 $0 $0 $0
Total Non-Capitalized Assets Total Non-Capitalized Assets $56,333 $93,236 $30,000 $30,720 $31,396 $32,087 $32,792 $31,399 Special Programs
SPC PRGRMS / FIRE SAFETY PROGRAMS (41-29) $13,529 $40,000 $15,000 Inflation $15,360 $15,698 $16,043 $16,396 $15,699 SPC PRGRMS / MISCELLANEOUS EXPENSE (42-50) $71 $1,500 $500 Inflation $512 $523 $535 $547 $523 ELECTRIC/ECONOMIC DEV (46-00) $0 $0 $0 Inflation $0 $0 $0 $0 $0 SPC PRGRMS / COMMUNITY PROMOTIONS (41-46) $212 $0 $0 Inflation $0 $0 $0 $0 $0 Total Special Programs Total Special Programs $13,812 $41,500 $15,500 $15,872 $16,221 $16,578 $16,943 $16,223 Employee Contract Services
UNIFORM PURCHASE/MAINT (25-02) $19,284 $25,013 $25,014 Inflation $25,614 $26,178 $26,754 $27,342 $26,180 VISION ALLOWANCE (25-10) $4,967 $3,500 $3,800 Inflation $3,891 $3,977 $4,064 $4,154 $3,977 OVERTIME MEALS (25-06) $2,856 $3,000 $3,000 Inflation $3,072 $3,140 $3,209 $3,279 $3,140 TUITION/BOOKS REIMBURSE (25-09) $0 $0 $0 Inflation $0 $0 $0 $0 $0 MILEAGE REIMBURSEMENT (25-05) $0 $500 $550 Inflation $563 $576 $588 $601 $576 Total Employee Contract Services Total Employee Contract Services $27,107 $32,013 $32,364 $33,141 $33,870 $34,615 $35,376 $33,873 Departmental Supplies
DEPARTMENTAL SUPPLIES (36-00) $9,251 $17,470 $7,500 Inflation $7,680 $7,849 $8,022 $8,198 $7,850 FOOD/MEALS COST (36-07) $22 $1,000 $500 Inflation $512 $523 $535 $547 $523 Total Departmental Supplies Total Departmental Supplies $9,273 $18,470 $8,000 $8,192 $8,372 $8,556 $8,745 $8,373 Contract Service Repair
MAINT / REPAIR/MAINT-SOFTWARE (30-17) $224,527 $380,156 $465,959 Inflation $477,142 $487,639 $498,367 $509,331 $487,688 MAINT / REPAIR/MAINT-BUILDINGS (30-02) $7,020 $8,000 $8,500 Inflation $8,704 $8,895 $9,091 $9,291 $8,896 MAINT / REPAIR/MAINT-ST. LIGHTS (30-10) $0 $5,000 $5,000 Inflation $5,120 $5,233 $5,348 $5,465 $5,233 MAINT / REPAIR/MAINT-EQUIPMENT (30-06) $3,818 $7,896 $7,875 Inflation $8,064 $8,241 $8,423 $8,608 $8,242 1176
Total Contract Service Repair Total Contract Service Repair $235,365 $401,052 $487,334 $499,030 $510,009 $521,229 $532,696 $510,059 Total Supplies and Services Total Supplies and Services $1,234,744 $2,190,678 $1,398,739 $1,432,309 $1,463,820 $1,496,024 $1,528,936 $1,463,965 Check 1 - -
Transfer Out
Interfund Transfers and Payments
TRNSFR-ELECTRIC FUND (56-59) $3,794,630 $0 $0 Inflation $0 $0 $0 $0 $0 TRNSF-ELEC DBT SVC (56-94) $2,416,833 $2,426,619 $2,426,619 Inflation $2,484,858 $2,539,525 $2,595,394 $2,652,493 $2,539,778 TRNSFR - ELEC IMPROV FUND (56-57) $0 $0 $0 Inflation $0 $0 $0 $0 $0 TRNSF-EL BOND PROJ FUND (56-26) $0 $0 $0 Inflation $0 $0 $0 $0 $0 CRA-LOW/MOD FUND (56-80) $0 $0 $0 Inflation $0 $0 $0 $0 $0 TRNSF - PUB BENEFIT FUND (56-73) -$675 $0 $0 Inflation $0 $0 $0 $0 $0 INTERFUND SVC-BILL/COLL (51-75) $1,379,298 $1,412,401 $1,443,474 Inflation $1,478,117 $1,510,636 $1,543,870 $1,577,835 $1,510,786 INTERFUND SVC-ADMIN COST (51-74) $941,614 $964,213 $985,425 Inflation $1,009,076 $1,031,275 $1,053,963 $1,077,150 $1,031,378 INTERFUND SVC-INSURANCE (51-71) $665,554 $681,527 $696,521 Inflation $713,237 $728,928 $744,965 $761,354 $729,001 INTERFUND SVC-FINANCIAL (51-77) $655,199 $670,924 $685,685 Inflation $702,141 $717,588 $733,375 $749,509 $717,660 INTERFUND SVC-MTR READ SV (51-76) $514,648 $527,000 $538,594 Inflation $551,520 $563,654 $576,054 $588,727 $563,710 INTERFUND SVC-COMPUTER (51-78) $401,643 $411,282 $420,331 Inflation $430,418 $439,888 $449,565 $459,456 $439,931 INTFD SVC-BLDG JANIT/MANT (50-32) $205,928 $210,870 $215,509 Inflation $220,681 $225,536 $230,498 $235,569 $225,559 INTERFUND SVC-FLEET MAINT (51-73) $179,604 $183,915 $187,961 Inflation $192,472 $196,706 $201,034 $205,456 $196,726 INTERFUND SVC-PURCH & A/P (51-72) $168,845 $172,897 $176,701 Inflation $180,942 $184,922 $188,991 $193,148 $184,941 INTERFUND SVC-PERSONNEL (50-13) $91,937 $94,144 $96,215 Inflation $98,524 $100,692 $102,907 $105,171 $100,702 INTERFUND SVC-C/ATTORNEY (50-18) $32,421 $33,199 $33,929 Inflation $34,744 $35,508 $36,289 $37,088 $35,512 Total Interfund Transfers and Payments Total Interfund Transfers and Payments $11,447,479 $7,788,991 $7,906,963 $8,096,730 $8,274,858 $8,456,905 $8,642,957 $8,275,682 Total Transfer Out $11,447,479 $7,788,991 $7,906,963 $8,096,730 $8,274,858 $8,456,905 $8,642,957 $8,275,682 Check - - -
Labor
Salaries and Wages
PAYROLL-REGULAR (10-10) $4,280,221 $4,441,978 $4,486,416 Inflation $4,594,090 $4,695,160 $4,798,453 $4,904,019 $4,695,628 OVERTIME (10-30) $599,457 $173,886 $173,886 Inflation $178,059 $181,977 $185,980 $190,072 $181,995 INCENTIVE PAY (10-51) $139,723 $57,919 $57,919 Inflation $59,309 $60,614 $61,947 $63,310 $60,620 STANDBY PAY (10-55) $90,666 $67,231 $67,231 Inflation $68,845 $70,359 $71,907 $73,489 $70,366 SICK LEAVE PAYOFF (10-72) $71,796 $47,233 $47,777 Inflation $48,924 $50,000 $51,100 $52,224 $50,005 VACATION PAYOFF (10-71) $58,268 $42,530 $43,196 Inflation $44,233 $45,206 $46,200 $47,217 $45,210 HOLIDAY PAYOFF (10-73) $27,171 $42,320 $42,747 Inflation $43,773 $44,736 $45,720 $46,726 $44,740 COMP TIME PAYOFF (10-70) $39,171 $23,665 $24,092 Inflation $24,670 $25,213 $25,768 $26,335 $25,215 ESSENTIAL WKR PREMIUM PAY (10-60) $0 $0 $0 Inflation $0 $0 $0 $0 $0 WORKING OUT OF CLASS (10-56) $22,257 $6,902 $6,902 Inflation $7,068 $7,223 $7,382 $7,544 $7,224 JURY DUTY REIMBURSEMENT (10-82) -$15 -$15 -$15 Inflation -$15 -$16 -$16 -$16 -$16 WORKERS COMP-REIMBURSEMNT (10-80) -$12,491 $0 $0 Inflation $0 $0 $0 $0 $0 CAPITALIZED WAGES (10-90) -$885,697 $0 $0 Inflation $0 $0 $0 $0 $0 Total Salaries and Wages Total Salaries and Wages $4,430,527 $4,903,649 $4,950,151 $5,068,955 $5,180,472 $5,294,442 $5,410,920 $5,180,988 Fringe Benefits
PERS (15-15) $1,072,843 $1,364,208 $1,377,659 Inflation $1,410,723 $1,441,759 $1,473,477 $1,505,894 $1,441,902 BENEFIT ALLOWANCE (15-80) $607,210 $652,600 $656,800 Inflation $672,563 $687,360 $702,482 $717,936 $687,428 FICA (15-10) $383,765 $324,510 $325,256 Inflation $333,062 $340,390 $347,878 $355,531 $340,423 WORKERS COMP (15-20) $147,833 $155,748 $159,379 Inflation $163,204 $166,795 $170,464 $174,214 $166,811 VEHICLE ALLOWANCE (15-84) $27,478 $29,790 $30,840 Inflation $31,580 $32,275 $32,985 $33,711 $32,278 UNEMPLOYMENT INSURANCE (15-30) $26,516 $26,840 $27,111 Inflation $27,762 $28,372 $28,997 $29,635 $28,375 UTILITY CREDIT (15-70) $25,043 $23,400 $23,400 Inflation $23,962 $24,489 $25,028 $25,578 $24,491 1177
BOOT ALLOWANCE (15-88) $7,150 $6,900 $6,900 Inflation $7,066 $7,221 $7,380 $7,542 $7,222 LIFE INSURANCE (15-40) $1,888 $2,060 $2,132 Inflation $2,183 $2,231 $2,280 $2,330 $2,231 HEALTH INSURANCE (15-50) $0 $0 $0 Inflation $0 $0 $0 $0 $0 DENTAL INSURANCE (15-60) $37 $0 $0 Inflation $0 $0 $0 $0 $0 VISION COVERAGE (15-65) $13 $0 $0 Inflation $0 $0 $0 $0 $0 UNIFORM ALLOWANCE (15-82) $0 $0 $0 Inflation $0 $0 $0 $0 $0 FICA REIMB-BENEFIT ALLOW (15-95) -$4,281 -$5,015 -$5,015 Inflation -$5,135 -$5,248 -$5,364 -$5,482 -$5,249 CAPTLZED FRINGE BENEFITS (15-90) -$234,149 -$208,314 -$208,314 Inflation -$213,314 -$218,006 -$222,803 -$227,704 -$218,028 Total Fringe Benefits Total Fringe Benefits $2,061,346 $2,372,727 $2,396,148 $2,453,656 $2,507,636 $2,562,804 $2,619,186 $2,507,886 Total Labor $6,491,873 $7,276,376 $7,346,299 $7,522,610 $7,688,108 $7,857,246 $8,030,105 $7,688,874 Check - - -
Other Expenses (Revenues)
STREET LIGHTING POWER (26-03) $155,699 $194,287 $194,287 Inflation $198,950 $203,327 $207,800 $212,372 $203,347 FEES/PENALTIES (23-42) $6,426 $0 $0 Inflation $0 $0 $0 $0 $0 Total Other Expenses (Revenues) $162,125 $194,287 $194,287 $198,950 $203,327 $207,800 $212,372 $203,347 Contra Expenditure (Revenues)
OPEB EXPENSE (99-75) $234,548 $0 $0 Inflation $0 $0 $0 $0 $0 PENSION EXPENSE (99-50) $678,789 $0 $0 Inflation $0 $0 $0 $0 $0 Total Contra Expenditure $913,337 $0 $0 $0 $0 $0 $0 $0
Total Other Expenses (Revenues) $1,075,462 $194,287 $194,287 $198,950 $203,327 $207,800 $212,372 $203,347 Check - - -
Total Expenses $42,324,941 $39,782,332 $40,060,538 $41,679,052 $43,336,162 $45,068,525 $46,879,832 $43,404,822 Check 1 - -
Revenues
Sales and Service Charges
METERED SALES (356.38-01) $27,047,120 $31,329,155 $36,414,876 Calculated Revenues $44,749,212 $49,969,990 $52,702,904 $55,586,253 $47,884,647 REC SALES (366.44-60) $2,480,000 $3,500,000 $1,000,000 No Escalation $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 CAP & TRADE (366.44-55) $1,375,779 $1,450,000 $1,500,000 No Escalation $1,500,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000 TRANSMISSION SALES-CAISO (356.38-20) $1,045,790 $1,000,000 $1,000,000 No Escalation $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 POWER COST ADJUSTMENT (356.38-18) $1,021,065 $1,100,000 $1,100,000 No Escalation $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 BULK ENERGY SALES (356.38-10) $410,116 $400,000 $400,000 No Escalation $400,000 $400,000 $400,000 $400,000 $400,000 MISCELLANEOUS REVENUES (356.38-12) $253,317 $200,000 $200,000 No Escalation $200,000 $200,000 $200,000 $200,000 $200,000 CRR REVENUE - CAISO (356.38-17) $137,915 $150,000 $150,000 No Escalation $150,000 $150,000 $150,000 $150,000 $150,000 STREET LIGHTING (356.38-05) $0 $322,340 $322,340 No Escalation $322,340 $322,340 $322,340 $322,340 $322,340 TURN ON CHARGES (356.38-06) $71,205 $75,000 $75,000 No Escalation $75,000 $75,000 $75,000 $75,000 $75,000 DELINQ. RECONNECT FEE (356.38-08) $130 $15,000 $15,000 No Escalation $15,000 $15,000 $15,000 $15,000 $15,000 MEDICAL DISCOUNT (357.38-10) -$142,107 -$140,763 -$140,763 No Escalation -$140,763 -$140,763 -$140,763 -$140,763 -$140,763 Total Sales and Service Charges $33,700,330 $39,400,732 $42,036,453 $50,370,789 $55,591,567 $58,324,481 $61,207,830 $53,506,224 Miscellaneous & Other Income
IN AID OF CONSTRUCTION (366.44-07) $5,315,000 $125,000 $4,918,750 Inflation $1,175,000 $0 $2,200,000 $1,000,000 $1,858,750 RESERVE CANCELLATIONS-OP (369.99-98) $0 $0 $0 Inflation $0 $0 $0 $0 $0 SPC PRGRMS / RESTITUTION/SUBROGATION (361.41-53) $22,267 $10,000 $10,000 Inflation $10,240 $10,465 $10,696 $10,931 $10,466 ELECT JOINT POLES (331.27-02) $15,263 $15,875 $15,875 Inflation $16,256 $16,614 $16,979 $17,353 $16,615 SPC PRGRMS / SALE OF SURPLUS PROPERT (361.41-24) $5,501 $20,000 $20,000 Inflation $20,480 $20,931 $21,391 $21,862 $20,933 1178
SPC PRGRMS / GAIN ON SALE OF ASSET (361.41-27) $41,281 $0 $0 Inflation $0 $0 $0 $0 $0 SPC PRGRMS / MISC. RECEIPTS/REVENUE (361.41-61) $0 $1,804 $1,804 Inflation $1,847 $1,888 $1,929 $1,972 $1,888 PLAN CHECK FEES (366.44-09) $840 $1,180 $1,180 Inflation $1,208 $1,235 $1,262 $1,290 $1,235 TEMP POLE CONNECTION (331.27-01) $704 $1,000 $1,000 Inflation $1,024 $1,047 $1,070 $1,093 $1,047 EV CHARGING STATION (356.38-25) $93 $200 $200 Inflation $205 $209 $214 $219 $209 CAPITAL CONTRIBUTIONS (331.25-20) $466,561 $0 $0 Inflation $0 $0 $0 $0 $0 Total Miscellaneous & Other Income $5,867,510 $175,059 $4,968,809 $1,226,260 $52,388 $2,253,541 $1,054,719 $1,911,143 Use of Money and Property
INVESTMENT INTEREST (331.20-01) $58,075 $40,000 $40,000 Inflation $40,960 $41,861 $42,782 $43,723 $41,865 INT. EARNED-FISCAL AGENT (331.20-03) $5,568 $0 $0 Inflation $0 $0 $0 $0 $0 Total Use of Money and Property $63,643 $40,000 $40,000 $40,960 $41,861 $42,782 $43,723 $41,865 Intergovenmental, Licenses and Permits
CA DPT OF COMM SVCS & DEV (341.31-13) $0 $0 $0 Inflation $0 $0 $0 $0 $0 METER INSTALLATION & CONN (366.44-03) $5,830 $13,515 $13,515 Inflation $13,839 $14,144 $14,455 $14,773 $14,145 CONSTRUCTION PLAN CK FEE (351.35-16) $0 $0 $0 Inflation $0 $0 $0 $0 $0 Total Intergovernmental, Licenses and Permits $5,830 $13,515 $13,515 $13,839 $14,144 $14,455 $14,773 $14,145 Interfund Transfers In
TRNSFR-ELECTRIC IMPROV FD (381.56-61) $3,794,630 $0 $0 Inflation $0 $0 $0 $0 $0 TRANSFER-ELECTRIC FUND (381.56-59) $2,416,833 $2,426,619 $2,426,619 Inflation $2,484,858 $2,539,525 $2,595,394 $2,652,493 $2,539,778 TRNSFR-GAS TAX STREET FD (381.56-04) $338,270 $350,000 $350,000 Inflation $358,400 $366,285 $374,343 $382,579 $366,321 (222) ARPA FUND (381.56-22) $0 $0 $0 Inflation $0 $0 $0 $0 $0 TRNSF - PUB BENEFIT FUND (381.56-74) $0 $0 $0 Inflation $0 $0 $0 $0 $0 Total Interfund Transfer In $6,549,733 $2,776,619 $2,776,619 $2,843,258 $2,905,810 $2,969,737 $3,035,072 $2,906,099 Total Revenues $46,187,046 $42,405,925 $49,835,396 $54,495,107 $58,605,769 $63,604,996 $65,356,116 $58,379,477 Check 1 - -
Revenues Less Expenses $3,862,105 $2,623,593 $9,774,858 $12,816,055 $15,269,608 $18,536,471 $18,476,284 $14,974,655 Debt Service
INTEREST - 2015 REV BONDS (62-18) $1,017,210 $1,023,044 $1,023,044 Debt Service $802,294 $721,294 $668,013 $610,975 $765,124 PRIN - 2015 REV BONDS (61-18) $0 $1,400,000 $1,400,000 Debt Service $1,620,000 $1,705,000 $1,755,000 $1,740,000 $1,644,000 ROUA AMORTIZATION-SBITA (66-19) $0 $0 $0 Inflation $0 $0 $0 $0 $0 INTEREST EXPENSE-LEASE (62-01) $0 $0 $0 Inflation $0 $0 $0 $0 $0 SBITA (32-19) $0 $0 $0 Inflation $0 $0 $0 $0 $0
BOND PAYING AGENT FEES (65-08) $2,750 $2,475 $2,475 Inflation $2,534 $2,590 $2,647 $2,705 $2,590 AMORT-DEBT DISCT/EXP (65-07) -$35,189 -$35,189 -$35,189 Inflation -$36,034 -$36,826 -$37,636 -$38,464 -$36,830 BAD DEBT EXPENSE (49-01) $256,476 $0 $0 Inflation $0 $0 $0 $0 $0 Total Debt Service Total Debt Service $1,241,247 $2,390,330 $2,390,330 $2,388,795 $2,392,058 $2,388,023 $2,315,216 $2,374,884 Check - - -
1179
Banning Cash Flow
Amended Amended
Budget Budget FY 26 - FY 30
Description FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 Test Year Key Performance Indicators
Debt Service Coverage 1.32 1.21 1.32 1.70 1.72 2.07 1.60 Debt Service Coverage Target 1.20 1.20 1.20 1.20 1.20 1.20 1.20 Days Cash on Hand (Funds 670 and 672) 48 -6 38 94 100 106 66 Day Cash on Hand Target (Policy) 90 90 90 90 90 90 90
Electric Utility Fund (Collective) YE Balance -$10,460,989 -$10,383,413 -$4,391,111 $4,310,704 $14,646,008 $24,488,712 $5,734,180 Fund Policy Target Rounded (30% of O&M and DS) $11,924,000 $12,007,000 $12,475,000 $12,957,000 $13,458,000 $13,963,000 $12,972,000 YE Balance Meeting Fund Target (Yes/No) NO NO NO NO YES YES Operating Revenues
Metered Sales $32,030,343 $36,414,876 $44,250,098 $50,020,113 $53,224,832 $55,650,024 $47,911,989 REC Sales $3,500,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 Other Sales and Service Charges $4,300,000 $4,350,000 $4,350,000 $4,350,000 $4,350,000 $4,350,000 $4,350,000 Total Operating Revenues $39,830,343 $41,764,876 $49,600,098 $55,370,113 $58,574,832 $61,000,024 $53,261,989 Check - - - - - - -
Operating Expenses
Purchased Power $22,332,000 $23,214,250 $24,428,453 $25,706,050 $27,050,551 $28,465,462 $25,772,953 Supplies and Services $2,190,678 $1,398,739 $1,432,309 $1,463,820 $1,496,024 $1,528,936 $1,463,965 Labor Expenses $7,276,376 $7,346,299 $7,522,610 $7,688,108 $7,857,246 $8,030,105 $7,688,874 Interfund Services $5,362,372 $5,480,344 $5,611,872 $5,735,333 $5,861,511 $5,990,464 $5,735,905 Other Expenses (Revenues) $194,287 $194,287 $198,950 $203,327 $207,800 $212,372 $203,347 Contra Expenditure $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $37,355,713 $37,633,919 $39,194,194 $40,796,637 $42,473,131 $44,227,339 $40,865,044 Check - - (0) - (0) (0) 0
Other Income (Expenses)
Miscellaneous Income $30,059 $30,059 $30,780 $31,458 $32,150 $32,857 $31,461 Interest Income $40,000 $40,000 $40,960 $41,861 $42,782 $43,723 $41,865 Connection Fees $13,515 $13,515 $13,839 $14,144 $14,455 $14,773 $14,145 Contribution to Electric Operations Fund -$425,000 -$2,125,000 -$2,500,000 $0 $0 -$1,010,000 Contribution to Rate Stability Fund -$400,000 -$2,125,000 -$2,500,000 $0 $0 -$1,005,000 Contribution to Electric Improvement Fund -$400,000 -$3,000,000 -$5,500,000 -$12,000,000 -$12,000,000 -$6,580,000 Contrbution to Electric Revenue Bond Debt Service Fund $0 $0 $0 $0 $0 $0 Contribution to Working Capital Reserve -$451,927 -$451,927 -$451,927 -$451,927 -$451,927 -$451,927 Capital from Cash -$25,000 $0 $0 $0 $0 $0 $0
Transfers In $350,000 $350,000 $358,400 $366,285 $374,343 $382,579 $366,321 Total Other Income (Expenses) $408,574 -$1,243,353 -$7,257,948 -$10,498,180 -$11,988,198 -$11,977,995 -$8,593,135 Balance Available for Debt Service $2,883,204 $2,887,604 $3,147,956 $4,075,296 $4,113,504 $4,794,689 $3,803,810 1180
Debt Service
Outstanding Debt $2,390,330 $2,390,330 $2,388,795 $2,392,058 $2,388,023 $2,315,216 $2,374,884 Debt Refunding (Savings) $0 $0 $0 $0 $0 $0 $0
Proposed Debt $0 $0 $0 $0 $0 $0 $0
Total Debt Service $2,390,330 $2,390,330 $2,388,795 $2,392,058 $2,388,023 $2,315,216 $2,374,884 Debt Service Coverage Ratio 1.21 1.21 1.32 1.70 1.72 2.07 1.60 DSC Ratio Required 1.20 1.20 1.20 1.20 1.20 1.20 1.20
Balance Available for Retained Earnings $492,874 $497,274 $759,162 $1,683,238 $1,725,480 $2,479,474 $1,428,926 Capital Expenditures
Sources - Debt $0 $0 $0 $0 $0 $0 $0
Sources - Aid in Construction $125,000 $4,918,750 $1,175,000 $0 $2,200,000 $1,000,000 $1,858,750 Sources - Unfunded $25,000 $0 $0 $0 $0 $0 $0
Sources - Reserves $995,000 $2,096,626 $2,468,787 $3,933,350 $4,268,150 $6,372,694 $3,827,921 Uses $1,145,000 $7,015,376 $3,643,787 $3,933,350 $6,468,150 $7,372,694 $5,686,671 Check - $0 $0 $0 $0 $0
Funds
Electric Operations (670)
Beginning Balance -$2,461,331 -$1,968,457 -$1,046,183 $1,837,979 $6,021,217 $7,746,697 $2,518,251 Deposits from Rate Revenue $0 $425,000 $2,125,000 $2,500,000 $0 $0 $1,010,000 Over / (Under) Recovery $492,874 $497,274 $759,162 $1,683,238 $1,725,480 $2,479,474 $1,428,926 Interest Income $0 $0 $0 $0 $0 $0 $0
Withdrawals to 673 $0 $0 $0 $0 $0 $0 $0
Ending Balance -$1,968,457 -$1,046,183 $1,837,979 $6,021,217 $7,746,697 $10,226,171 $4,957,176 Rate Stability Fund (672)
Beginning Balance $6,800,667 $6,903,678 $400,000 $2,525,000 $5,025,000 $5,025,000 $3,975,736 Deposits from Rate Revenue $0 $400,000 $2,125,000 $2,500,000 $0 $0 $1,005,000 Over / (Under) Recovery $0 $0 $0 $0 $0 $0 $0
Interest Income $103,011 $0 $0 $0 $0 $0 $0
Withdrawals to 673 $0 -$6,903,678 $0 $0 $0 $0 -$1,380,736 Ending Balance $6,903,678 $400,000 $2,525,000 $5,025,000 $5,025,000 $5,025,000 $3,600,000 Combined 670 & 672 Funds
Beginning Balance $4,339,336 $4,935,221 -$646,183 $4,362,979 $11,046,217 $12,345,651 $6,408,777 Deposits from Rate Revenue $0 $825,000 $4,250,000 $5,000,000 $0 $0 $2,015,000 Over / (Under) Recovery $492,874 $497,274 $759,162 $1,683,238 $1,725,480 $2,479,474 $1,428,926 Interest Income $103,011 $0 $0 $0 $0 $0 $0
Withdrawals to 673 after DCOH Target $0 $0 $0 -$426,046 -$1,283,997 -$342,009 Withdrawals to 673 from 672 $0 -$6,903,678 $0 $0 $0 $0 -$1,380,736 Ending Balance $4,935,221 -$646,183 $4,362,979 $11,046,217 $12,345,651 $13,541,128 $8,129,959 Days Cash on Hand 45 (6) 38 94 100 106 67
Days Cash on Hand Target (Proposed) 90 90 90 90 90 90 90 1181
Cash Target for DCOH Target 9,800,394 9,868,993 10,253,340 10,620,171 11,061,654 11,476,246 10,656,081 Cash Needed for DCOH Target 4,865,173 10,515,176 5,890,361 (426,046) (1,283,997) (2,064,882) 2,526,122 Electric Improvement Fund (673)
Beginning Balance -$15,086,772 -$16,081,772 -$10,874,720 -$10,343,507 -$8,776,857 -$618,961 -$9,339,163 Deposits - Rate Stability Fund (672) $0 $6,903,678 $0 $0 $0 $0 $1,380,736 Deposits - Rate Revenue $0 $400,000 $3,000,000 $5,500,000 $12,000,000 $12,000,000 $6,580,000 Deposits - Electric Operations (670) $0 $0 $0 $0 $426,046 $1,283,997 $342,009 Over / (Under) Recovery $0 $0 $0 $0 $0 $0 $0
Interest Income $0 $0 $0 $0 $0 $0 $0
Capital from Reserves -$995,000 -$2,096,626 -$2,468,787 -$3,933,350 -$4,268,150 -$6,372,694 -$3,827,921 Ending Balance -$16,081,772 -$10,874,720 -$10,343,507 -$8,776,857 -$618,961 $6,292,342 -$4,864,340 Electric Rev Bond Project Fund (674)
Beginning Balance $696,123 $696,123 $696,123 $696,123 $696,123 $696,123 $696,123 Deposits $0 $0 $0 $0 $0 $0 $0
Interest Income $0 $0 $0 $0 $0 $0 $0
Withdrawals $0 $0 $0 $0 $0 $0 $0
Ending Balance $696,123 $696,123 $696,123 $696,123 $696,123 $696,123 $696,123 Electric Rev Bond DS Fund (678)
Beginning Balance -$10,561 -$10,561 -$10,561 -$10,561 -$10,561 -$10,561 -$10,561 Deposits $0 $0 $0 $0 $0 $0 $0
Interest Income $0 $0 $0 $0 $0 $0 $0
Withdrawals $0 $0 $0 $0 $0 $0 $0
Ending Balance -$10,561 -$10,561 -$10,561 -$10,561 -$10,561 -$10,561 -$10,561 Proposed Working Capital Reserve Fund
Beginning Balance $0 $0 $451,927 $903,855 $1,355,782 $1,807,709 $903,855 Deposits from Rate Revenue $0 $451,927 $451,927 $451,927 $451,927 $451,927 $451,927 Withdrawals $0 $0 $0 $0 $0 $0 $0
Ending Balance $0 $451,927 $903,855 $1,355,782 $1,807,709 $2,259,637 $1,355,782 Proposed Working Capital Reserve Fund $0 $451,927 $903,855 $1,355,782 $1,807,709 $2,259,637 $1,355,782 Proposed Working Capital Reserve Fund Target (1/8th O&M excl. PP) $1,877,964 $1,802,459 $1,845,718 $1,886,323 $1,927,823 $1,970,235 $1,886,511 Total Fund Balance
Beginning Balance -$10,061,874 -$10,460,989 -$10,383,413 -$4,391,111 $4,310,704 $14,646,008 -$1,255,760 Deposits from Rate Revenue $0 $1,676,927 $7,701,927 $10,951,927 $12,451,927 $12,451,927 $9,046,927 Deposits from Existing Funds to Fund 673 $0 $6,903,678 $0 $0 $426,046 $1,283,997 $1,722,744 Over/ (Under) Recovery $492,874 $497,274 $759,162 $1,683,238 $1,725,480 $2,479,474 $1,428,926 Interest Income $103,011 $0 $0 $0 $0 $0 $0
Withdrawals $0 -$6,903,678 $0 $0 $0 $0 -$1,380,736
Capital from Reserves (Fund 673) -$995,000 -$2,096,626 -$2,468,787 -$3,933,350 -$4,268,150 -$6,372,694 -$3,827,921 Additional Funding $0 $0 $0 $0 $0 $0 $0
All Funds Ending Balance -$10,460,989 -$10,383,413 -$4,391,111 $4,310,704 $14,646,008 $24,488,712 $5,734,180 1182
CITY OF BANNING
STAFF REPORT
TO: CITY COUNCIL
FROM: Arturo Vela, Interim City Manager
PREPARED BY: Art Vela, Interim City Manager
MEETING DATE: October 14, 2025
SUBJECT: Consideration of Resolution 2025-149, Approving a Professional Services Agreement with LSL, LLP in the Amount of $310,000 for Professional Municipal Accounting Services Aimed at Updating the City's Financial Records
RECOMMENDATION:
Adopt Resolution 2025-149
BACKGROUND:
The City Council has been made aware of the significant lack of current and reliable financial information for Fiscal Year 2024-25. This information gap directly affects day-to-day operations and the City’s ability to accurately assess its overall financial position. The underlying challenges began early in Fiscal Year 2024-25 with the departure of several key employees from the Finance Department, resulting in a loss of institutional knowledge and continuity.
Since that time, the City has relied on interim personnel and contracted temporary staff to maintain operations and work toward financial reconciliation. Despite these efforts, including the dedication of the Interim Finance Director (CalPERS retired annuitant), the scope and complexity of the challenge exceed the capacity currently available within the Finance Department. Most recently, the resignation of tenured Chief Procurement Officer and Senior Accountant further exacerbated the Finance Department’s resource limitations.
To stabilize operations and accelerate progress, staff determined that a coordinated team from a single accounting firm would be necessary. An initial on-site presence will allow the firm to evaluate existing records, identify key information sources, and develop a structured work plan. Once this foundation is established, the firm can transition to a primarily remote service model, thereby reducing travel and lodging costs and improving efficiency.
Consistent with Section 13 (Emergency Purchases) of the City’s Purchasing Rules and Procedures, staff informally solicited and interviewed two qualified Certified Public Accounting firms with demonstrated experience in assisting municipalities to reconcile and restore financial records. Due to the urgent need to bring the City’s accounting activities current, there was insufficient time to conduct a formal Request for Proposals (RFP) process, and staff determined that such a process would not likely yield better results given the immediate circumstances.
Following the interviews, staff selected LSL, LLP, an accounting and consulting firm with a strong presence in California and extensive experience supporting cities with similar financial recovery efforts.
LSL also brings valuable familiarity with Banning’s financial systems and practices, having previously 1183
served as the City’s independent auditor.
In addition to contracting with LSL, the City will onboard a new former Banning Finance Director Bonnie Johnson as an Extra Help retiree annuitant. Ms. Johnson has since served as Finance Director and City Manager for other Inland Empire cities and will provide additional high-level guidance as the current Interim Finance Director approaches her CalPERS 960-hour limit in December.
The City is also preparing to enter its next budget development cycle, which typically begins at the start of the calendar year. To prepare a sound and realistic spending plan for Fiscal Year 2025-26, it is essential to have accurate and up-to-date financial data for both the prior and current fiscal years. This information will also serve as the foundation for developing a long-term fiscal forecast to guide City Council policy decisions and ensure the City’s ongoing financial sustainability.
Between the two firms considered—Baker Tilly and LSL, LLP—staff recommends LSL due to their extensive California municipal experience, their proposed hourly rates being approximately 30% lower than Baker Tilly’s, and their responsiveness and understanding of the City’s needs.
Engaging LSL will provide the additional capacity and expertise necessary to bring the City’s financial records current. This recommendation in no way reflects negatively on the current Interim Finance Director, whose efforts and leadership have been instrumental in maintaining operations under difficult circumstances.
JUSTIFICATION:
The City requires professional accounting support to bring its financial records current following significant turnover and vacancies within the Finance Department. Despite the dedication of existing staff, the scope and complexity of the backlog exceed the Finance Department's current capacity, making outside expertise essential to ensure timely and reliable financial information for upcoming budget and audit processes.
LSL, LLP was selected based on its extensive experience assisting California municipalities with similar accounting recovery efforts, its prior familiarity with the City’s financial systems as a former independent auditor, and its competitive price proposal. Their team offers the technical expertise and capacity needed to stabilize the City’s financial operations.
FISCAL IMPACT:
The total cost of services is estimated to range between $215,000 and $310,000, depending on the level of effort required once LSL, LLP begins work and fully assesses the City’s accounting records. The final cost will be determined based on actual time and materials needed to complete the scope of work and bring the City’s financial records current.
An appropriation in the amount of $310,000 to Account 001-1910-412-33.11 to cover the "not-to-exceed" amount.
ALTERNATIVES:
1. Do not approve and remain at status quo, which would rely on current limited staff to complete the work, which may not happen in time or at all to complete the upcoming budget process and to inform the City Council on the City's financial position.
2. Direct staff to procure the required services following a formal RFP process. This would take up to 3-4 months to commence the required services resulting in not completing the services on time for the City to make will informed decisions on the upcoming budgeting process.
BUDGETED?:
No
1184
CONTRACT/AGREEMENT:
Yes
ATTACHMENTS:
1. Resolution_2025-149.docx
2. LSL Consulting Proposal - City of Banning 10.09.2025.pdf
3. AGREEMENT FOR PROFESSIONAL SERVICES - LSL LLP w bd edits.docx 1185
Resolution 2025-149
RESOLUTION 2025-149
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BANNING, CALIFORNIA,
APPROVING A PROFESSIONAL SERVICES AGREEMENT WITH LSL, LLP IN THE AMOUNT OF $310,000 FOR PROFESSIONAL MUNICIPAL ACCOUNTING SERVICES AIMED AT
UPDATING THE CITY'S FINANCIAL RECORDS
WHEREAS, the City is faced with a significant lack of current and reliable financial information for Fiscal Year 2024-25, which affects day-to-day operations and the City’s ability to accurately assess its overall financial position; and
WHEREAS, this condition originated with the departure of several key Finance Department employees in Fiscal Year 2024-25, resulting in the loss of institutional knowledge and continuity essential to maintaining accurate and timely financial records; and WHEREAS, despite the dedication of the Interim Finance Director, who will soon near the maximum hours allowed for a CalPERS retired annuitant, and the use of interim and temporary staffing resources, the complexity and magnitude of the backlog exceed the current capacity of the Finance Department; and
WHEREAS, consistent with Section 13 (Emergency Purchases) of the City’s Purchasing Rules and Procedures, staff informally solicited and interviewed two qualified Certified Public Accounting firms experienced in municipal accounting recovery to address this urgent need; and WHEREAS, following this process, staff selected LSL, LLP, an accounting and consulting firm with extensive experience assisting California cities with financial reconciliation and prior familiarity with Banning’s accounting systems and practices, as the most qualified and costeffective option; and WHEREAS, engaging LSL, LLP, along with onboarding of a new Interim Finance Director as an Extra Help retiree annuitant, will provide the additional capacity, expertise, and leadership necessary to bring the City’s financial records current and ensure accurate data for the upcoming budget cycle and long-term fiscal planning; and
WHEREAS, an appropriation in the amount of $310,000 is required from the General Fund to Account 001-1910-412-33.11.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Banning as follows:
SECTION 1. The City Council approves the Professional Services Agreement with LSL, LLP in the amount of $310,000 for Professional Municipal Accounting Services.
SECTION 2. The City Council authorizes the City Manager, or their designee, to make necessary budget adjustments, appropriations, and transfers related to this resolution.
SECTION 3. The City Council authorizes the City Manager to make necessary non-substantive changes and to execute the Professional Services Agreement with LSL, LLP.
SECTION 4. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. 1186
Resolution 2025-149
PASSED, APPROVED AND ADOPTED this 14th day of October 2025.
Sheri Flynn, Mayor
City of Banning
ATTEST:
Sandra Calderon, Acting Administrative
City Clerk
City of Banning
APPROVED AS TO FORM:
John Pinkney, City Attorney
Slovak, Baron, Empey, Murphy & Pinkney, LLP
1187
Resolution 2025-149
CERTIFICATION:
I, Sandra Calderon, Acting Administrative City Clerk of the City of Banning, California, do hereby certify that the foregoing Resolution 2025-149, was duly adopted by the City Council of the City of Banning, California, at a regular meeting thereof held on the 14th day of October 2025 by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Sandra Calderon, Acting Administrative City
Clerk
City of Banning, California
1188
Resolution 2025-149
EXHIBIT A
Professional Services Agreement with LSL, LLP
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PREPARED BY
LSL, LLP
Certified Public Accountants
License Number 2584
Proposal Presented to the
City of Banning
Accounting and Consulting Services
Date of Submission: October 8, 2025
Valid for 90 Days
Authorized by
Kelly Telford, CPA, Partner
500 Technology Drive, Suite 350
Irvine, CA 92618
(949) 829-8299
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Table of Contents
TABLE OF CONTENTS ........................................................................................................................... 1 LETTER OF TRANSMITTAL .................................................................................................................... 2 Scope of Services and Deliverables ...................................................................................................... 2 Qualifications and Personnel ................................................................................................................. 2 Cost Proposal and Payment Terms ....................................................................................................... 5 Adapting to a Remote Working Relationship ......................................................................................... 6 Conclusion ............................................................................................................................................. 6 LSL PROFILE ........................................................................................................................................... 7 History and Size ..................................................................................................................................... 7 Location ................................................................................................................................................. 7 Accounting Today Regional Leader ....................................................................................................... 7 INSIDE Public Accounting (IPA) Award ................................................................................................. 8 Our Core Values .................................................................................................................................... 8 Best of Accounting Award ...................................................................................................................... 8 Training and Seminars ........................................................................................................................... 8 License to Practice ................................................................................................................................ 8 Desk Reviews and Disciplinary Action ................................................................................................... 8 Peer Review .......................................................................................................................................... 9 QUALIFICATIONS & EXPERIENCE ........................................................................................................ 9 Continuing Education ............................................................................................................................. 9 Recent Experience ................................................................................................................................ 9 APPENDIX A – SCOPE AND DELIVERABLES .................................................................................... 10 APPENDIX B – CLIENT REFERENCES ................................................................................................ 13 APPENDIX C – PEER REVIEW ............................................................................................................. 14
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LETTER OF TRANSMITTAL
October 8, 2025
Bob Deis
City of Banning
99 E. Ramsey Street
Banning, CA 92220
Dear Mr. Deis,
LSL, LLP (“LSL”) is pleased to present our proposal for accounting and consulting services. We value the opportunity to present our professional qualifications to the City of Banning and demonstrate why our services are second to none.
LSL has a well-established history of delivering outstanding services to government entities. We provide auditing, accounting, and consulting services to more than 100 municipal clients across the country, such as cities, counties, water and electric utilities, and special-purpose government agencies. Our proposal highlights our firm’s strength and stability, along with our demonstrated experience, knowledge, passion, and creative problem-solving capabilities as a leader in the field of governmental accounting and auditing. Our dynamic team is comprised of top talent within the industry, and with our comprehensive government experience, and our dedication to providing personalized experiences for each of our clients, we believe you will find that LSL is one of the best-qualified accounting firms to provide these services.
SCOPE OF SERVICES AND DELIVERABLES
We understand you are seeking a qualified firm to provide consulting and accounting services. LSL has a structured, well-tested approach to providing accounting services. Our goal is not to replace your team but become a part of it.
Our team is willing and ready to provide assistance in strategic areas that allow your team to focus on the day-to-day while allowing us to take care of more complex tasks that cannot be done by other team members. The City can benefit from various services, including year-end and month-end close, as well as special projects like financial analysis for internal service funds. LSL can handle tasks typically managed by the finance department so your team can focus on daily operations. Details on LSL's services are in Appendix A, which can be prioritized with City staff to address key items within budget.
QUALIFICATIONS AND PERSONNEL
Our dedicated team of professionals have over 100 years of expertise working in and with government agencies.
Key members of our team and their requisite experience is listed below. Detailed resumes of our management team are included below. Additional information regarding the other members of the team are available upon request.
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Kelly Telford, CPA, Partner
Kelly is a respected leader in public finance and is known for being a change agent and thought leader in organizational strategy. She has developed her expertise in accounting and auditing, financial forecasting, budget development, public utilities, investment management, grant management, human resources, and information technology, including ERP implementations. She has taught classes for GFOA and CSMFO and has presented at annual conferences for GFOA, CSMFO and GFOAA.
Kelly has a wealth of experience in both public accounting and local government. She has previously served as Finance Director for the cities of Costa Mesa and Seal Beach as well as the Los Angeles Community Development Agency.
Kelly has a proven track record of helping agencies identify operating inefficiencies assisted in departmental reorganizations, identify internal control challenges, completing year-end close procedures, and serving as an outsourced Finance Director. Her practical recommendations are instrumental in helping our team and our clients achieve a high-quality and efficient audit while providing valuable feedback for organizational improvements.
Noah Daniels, CPA, CPFO, Director
Noah has extensive experience in municipal finance departments, gained through both his work as an auditor and his work in local government agencies. As a director, he combines his strategic problem-solving approach with firsthand knowledge of our client’s operations, allowing him to understand their needs and serve as a trusted partner and extension of their departments. Noah's expertise has been instrumental in helping government agencies maximize the use of their existing resources to meet a broader range of priorities.
As the Finance Director for the City of Rancho Cucamonga, Noah's strategic leadership was instrumental in replacing an outdated financial system (Workday), enhancing efficiency and accuracy. He was responsible for designing fiscal policies, including debt management, special district funding, and reserve policies, to ensure efficiency, compliance, and adherence to government regulations.
Aaron Rios, CPA, Senior Manager
With more than two decades of experience, Aaron brings deep expertise, passion, and a steady hand to the LSL team. Specializing in governmental agencies, he helps clients navigate with confidence in their audits, reporting, internal controls, and compliance.
Previously a partner at a top 25 regional firm and assurance director at a top 10 national firm - Aaron has worked with both large and small organizations across the country. His experience in internal control improvements has helped him become a top advisor for his clients. His practical recommendations are instrumental in helping our team and our clients achieve a high-quality and efficient audits while providing valuable feedback for organizational improvements.
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Hiram Zavala, Supervisor
With more than a decade of experience in municipal accounting and finance, Hiram Zavala brings strong technical expertise and practical experience to the LSL team.
Before joining LSL, he held key finance roles with the County of San Bernardino and the cities of Ontario and Rancho Cucamonga. Hiram has performed a variety of tasks in those roles, including capital asset accounting, accounts payable, budgeting, assembling cost allocation plan and indirect cost rate calculations, and improving financial reporting processes. His analytical and collaborative approach makes him a valuable contributor to complex accounting and implementation projects supporting LSL’s government clients.
Cara Clifton, Senior Accountant
With more than 22 years of experience in municipal accounting, Cara brings extensive knowledge of fund accounting, bank reconciliations, capital assets, and utility billing.
Before joining LSL, Cara spent 16 years with the City of Longview, Texas where she rose to the role of Utilities Accounting Supervisor. Her responsibilities included capital asset accounting, grant management, multiple bank reconciliations, and oversight of utility revenue internal controls.
She has supported numerous cities and special districts in their year-end close processes, including bank reconciliation, capital assets, pensions, OPEB, leases, and IT subscriptions. Cara’s hands-on approach and familiarity with municipal systems make her a trusted resource for complex reconciliations and year-end close support.
In addition to our key team members, our team includes seniors, supervisors, and managers with extensive experience working in and with local governments. All assigned staff have significant expertise in providing auditing and accounting services for cities, counties, and special-purpose government agencies. This ensures that your team does not need to train ours. All our team members are supervised by the LSL management team, guaranteeing that the deliverables we provide to our clients are of high quality and accuracy.
As you can see, LSL is uniquely positioned to assist our clients as our team is comprised of government industry experts who have worked in local governments themselves. Our team understands the complexities of government accounting and can ensure your accounting is accurate and well maintained. In addition, our team has worked in various ERP systems as both consultants and as members of local government which allows us to adapt quickly to your financial environment.
Also, having a team that has worked in local government, we can assist with other projects you may need such as training and support of finance department staff, evaluations of efficiencies in the department and assessments to help determine where staff capacity exists, and serving as a backup for day-to-day transaction processing such as utility billing, accounts payable and payroll.
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The LSL team is comprised of top talent within the industry with comprehensive experience beyond governmental audit, accounting, and advisory services. When you partner with LSL, you gain access to the experience, knowledge, and resources of our entire team, including our consulting and technology teams. We are committed to helping finance departments thrive by providing the guidance, tools, and services that foster lifelong success for your finance team. We encourage our clients to tap into our full professional team of industry and product experts for your fullservice consulting, staffing, and financial report automation solutions.
Financial &
Compliance Audits
Consulting,
Staffing & Training
ERP &
Other Technologies
COST PROPOSAL AND PAYMENT TERMS
Our professional fee for the services outlined in Appendix A – Scope and Deliverables will be at the firm’s standard rates plus out of pocket expenses. Our fees are based on the time required by the individuals assigned to the engagement, the complexity of the work to be performed, as well as any out-of-pocket expenses. Due to the nature of these services, LSL recommends an hourly contract be established to allow for as little or as much assistance as necessary. Estimates are preliminary and subject to change based on the complexity of the work, the extent of procedures required, and the condition of the City’s accounting records to be evaluated while onsite and throughout the project. Any significant deviations from these estimates will be reviewed and discussed with City management prior to proceeding.
Task 1 – Assist with FY 2024–25 Year End Close $145,000 to $195,000 Task 2 – Review FY 2025–26 Adopted Budget for Reasonableness $25,000 to $50,000 Task 3 – Collaborate with ISF Program Managers and Develop an Allocation Plan $35,000 to $50,000 Task 4 – Develop Implementation Plan for ISF Allocation Plan $10,000 to $15,000 Task 5 – Support for Year-End and Ongoing Accounting Services To be determined Our standard hourly rates are as follows:
Title Rates
Group Training $450
Partner $390
Director $320
Senior Manager $290
Manager $250
Supervisor $210
Senior Accountant $190
Experienced Staff $160
Staff Accountant $140
Clerical $120
LSL 2025 Hourly Rates
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Additional circumstances may arise that could impact the total cost including, but not limited to, increase in scope, issues encountered with the timely delivery, availability, quality, or completeness of the information you provide to us, changes in your personnel or operations that impact our services or other unanticipated items that arise during our engagement and that require additional time to complete the agreed-upon services. You agree that you will deliver all records requested and respond to all inquiries made by our staff to complete this engagement on a timely basis.
You agree to pay all fees and expenses incurred whether or not we issue deliverable(s). Should these circumstances exist, our team will communicate with staff prior to time being incurred.
Any non-personnel-related costs, including travel-related costs, will be billed and reimbursed as they are incurred, if necessary. Progress bills will be sent monthly on the basis of hours of work completed during the course of the engagement plus out-of-pocket expenses incurred in accordance with the firm's proposal.
The rates above are effective through December 31, 2025. Rates increase annually on January 1 based upon market rates for similar services and generally range between 3% to 7%.
ADAPTING TO A REMOTE WORKING RELATIONSHIP
LSL is fully equipped with software and communication tools to support a remote process. We leverage Microsoft Teams to easily connect over a video call in a face-to-face setting, giving us the ability to share screens and information in real-time. Additionally, having the customizable LSL CaseWare Cloud Portal makes the exchange of secure information easy and painless. LSL is also accustomed to working in our client’s financial software solutions in a remote environment, taking advantage of VPN connections and remote desktops. In an effort to reduce costs for our clients, our team has become accustomed to working remotely using remote desktop technology. It is anticipated that the work would be performed on-site and remotely.
CONCLUSION
Our collective experience in local government accounting backed by our comprehensive understanding of all facets of municipal government operations has resulted in our development of efficient procedures and a streamlined work plan approach, which we believe makes LSL one of the best-qualified teams to perform this engagement.
Our proposal is a firm and irrevocable offer for 90 days following the closing date for the receipt of proposals. For this proposal, Kelly Telford, CPA, Partner, is authorized to make representations for our firm. She can be reached by phone at (714) 458-5292 or by email at [email protected].
Very truly yours,
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LSL PROFILE
LSL provides auditing, accounting, and consulting services to over 100 municipal clients, including cities, counties, water and electric utilities, and special-purpose government agencies. Generally, our government sector services break down into the following major classifications: attestation, compliance, consulting, outsourced accounting and reporting, year-end close assistance, interim staffing, strategic planning, and tax services.
Our extensive experience in local government accounting has led to the development of efficient procedures and a comprehensive understanding of all finance department operations, including federal and state grant programs. Our work plan approach takes full advantage of accumulated experiences, which we believe sets LSL apart.
Our dynamic team of industry experts holds extensive experience providing services to a full range of government entities. We lead seminars and training courses on introductory government accounting, preliminary views on financial reporting, internal control risk assessments, and all GASB updates and best practices.
HISTORY AND SIZE
LSL is a limited liability partnership and is not a wholly owned subsidiary of a parent company. LSL was established in 1929 and has grown as a leader in the government sector. Our full-service accounting firm is headquartered in Irvine, California, with a dynamic team of 15 partners, 2 principals, and 150 employees.
LOCATION
LSL is a multi-location firm with formidable resources that provides a personal feel and hands-on client experience.
Our Offices
Irvine, CA - Headquarters
500 Technology Drive, Suite 350
Irvine, CA 92618
Phone: (949) 829-8299
Sacramento, CA
2151 River Plaza Dr., Suite 150
Sacramento, CA 95833
Phone: (916) 503-9691
The Woodlands, TX
21 Waterway Avenue, Suite 30089
The Woodlands, TX 77380
Phone: (936) 828-4587
ACCOUNTING TODAY REGIONAL LEADER
LSL has again been recognized as an Accounting Today Regional Leader in 2025.
The list ranks the top CPA firms that have shown exceptional growth, embraced technology, and who ‘think outside the box’ when providing solutions. 1197
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INSIDE PUBLIC ACCOUNTING (IPA) AWARD
LSL is honored to be recognized among the Top 300 accounting firms in the nation by INSIDE Public Accounting! Each year, IPA ranks CPA firms based on net revenue, and LSL proudly advanced from #220 in 2024 to #201 in 2025. Our fantastic team and the trust of our valued clients are the driving force behind this upward momentum and continued growth.
OUR CORE VALUES
As we continue to grow and evolve, we recognized our core values needed to grow and change with us. Our values weren’t decided on by management and handed down, every member of the LSL team worked together to share what values matter most to us. From there, we came up with the following five core values that embody how we approach each other, our work, and our clients.
BEST OF ACCOUNTING AWARD
LSL has consistently secured the ClearlyRated Best of Accounting award since 2019. This exclusive program awards accounting firms who demonstrate high-level service of excellence within the accounting industry and solely leverages statistically validated survey responses from our clients.
TRAINING AND SEMINARS
LSL regularly leads seminars and training courses on introductory governmental accounting, preliminary views on financial reporting, internal control risk assessments, and all GASB updates and best practices, which are made available to our clients for additional information and continued support. For upcoming webinars, please visit https://lslcpas.com/webinars/.
LICENSE TO PRACTICE
LSL is a limited liability partnership and is not a wholly owned subsidiary of a parent company. LSL is a public accounting firm licensed by the State of California, Department of Consumer Affairs, as a Public Accounting Partnership. Under Section 901.461 of the State of Texas Public Accountancy Act, LSL is authorized to practice in the State of Texas as an out-of-state firm. We are also members of the American Institute of Certified Public Accountants. All key staff to be assigned to this engagement are or will be licensed by the State of California to practice as Certified Public Accountants and are pending approval for licensure in the State of Texas.
DESK REVIEWS AND DISCIPLINARY ACTION
There have been no disciplinary actions against our organization since its inception. There have been no litigations against our firm in the past three years. Our Single Audit reports are desk reviewed either by the federal cognizant agency or the State Controller’s Office acting as the Oversight Agency. We have never had a report rejected by any of these agencies, which demonstrates our thorough understanding of federal grant programs. LSL is highly regarded and recognized by the staff of the State Controller’s Office for top-quality reports. 1198
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PEER REVIEW
Our firm has participated in the AICPA Peer Review Program since its inception. All our peer reviews have covered governmental engagements and have received pass ratings. Our most recent peer review, conducted by Spafford and Landry CPAs, is provided in Appendix C.
QUALIFICATIONS & EXPERIENCE
CONTINUING EDUCATION
As a firm policy, all professional government staff meet the requirement of 40 hours of continuing education every year, with at least 24 hours in governmental accounting and auditing in a two-year period. Our educational programs include training from CalCPA, AICPA, Government Audit Quality Center, and GFOA.
RECENT EXPERIENCE
As a firm, we have extensive experience with municipalities including cities, counties, water and electric utilities, special districts, joint powers authorities and compliance with OMB Uniform Guidance. We are familiar with all federal and state grant programs typically awarded to municipalities. Generally, our government sector services break down into the following major classifications: attestation, compliance, consulting, interim staffing, strategic planning, and tax services. A list of current government clients can be provided upon request.
As a part of our consulting services, we also provide accounting services that include outsourced accounting services, year-end close assistance, audit preparation, bank reconciliation, training, accounting software implementation, and GASB implementation services. Our team is well-versed in using most accounting software solutions, including Workday, Tyler Munis, One Solution, PeopleSoft, and Tyler Incode.
Our collective experience in local government accounting, backed by our comprehensive understanding of all federal and state grant programs awarded to municipalities, has refined our development of efficient procedures and streamlined work plan approach, which we believe makes LSL one of the best-qualified teams to perform these services.
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APPENDIX A – SCOPE AND DELIVERABLES
DESCRIPTION OF SERVICES AND DELIVERABLE PLAN AND OUTCOME On boarding, including:
Configure system access and review available
financial records, including the general ledger,
budget system (e.g., Naviline or OpenGov), and
supporting documentation
Coordinate the transition of accounting information
to understand existing processes, reconciliations
completed to date, and areas requiring immediate
attention
Review prior-year financial statements and trial
balances
Meet with accounting and management staff to
confirm responsibilities, establish communication
protocols, and define a reporting cadence
Schedule and coordinate onsite visits based on
project milestones and staff availability
Onboarding to occur within one week of
contract execution and will include inperson and remote resources Task 1 – Assist with FY 2024–25 Year End Close:
Perform year-end close procedures, including
reconciliation of key fund-level balance sheet
accounts such as receivables, payables, interfund
balances, and accrued liabilities
Prepare and reconcile capital asset
Review and calculate accrued liabilities (e.g.,
compensated absences, pension and OPEB
balances, leases, and claims payable) as
determined during onboarding; LSL can assist with
the necessary calculations and implementation of
GASB 101 for compensated absences
Review revenue and expenditure activity for
completeness, accuracy, and proper period
recognition
Reconcile interfund transactions to ensure all entries are balanced across funds
Evaluate beginning fund balances to determine if
there are General Fund subsidies that will be
required to clear negative balances in other funds
Collaborate with City staff to ensure the
completeness and accuracy of accounting activities
to provide a reliable foundation for year-end close
City responsibilities will include:
Complete FY 2024-25 bank reconciliations by
interim and City staff
Accounts payable accruals and reconciliations
utilizing the City’s ERP system
Assist LSL in locating and providing supporting
documentation and records as available
Plan: Two-week onsite review followed by
remote work as needed. Estimated 500 to
700 hours, depending on reliability of
beginning balances, completeness of prior
year end closes, and availability of
information (additional onsite weeks can
be accommodated, as needed)
In an effort to reduce the estimated hours,
LSL will work with City staff to determine
areas where work can be performed inhouse and incorporated into the year-end close
Outcome: At the end of this task, LSL will
provide estimated unaudited fund balance
for the General Fund and Internal Service
Funds to assist management in making
financial decisions
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DESCRIPTION OF SERVICES AND DELIVERABLE PLAN AND OUTCOME Task 2 – Review FY 2025–26 Adopted Budget for
Reasonableness:
Analyze the adopted FY 2025-26 budget in relation
to FY 2024-25 actual and pacing through December
31, 2025 (mid-year analysis)
Review key revenue and expenditure assumptions
against supporting documentation and known
financial activity
Perform variance analysis to identify any material
deviations and necessary budget amendments
Prepare a memorandum summarizing findings and
recommended revisions for City management
City responsibilities will include:
Provide the adopted FY 2025–26 budget files,
schedules, and supporting documentation, including
labor-related calculations
Ensure all FY 2025-26 accounting, including bank
reconciliation, is maintained and up-to-date to
ensure reliability of general ledger actuals
Make key staff available to discuss departmental
budgets and assumptions discussed during analysis
Plan: Upon completion of Task 1;
estimated 100 to 200 hours
Outcome: Communicate recommended
revisions to the FY 2025-26 budget with
an executive summary of key areas of
concern
Task 3 – Collaborate with Internal Service Funds (ISF)
Program Managers and Develop an Allocation Plan:
Develop an allocation plan for ISF services using
measurable cost drivers (e.g., staff hours, usage, or
service levels) and include a true-up to actuals at the end of each year
Identify cost centers, establish allocation
methodologies, and design a chargeback model
Prepare calculation templates using FY 2025–26
budget figures
Prepare a summary memorandum detailing the
methodology and implementation recommendations
Recommend policy, procedural, and accounting
updates to support implementation
City responsibilities will include:
Access to departmental budgets, staffing and
operational data and information (e.g., vehicle
inventory, user counts, or claims data) necessary to
evaluate cost drivers
Plan: Begin during Task 1 once records
are reasonably accurate. Estimated 140 to
200 hours, depending on information
accessibility and staff availability
Outcome: Develop new ISF fund allocation
plans that prevents the continued
depletion of fund resources and instruct on
future implementation plan
Communication of recommendations to
management for evaluation and
implementation
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Task 4 – Develop Implementation Plan for ISF Allocation Plan:
Develop a transition plan to move from the current
cost allocation model to the new ISF allocation plan
established in Task 3
Propose adjustments to financial reporting and
budget practices to align with the revised ISF
Allocation Plan
Identify opportunities to eliminate structural deficits that have built up in previous years and replenish
reserves in these funds
City responsibilities will include:
Review and provide feedback on the proposed
transition plan and implementation schedule
Coordinate internal review and approval of policy
and procedural updates
Plan: Upon completion of Task 3;
estimated 40 to 60 hours, depending on
the methodology prescribed in Task 3
Outcome: Summary documentation and
presentation materials for internal review
and adoption
Task 5 –Support for year-end and ongoing accounting
services, including:
Assistance with facilitating the FY 2024-25 annual
audit, including preparation of audit request and
representation with the auditors
Review of financial statements and preparation of
additional items included in the annual financial
statements
Additional assistance, as needed
Plan: Provided, as needed, and
coordinated between LSL and the City
based on the scope of the additional
request
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APPENDIX B – CLIENT REFERENCES
City of Palos Verdes Estates, CA
Contact Kerry Kallman, City Manager
Telephone (310) 378-0383
Email Address [email protected]
Scope of Work The LSL Team provides year-end close process by providing comprehensive services, including capital asset analysis, balance sheet account reconciliations, income statement fluctuation analysis, and audit-related reviews and representation with the auditors. The role includes coordination of the financial statements, performing review and tie-out procedures, ensuring accuracy throughout the entire audit process. In addition, LSL provides assistance with the development of the annual budget and midyear budget review. This assistance was provided both in-person and remotely.
City of Beaumont, CA
Contact Jennifer Ustation, Finance Director
Telephone (951) 572-3236
Email Address [email protected]
Scope of Work LSL provided assistance with reconciling monthly trustee statements for numerous Community Facilities District (CFD) accounts, ensuring all accounts were accurately reconciled and properly posted to the general ledger. In addition, LSL supported the City in reconciling CFD special tax receipts, debt service payments, operational expenditures, and other transactions, helping to confirm the accuracy of general ledger activity across multiple years.
City of Livingston, CA
Contact Happy Bains, Finance Director/Assistance City Manager Telephone (209) 394-8041
Email Address [email protected]
Scope of Work LSL provided both in-person and remote support for the implementaiton of new GASB standards, year-end close procedures and audit readiness. Including guidance and technical support for GASB 68 (Pension), GASB 75 (OPEB), GASB 87 (Leases), and GASB 96 (Subscription-Based IT Arrangements) through analysis and preparation of required journal entries.
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APPENDIX C – PEER REVIEW
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1 AGREEMENT FOR PROFESSIONAL SERVICES
BY INDEPENDENT CONTRACTOR
THIS AGREEMENT FOR PROFESSIONAL SERVICES BY INDEPENDENT CONTRACTOR is made and effective as of the October 14, 2025 by and between the CITY OF BANNING, a California municipal corporation (“City”) whose address is 99 East Ramsey Street, Banning, California 92220, and LSL, LLP, a California limited liability partnership whose address is 500 Technology Drive, Suite 350 Irvine, California 92618 (“Contractor”). City and Contractor are sometimes hereinafter individually referred to as “party” and hereinafter collectively referred to as the “parties.”
RECITALS
This Agreement is entered into on the basis of the following facts, understandings and intentions of the parties to this Agreement:
A. City desires to engage Contractor to provide the following services: accounting and finance consulting support; and
B. Contractor has made a proposal (“Proposal”) to the City to provide such professional services, which Proposal is attached hereto as Exhibit “A” and incorporated herein by this reference; and
C. Contractor agrees to provide such services pursuant to, and in accordance with, the terms and conditions of this Agreement, and represents and warrants to City that Contractor possesses the necessary skills, licenses, certifications, qualifications, personnel and equipment to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and mutual covenants contained herein, City and Contractor agree as follows:
1. Term of Agreement. This Agreement is effective as of the date first above written and shall continue until terminated as provided for herein. Notwithstanding anything in this Agreement to the contrary, this Agreement shall automatically terminate after eighteen months, unless extended by the parties with the approval of the City Council of the City.
2. Services to be Performed. Contractor agrees to provide the services (“Services”) as follows: accounting and consulting in accordance with Exhibit “A”. All Services shall be 1206
2 performed in the manner and according to the timeframe set forth in the Proposal. Contractor designates Kelly Telford, CPA, Partner as Contractor’s Representative responsible for overseeing the Services provided by Contractor (“Contractor’s Representative”). City designates the City Manager, or his or her designee, to act as the Project Manager (“Project Manager”) in connection with the delivery of Services under this Agreement. Contractor shall supply, at its sole expense, all equipment, tools, materials, and supplies necessary to perform Services. In the event that the Proposal contains terms that are in addition to or in conflict with this Agreement, other than the price for Services, such terms shall not be valid and shall be of no force or effect.
3. Associates and Subcontractors. Contractor may, at Contractor’s sole cost and expense, employ such competent and qualified independent associates, subcontractors and consultants as Contractor deems necessary to perform the Services; provided, however, that Contractor shall not subcontract any of the Services without the prior written consent of City.
4. Compensation.
4.01 Contractor shall be paid at the rates set forth in the Proposal and shall not increase any rate without the prior written consent of the City. Notwithstanding anything in this Agreement to the contrary, total fees and charges paid by City to Contractor under this Agreement shall not exceed the amount of Three-Hundred and Ten-Thousand Dollars and Zero Cents ($310,000).
4.02 Contractor shall not be compensated for any Services rendered nor reimbursed for any expenses incurred in excess of those authorized unless approved in advance by the City, in writing.
4.03 Contractor shall submit to City, on or before the fifteenth (15th) of each month, itemized invoices for the Services rendered in the previous month. The City shall not be obligated to pay any invoice that is submitted more than sixty (60) days after the due date of such invoice. City shall have the right to review and audit all invoices prior to or after payment to Contractor. This review and audit may include, but not be limited to City’s:
a. Determination that any hourly fee charged is consistent with this Agreement's approved hourly rate schedule;
b. Verification that the hours billed, when multiplied by the approved hourly rates, result in the correct total;
c. Determination that each item charged is the usual, customary, and reasonable charge for the particular item. If City determines an item charged is greater than usual, 1207
3 customary, or reasonable, or is duplicative, ambiguous, excessive, or inappropriate, City shall either return the bill to Contractor with a request for explanation or adjust the payment accordingly and give notice to Contractor of the adjustment.
4.04 If the work is satisfactorily completed, City shall pay such invoice within thirty (30) days of its receipt. Should City dispute any portion of any invoice, City shall pay the undisputed portion within the time stated above, and at the same time advise Contractor in writing of the disputed portion.
5. Obligations of Contractor.
5.01 Contractor agrees to perform all Services in accordance with the terms and conditions of this Agreement and the Proposal. In the event that the terms of the Proposal shall conflict with the terms of this Agreement or contain additional terms that purport to bind the City other than the Services to be rendered and the hourly rate for the Services, the terms of this Agreement shall govern and said additional or conflicting terms shall be of no force or effect.
5.02 Except as otherwise agreed by the parties, Contractor will supply all personnel, materials and equipment required to perform the Services. Contractor shall provide its own offices, telephones, vehicles and computers. Contractor will determine the method, details, and means of performing the Services under this Agreement.
5.03 Contractor shall keep City informed as to the progress of the Services by means of regular and frequent consultations. Additionally, when requested by City, Contractor shall prepare written status reports.
5.04 Contractor is responsible for paying, when due, all income and other taxes, fees, and withholding, including withholding state and federal taxes, social security, unemployment and worker’s compensation, incurred as a result of the compensation paid under this Agreement. Contractor agrees to indemnify, defend, and hold harmless City for any claims, costs, losses, fees, penalties, interest, or damages suffered by City resulting from Contractor’s failure to comply with this provision.
5.05 In the event Contractor is required to prepare plans, drawings, specifications and/or estimates, the same shall be furnished in conformance with local, state and federal laws, rules and regulations.
5.06 Contractor represents that it possesses all required licenses necessary or applicable to the performance of Services under this Agreement and the Proposal and shall obtain and keep in full force and effect all permits and approvals required to perform the Services herein. 1208
4 In the event City is required to obtain an approval or permit from another governmental entity, Contractor shall provide all necessary supporting documents to be filed with such entity.
5.07 Contractor shall be solely responsible for obtaining Employment Eligibility Verification information from Contractor’s employees, in compliance with the Immigration Reform and Control Act of 1986, Pub. L. 99-603 (8 U.S.C. 1324a), and shall ensure that Contractor’s employees are eligible to work in the United States.
5.08 In the event that Contractor employs, contracts with, or otherwise utilizes any CalPERS retirees in completing any of the Services performed hereunder, such instances shall be disclosed in advance to the City and shall be subject to the City’s advance written approval.
5.09 Drug-free Workplace Certification. By signing this Agreement, the Contractor hereby certifies under penalty of perjury under the laws of the State of California that the Contractor will comply with the requirements of the Drug-Free Workplace Act of 1990 (Government Code, Section 8350 et seq.) and will provide a drug-free workplace.
5.10 Contractor shall comply with all applicable local, state and federal laws, rules, regulations, entitlements and/or permits applicable to, or governing the Services authorized hereunder including, but not limited to California Department of Industrial Relations (Cal/OSHA) regulations; and the U.S. Department of Transportation Omnibus Transportation Employee Testing Act, related to their scope of work and operations. In case of conflict, the most stringent shall apply.
5.11 Contractor shall keep itself informed concerning and shall render all Services hereunder in accordance with all ordinances, resolutions, statutes, rules, and regulations of the City and any federal, state or local governmental entity having jurisdiction in effect at the time service is rendered.
5.12 By executing this Agreement, Contractor warrants that Contractor (i) has thoroughly investigated and considered the scope of Services to be performed, (ii) has carefully considered how the Services should be performed, and (iii) fully understands the conditions, circumstances, difficulties and restrictions attending performance of the Services under this Agreement. If the Services involve work upon any site, Contractor warrants that Contractor has or will investigate the site and is or will be fully acquainted with the conditions there existing, prior to commencement of Services hereunder. Should the Contractor discover any latent or unknown conditions, which will materially affect the performance of the Services hereunder, Contractor shall immediately inform the City of such facts and shall not proceed except at Contractor’s sole risk until written instructions are received from the Project Manager. 1209
5 Contractor warrants all Services under the Agreement to be of good quality and free from any defective or faulty material and workmanship. Contractor agrees that for a period of one year (or the period of time specified elsewhere in the Agreement or in any guarantee or warranty provided by any manufacturer or supplier of equipment or materials incorporated into the Services, whichever is later) after the date of final acceptance, Contractor shall within ten (10) days after being notified in writing by the City of any defect in the Services or non-conformance of the Services to the Agreement, commence and prosecute with due diligence all Services necessary to fulfill the terms of the warranty at Contractor’s sole cost and expense. Contractor shall act sooner as requested by the City in response to an emergency. In addition, Contractor shall, at its sole cost and expense, repair and replace any portions of the Services (or work of other contractors) damaged by Contractor’s defective Services or which becomes damaged in the course of repairing or replacing defective Services. For any Services so corrected, Contractor’s obligation hereunder to correct defective Services shall be reinstated for an additional one-year period, commencing with the date of acceptance of such corrected Services. All costs associated with such corrective actions and testing, including the removal, replacement, and reinstitution of equipment and materials necessary to gain access, shall be the sole responsibility of Contractor.
In the event that Contractor fails to fulfil its obligations under this Section, or under any other warranty or guaranty under this Agreement, to the satisfaction of the City, the City shall have the right to correct and replace any defective or non-conforming Services and any work damaged by such services or the replacement or correction thereof at Contractor’s sole expense. Contractor shall be obligated to fully reimburse the City for any expenses incurred hereunder upon demand.
Payment to Contractor for work performed pursuant to this Agreement shall not be deemed to waive any defects in work performed by Contractor.
5.13 Time is of the essence in the performance of this Agreement.
6. Insurance. Contractor hereby agrees to be solely responsible for the health and safety of its employees and agents in performing the Services under this Agreement and shall comply with all laws applicable to worker safety including but not limited to Cal-OSHA.
Therefore, throughout the duration of this Agreement, Contractor hereby covenants and agrees to maintain insurance in conformance with the requirements set forth below. Attached hereto as Exhibit “B” are copies of Certificates of Insurance and endorsements as required by Section 7.02.
If existing coverage does not meet the requirements set forth herein, Contractor agrees to amend, supplement or endorse the existing coverage to do so. Contractor shall provide the following types and amounts of insurance:
6.01 Commercial general liability insurance in an amount of not less than $2,000,000 per occurrence and $4,000,000 in the aggregate; Contractor agrees to have its insurer 1210
6 endorse the general liability coverage required herein to include as additional insured’s City, its officials, employees and agents. Contractor also agrees to require all contractors and subcontractors to provide the same coverage required under this Section 6.
6.02 Business Auto Coverage in an amount no less than $1 million per accident.
If Contractor or Contractor’s employees will use personal autos in performance of the Services hereunder, Contractor shall provide evidence of personal auto liability coverage for each such person.
6.03 Workers’ Compensation insurance for any of Contractor’s employees that will be providing any Services hereunder. Contractor will have a state-approved policy form providing statutory benefits as required by California law. The provisions of any Workers’ Compensation insurance will not limit the obligations of Contractor under this Agreement.
Contractor expressly agrees not to use any statutory immunity defenses under such laws with respect to City, its employees, officials and agents. Sole proprietors with no employees, LLCs, or partnerships using the services of members or partners who do not carry Workers’ Compensation insurance acknowledge that they are not subject to the Workers’ Compensation Act of the State of California and agree to complete a signed workers compensation exemption form.
6.04 Optional Insurance Coverage. Choose and check one: Required [X] /Not Required __; Errors and omissions insurance in a minimum amount of $2 million per occurrence to cover any negligent acts or omissions committed by Contractor, its employees and/or agents in the performance of any Services for City.
6.05 Cyber Liability Insurance REQUIRED IF CHECKED HERE ONLY [X] (Technology Professional Liability – Errors and Omissions), with limits not less than $2,000,000 per occurrence or claim, and $2,000,000 aggregate or the full per occurrence limits of the policies available, whichever is greater. Coverage shall be sufficiently broad to respond to the duties and obligations as is undertaken by Contractor in this Agreement and shall include, but not be limited to, claims involving infringement of intellectual property, including but not limited to infringement of copyright, trademark, trade dress, invasion of privacy violations, information theft, damage to or destruction of electronic information, release of private information, alteration of electronic information, extortion and network security. The policy shall provide coverage for breach response costs as well as regulatory fines and penalties as well as credit monitoring expenses with limits sufficient to respond to these obligations. Contractor will file with City, before beginning professional services, certificates of insurance (Acord Form 25 or equivalent) satisfactory to City evidencing.
6.06 If Claims Made Policies (applies only to professional liability and cyber liability policies):
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7 i. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work.
ii. Insurance must be maintained, and evidence of insurance must be provided for at least five (5) years after completion of the contract of work. iii. If coverage is canceled or non-renewed and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Contractor must purchase “extended reporting” coverage for a minimum of five (5) years after completion of the contract work.
7. General Conditions pertaining to Insurance Coverage.
7.01 No liability insurance coverage provided shall prohibit Contractor from waiving the right of subrogation prior to a loss. Contractor waives all rights of subrogation against City regardless of the applicability of insurance proceeds and shall require all contractors and subcontractors to do the same.
7.02 Prior to beginning the Services under this Agreement, Contractor shall furnish City with certificates of insurance, endorsements, and upon request, complete copies of all policies, including complete copies of all endorsements. All copies of policies and endorsements shall show the signature of a person authorized by that insurer to bind coverage on its behalf.
7.03 All required policies shall be issued by a highly rated insurer with a minimum A.M. Best rating of “A:VII”. The insurer(s) shall be admitted and licensed to do business in California. The certificates of insurance hereunder shall state that coverage shall not be suspended, voided, canceled by either party, or reduced in coverage or in limits, except after thirty (30) days' prior written notice has been given to CITY.
7.04 Self-insurance does not comply with these insurance specifications.
Contractor acknowledges and agrees that that all insurance coverage required to be provided by Contractor or any subcontractor, shall apply first and on a primary, non-contributing basis in relation to any other insurance, indemnity or self-insurance available to City.
7.05 All coverage types and limits required are subject to approval, modification and additional requirements by City, as the need arises. Contractor shall not make any reductions in scope of coverage (e.g. elimination of contractual liability or reduction of discovery period) that may affect City’s protection without City’s prior written consent. 1212
8 7.06 Contractor agrees to provide immediate notice to City of any claim or loss against Contractor or arising out of the Services performed under this Agreement. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City.
7.07 The coverage shall contain no special limitations on the scope of protection afforded to City, its directors, officers, employees, or authorized volunteers. If the Contractor maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or higher limits maintained by the Contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.
8. Indemnification.
8.01 Contractor and City agree that City, its employees, agents and officials should, to the extent permitted by law, be fully protected from any loss, injury, damage, claim, lawsuit, cost, expense, attorneys’ fees, litigation costs, defense costs, court costs or any other costs arising out of or in any way related to the performance of this Agreement by Contractor or any subcontractor or agent of either as set forth herein. Accordingly, the provisions of this indemnity are intended by the parties to be interpreted and construed to provide the fullest protection possible under the law to City. Contractor acknowledges that City would not enter into this Agreement in the absence of the commitment of Contractor to defend, indemnify, and protect City as set forth herein.
a. To the fullest extent permitted by law, Contractor shall defend, indemnify and hold harmless City, its employees, agents and officials, from and against any liability, claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, injuries, expenses, damages or costs of any kind, whether actual, alleged or threatened, actual attorneys’ fees incurred by City, court costs, interest, defense costs, including expert witness fees and any other costs or expenses of any kind whatsoever without restriction or limitation incurred in relation to, as a consequence of or arising out of, or in any way attributable actually, allegedly or impliedly, in whole or in part to the performance of this Agreement.
Contractor’s obligation to defend, indemnify, and hold harmless shall include any and all claims, suits, and proceedings in which Contractor (and/or Contractor’s agents and/or employees) is alleged to be an employee of City. All obligations under this provision are to be paid by Contractor as they are incurred by City.
b. Without affecting the rights of City under any provision of this Agreement or this Section, Contractor shall not be required to indemnify and hold harmless City 1213
9 as set forth above for liability attributable solely to the fault of City, provided such fault is determined by agreement between the parties or the findings of a court of competent jurisdiction. 8A Indemnification Design Professionals. In the event that Contractor is a design professional under California Civil Code Section 2782.8 this Section 8A shall apply instead of Section 8. To the fullest extent permitted by California law and in accordance with California Civil Code section 2782.8, Contractor shall defend, indemnify, and hold harmless the City, its officers, employees, trustees and members (“Indemnified Parties”) from any and all actions, assessments, counts, citations, claims, costs, damages, demands, judgments, liabilities (legal, administrative or otherwise), losses, notices, expenses, fines, penalties, proceedings, responsibilities, violations, attorney’s and consultants’ fees and causes of action including, but not limited to those for, injury to property or persons, including personal injury and/or death (“Claim(s)”), to the extent that the Claim(s) arises out of, pertains to, or relates to the negligence, recklessness, or willful misconduct of Contractor, its directors, officials, officers, employees and consultants arising out of, connected with, or resulting from the performance of the Services, the Project, or this Agreement. This indemnity excludes liability caused by the negligence or willful misconduct of any of the Indemnified Parties. The cost to indemnify, hold harmless, and defend charged to Contractor shall not exceed Contractor’s proportionate percentage of fault.
9. Additional Services, Changes and Deletions.
9.01. In the event Contractor performs additional or different services than those described herein without the prior written approval of the City Manager and/or City Council of City, Contractor shall not be compensated for such services. Contractor expressly waives any right to be compensated for services and materials not covered by the scope of this Agreement or authorized by the City in writing.
9.02 Contractor shall promptly advise the City Manager and Finance Director of City as soon as reasonably practicable upon gaining knowledge of a condition, event or accumulation of events which may affect the scope and/or cost of Services. All proposed changes, modifications, deletions and/or requests for additional services shall be reduced to writing for review and approval by the City and/or City Council.
10. Termination of Agreement.
10.01. Notwithstanding any other provision of this Agreement, City or Contractor, at its sole option, may terminate this Agreement with or without cause, or for no cause, at any time by giving twenty (20) days’ written notice to Contractor. 1214
10 10.02 In the event of termination, the payment of monies due Contractor for undisputed Services performed prior to the effective date of such termination shall be paid within thirty (30) business days after receipt of an invoice as provided in this Agreement. Immediately upon termination, Contractor agrees to promptly provide and deliver to City all original documents, reports, studies, plans, specifications and the like which are in the possession or control of Contractor and pertain to City.
11. Status of Contractor.
11.01 Contractor shall perform the Services in Contractor’s own way as an independent contractor, and in pursuit of Contractor’s independent calling, and not as an employee of City. However, Contractor shall regularly confer with City’s City Manager or Project Manager as provided for in this Agreement.
11.02 Contractor agrees that it is not entitled to the rights and benefits afforded to City’s employees, including disability or unemployment insurance, Workers’ Compensation, retirement, CalPERS, medical insurance, sick leave, or any other employment benefit. Contractor is responsible for providing, at its own expense, disability, unemployment, Workers’ Compensation and other insurance, training, permits, and licenses for itself and its employees and subcontractors.
11.03 Contractor hereby specifically represents and warrants to City that it possesses the qualifications and skills necessary to perform the Services under this Agreement in a competent, professional manner, without the advice or direction of City and that the Services to be rendered pursuant to this Agreement shall be performed in accordance with the standards customarily applicable to an experienced and competent professional rendering the same or similar services in the same geographic area where the City is located. Further, Contractor represents and warrants that the individual signing this Agreement on behalf of Contractor has the full authority to bind Contractor to this Agreement.
12. Ownership of Documents; Audit.
12.01 All draft and final reports, plans, drawings, studies, maps, photographs, specifications, data, notes, manuals, warranties, and all other documents of any kind or nature prepared, developed, or obtained by Contractor in connection with the performance of Services performed for the City shall become the sole property of City, and Contractor shall promptly deliver all such materials to City upon request. At the City’s sole discretion, Contractor may be permitted to retain original documents, and furnish reproductions to City upon request, at no cost to City.
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11 12.02 Subject to applicable federal and state laws, rules and regulations, City shall hold all intellectual property rights to any materials developed pursuant to this Agreement.
Contractor shall not use such data or documents for purposes other than the performance of this Agreement, nor shall Contractor release, reproduce, distribute, publish, adapt for future use or any other purposes, or otherwise use, any data or other materials first produced in the performance of this Agreement, nor authorize others to do so, without the prior written consent of City.
12.03 Contractor shall retain and maintain, for a period not less than four years following termination of this Agreement, all-time records, accounting records and vouchers and all other records with respect to all matters concerning Services performed, compensation paid and expenses reimbursed. At any time during normal business hours and as often as City may deem necessary, Contractor shall make available to City’s agents for examination all of such records and shall permit City’s agents to audit, examine and reproduce such records.
13. Miscellaneous Provisions.
13.01 This Agreement, which includes all attached exhibits, supersedes any and all previous agreements, either oral or written, between the parties hereto with respect to the rendering of Services by Contractor for City and contains all of the covenants and agreements between the parties with respect to the rendering of such Services in any manner whatsoever. Any modification of this Agreement will be effective only if it is in writing signed by both parties.
13.02 Contractor shall not assign or otherwise transfer any rights or interest in this Agreement without the prior written consent of City. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement.
13.03 Contractor shall timely file FPPC Form 700 Conflict of Interest Statements with City if required by California law and/or the City’s conflict of interest policy.
13.04 If any legal action or proceeding, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees and costs, in addition to any other relief to which that party may be entitled.
13.05 This Agreement is made, entered into and shall be performed in the County of Riverside in the State of California and shall in all respects be interpreted, enforced and governed under the laws of the State of California. The parties agree that venue in any litigation between them shall be in Riverside County, California.
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12 13.06 Contractor covenants that neither it nor any officer or principal of its firm has any interest, nor shall they acquire any interest, either directly or indirectly, which will conflict in any manner or degree with the performance of their Services hereunder. Contractor further covenants that in the performance of this Agreement, no person having such interest shall be employed by it as an officer, employee, agent, or subcontractor.
13.07 Contractor has read and is aware of the provisions of Section 1090 et seq. and Section 87100 et seq. of the Government Code relating to conflicts of interest of public officers and employees. Contractor agrees that they are unaware of any financial or economic interest of any public officer or employee of the City relating to this Agreement. It is further understood and agreed that if such a financial interest does exist at the inception of this Agreement, the City may immediately terminate this Agreement by giving notice thereof. Contractor shall comply with the requirements of Government Code section 87100 et seq. and section 1090 in the performance of and during the term of this Agreement.
13.08 Improper Consideration. Contractor shall not offer (either directly or through an intermediary) any improper consideration such as, but not limited to, cash, discounts, services, the provision of travel or entertainment, or any items of value to any officer, employee or agent of the City in an attempt to secure favorable treatment regarding this Agreement or any contract awarded by City. The City, by notice, may immediately terminate this Agreement if it determines that any improper consideration as described in the preceding sentence was offered to any officer, employee or agent of the City with respect to the proposal and award process of this Agreement or any City contract. This prohibition shall apply to any amendment, extension or evaluation process once this Agreement or any City contract has been awarded. Contractor shall immediately report any attempt by any City officer, employee or agent to solicit (either directly or through an intermediary) improper consideration from Contractor.
13.09 Severability. If any portion, section, sentence, provision or paragraph of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the entire balance of this Agreement not so affected shall remain in full force and effect.
13.10 Prevailing Wages. Contractor shall be responsible to comply with applicable prevailing wages laws. As a condition of payment, if applicable Contractor shall show proof of payment of wages under applicable state and federal laws and regulations relating to prevailing wages in accordance with the “General Wage Determination Made By the Director of Industrial Relations Pursuant To California Labor Code, Part 7, Chapter 1, Article 2, Sections 1770, 1773 and 1773.1”, for Riverside County and/or 40 U.S.C. Section 276a, et. seq. Such wage rates shall conform with those posted at City offices and the project site. In the event that the Contractor fails to pay the prevailing wages, the Contractor shall be solely liable for penalties and for the 1217
13 shortfall in wages and shall indemnify, defend and hold harmless City under Section 8.01 against any of the same. The following Labor Code sections are hereby referenced and made a part of this Agreement:
1. Section 1775 - Penalty for Failure to Comply with Prevailing Wage Rates.
2. Section 1777.4 - Apprenticeship Requirements.
3. Section 1777.5 - Apprenticeship Requirements.
4. Section 1813 - Penalty for Failure to Pay Overtime.
5. Sections 1810 and 1811 - Working Hour Restrictions.
6. Section 1776 - Payroll Records.
7. Section 1773.8 - Travel and Subsistence Pay.
13.11 Covenant Against Discrimination. Contractor covenants that, by and for itself, its heirs, executors, assigns and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the performance of this Agreement. Contractor shall take affirmative action to ensure that employees are treated during employment without regard to their race, color, creed, religion, sex, marital status, national origin or ancestry.
13.12 Waiver. Waiver by any party to this Agreement of any term, condition, or covenant of this Agreement shall not constitute a waiver of any other term, condition, or covenant.
Waiver by any party of any breach of the provisions of this Agreement shall not constitute a waiver of any other provision or a waiver of any subsequent breach or violation of any provision of this Agreement. Acceptance by City of any work or Services by Contractor shall not constitute a waiver of any of the provisions of this Agreement. No delay or omission in the exercise of any right or remedy by a non-defaulting party on any default shall impair such right or remedy or be construed as a waiver. Any waiver by either party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement.
13.13 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party.
13.14 Legal Action. In addition to any other rights or remedies, either party may take legal action, in law or in equity, to cure, correct or remedy any default, to recover damages for any default, to compel specific performance of this Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purpose of this Agreement. 1218
14 13.15 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply.
13.16 Both parties agree to use reasonable care and diligence to perform their respective obligations under this Agreement. Both parties agree to act in good faith to execute all instruments, prepare all documents and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless hereafter specified neither party shall be responsible for the service of the other.
13.17 The recitals set forth in the preamble of this Agreement are hereby incorporated into and made a substantive part of this Agreement as if fully set forth herein. [SIGNATURES ON FOLLOWING PAGE]
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15 IN WITNESS WHEREOF, the parties hereby have made and executed this Agreement to be effective as of the day and year first above written.
CITY: CONTRACTOR:
CITY OF BANNING LSL, LLP
By:_______________________ By:_______________________
Print Print
Name: ____________________ Name: ____________________
Date: _____________________ Date: _____________________ 1220
16 EXHIBIT “A”
PROPOSAL
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17 EXHIBIT “B”
CERTIFICATES OF INSURANCE
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Economics | Strategy | Stakeholders | Sustainability
www.newgenstrategies.net
225 Union Boulevard
Suite 450
Lakewood, CO 80228
Phone: (720) 633-9514
October 6, 2025
via email
Arturo Vela
Acting City Manager
Banning Electric Utility
99 East Ramsey Street
Banning, CA 92220
Subject: Banning Electric Utility Letter Report
Dear Mr. Vela:
In December 2024, the City of Banning (City) and the Banning Electric Utility (BEU) retained NewGen Strategies and Solutions, LLC (NewGen) to develop a detailed Cost of Service (COS) and Rate Study (Study) for its electric operations. The purpose of the Study was to analyze appropriate changes to BEU’s current retail electric rate revenues to recover projected operating and non-operating expenses and improve its financial position. The Study resulted in recommended electric rate changes that are designed to ensure the financial integrity of the electric utility as an independent enterprise fund within the City.
The purpose of this report is to provide a summary of the Study’s methodology, analysis, and findings.
This includes a summary of the projected capital expenses, current and projected utility fund balances, ongoing operational expenses, and recommended rate changes. The Study utilized a future period, beginning in Fiscal Year (FY) 2026 (July 1, 2026) and concluding FY 2030 (June 30, 2030), which is referred to as the rate plan, Study period, or Test Year (TY). The methodology utilized in this Study was based on the industry accepted methodologies for developing COS and retail rate design for electric utility operations, supported by the American Public Power Association (APPA). This approach involved the development of an annual projected revenue requirement on a cash basis, which includes operations and maintenance (O&M) expenses, fuel costs, existing debt service, labor costs and other costs. Additionally, the City allocates expenses shared by various departments related to administrative, legal, and other costs through an internal process referred to as the City-wide Cost Allocation Plan (CAP). BEU’s allocation of the CAP-related expenses were included on a historical and projected basis through the Study period.
BEU’s other non-operating expenses include those necessary to fund future capital and replenish its financial reserve accounts. As indicated herein, no new debt was assumed to be issued by BEU to support future utility operations or capital improvements over the Study period. The projected net revenue requirement is the sum of the operating and non-operating expenses over the Study period, less revenue received from non-rate-related sources (including interest, market power sales, and others). The projected net cash revenue requirement determines the total cash to be recovered in retail rates, as recommended herein. A driving need for the rate changes identified during this Study is BEU’s existing financial cash position related to its reserve funds.
Banning Electric Utility’s Financial Position
BEU utilizes multiple unrestricted cash reserve funds for its financial operations. These include the Electric Operations Fund, the Rate Stability Fund, the Electric Improvement Fund, the Electric Revenue Bond Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 112623
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 Project Fund, and the Electric Revenue Bond Debt Service Fund. At the end of FY 2025 (July 1, 2025), the collective fund balance of these funds was estimated to be approximately negative $11 million.
One goal of this Study was to analyze and propose retail electric rates to address financial cash position of BEU’s financial reserve funds. In coordination with BEU staff and the City’s Budget and Finance Committee, a series of financial goals for improving BEU’s fund balances were determined. The primary financial goal is to increase the revenues from electric rates so that the collective total fund balance of the utility is projected to be positive by the end of FY 2028. The estimated individual reserve fund balances for FY 2025 and the projected fund balances for FY 2026 through FY 2030, based on the proposed rate increases in this Study, are shown in Table 1 below.
Table 1
Projected Fund Balances
($000) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Electric Operations Fund ($1,968) ($1,046) $1,838 $6,021 $7,747 $10,226 Rate Stability Fund $6,904 $400 $2,525 $5,025 $5,025 $5,025 Electric Improvement Fund ($16,082) ($10,875) ($10,344) ($8,777) ($619) $6,292 Electric Revenue Bond Project Fund $696 $696 $696 $696 $696 $696 Electric Revenue Bond DS Fund ($11) ($11) ($11) ($11) ($11) ($11) Proposed Working Capital Reserve (1) $- $452 $904 $1,356 $1,808 $2,260 Total Funds Balance (1) ($10,461) ($10,383) ($4,391) $4,311 $14,646 $24,489 (1) BEU proposes developing a new Working Capital Reserve fund (see text). (2) Numbers may not add due to rounding.
Based on the recommended rate changes developed for this Study, the total fund balance is projected to be positive at the end of FY 2028 and will continue to increase in FY 2029 and FY 2030. To reach a positive balance by FY 2028, the recommended rate changes are higher in the first two years than the last three years of the five-year rate plan. It is critical that the City and BEU continue to review the fund balance, the proposed electric rates, and projected revenues on an annual basis to ensure that they are on track to meet target goals established by this Study. Based on the values shown in Table 1, BEU’s total fund balance is projected to be $24 million in FY 2030, which may exceed BEU’s financial targets. City and BEU staff may need to adjust the recommended rate increases in the latter years of the five-year rate plan based on the actual rate revenues and the City’s financial objectives.
The City proposes to develop a Working Capital Reserve fund to provide more financial stability for the utility. The Working Capital Reserve fund is proposed to be built up throughout the Study period to meet a balance equal to 1/8th of the projected annual non-fuel O&M expenses by the end of FY 2030. A Working Capital Reserve fund equal to 1/8th of annual non-fuel O&M expenses is a common electric utility practice for municipal electric utilities to address unforeseen and unplanned increases to O&M expenses.
The City also proposes to set a Days Cash on Hand (DCOH) minimum of 90 days relative to a portion of its reserve fund balances. DCOH is a common metric used in the utility industry to track a utility’s short-term financial stability. A minimum DCOH of 90 days is a typical minimum target in the electric utility industry.
The DCOH is calculated by dividing the available cash by the daily operating expenses for non-cash items to determine the total number of days cash that is available. The available cash proposed to be used in Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 112724
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 this metric is from BEU’s Electric Operations and Rate Stability Funds. The proposed rates in this Study are estimated to meet the BEU’s proposed 90 DCOH minimum by the end of FY 2028.
Revenue Requirement Forecast
BEU provides electrical service to retail customers in the City. The projected annual electric revenue requirement for the average of FY 2026 through FY 2030 (the TY), was estimated to be approximately $46.5 million (see Table 2). One purpose of this Study was to determine the rate changes needed to recover future operational costs, while addressing BEU’s financial reserve cash position. Operational expenses for the electric utility operations include those for electric administration, O&M, and cash required for capital and existing debt service (as noted, no additional debt is proposed to be issued for BEU over the Study period). Operational expenses were assumed to increase annually based on estimated inflation rates for labor and non-labor costs and other estimates provided by BEU for specific cost items.
The projected annual revenue requirement was estimated to increase from approximately $35.9 million in FY 2026 to approximately $53.2 million in FY 2030. Table 2 below shows the revenue requirement forecast for BEU for each year of the Study period, as well as the TY (average).
Table 2
BEU Projected Annual Revenue Requirement
($000)
Year 1
FY 2026
Year 2
FY 2027
Year 3
FY 2028
Year 4
FY 2029
Year 5
FY 2030
Test
Year
Operating Expenses
Purchased Power $23,214 $24,428 $25,706 $27,051 $28,465 $25,773 Supplies and Services $1,399 $1,432 $1,464 $1,496 $1,529 $1,464 Labor Expenses $7,346 $7,523 $7,688 $7,857 $8,030 $7,689 Interfund Services $5,480 $5,612 $5,735 $5,862 $5,990 $5,736 Other Expenses
(Revenues)
$194 $199 $203 $208 $212 $203
Other
Other Income ($5,784) ($5,794) ($5,804) ($5,814) ($5,824) ($5,804) Contributions to Funds $1,677 $7,702 $10,952 $12,452 $12,452 $9,047 Debt Service (2) $2,390 $2,389 $2,392 $2,388 $2,315 $2,375 Total Revenue
Requirement (1)
$35,918 $43,491 $48,338 $51,501 $53,174 $46,483
(1) Numbers may not add due to rounding.
(2) No additional debt service included in this Study.
Cost of Service Allocations
The next step in the COS process was to allocate the costs included in the revenue requirement to the various customer classes. Allocation factors were determined using BEU’s specific customer class characteristic and usage data and industry standard practices. The allocation factors used in this Study can be categorized as energy-related, demand-related, or customer-related. Energy-related allocation factors were used to allocate energy-related costs or costs that vary directly with the amount of energy Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 112825
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 (kilowatt-hours [kWh]) used by each customer class. Demand-related allocation factors were used for fixed costs that do not vary in nature, including debt service payments, fixed costs for the transmission and distribution systems, and other fixed costs. The demand-related allocation factors used in this Study were based on apportionment of each customer class to total system load during peak times. Customerrelated allocation factors were calculated based on the number of customers in a customer class.
Customer-related costs included items such as customer billing, meter reading, customer installations, and customer-related accounting. Using the various allocation factors, the system’s revenue requirement was allocated to each customer class to provide each class’s individual revenue requirement.
Cost of Service Results
The fully allocated COS analysis determined the system-level COS and each customer class COS. The projected revenues needed to meet each class COS were compared to the projected revenue by class based on existing rates. The COS results served as a guide to BEU when designing the proposed retail rates herein. Table 3 shows the COS results by class (total dollars in thousands) and compared to the projected revenues at current rates for the average year (TY) developed for this Study.
Table 3
Cost of Service Results by Class
Rate Class
Test Year Cost
of Service
($000)
Test Year Revenue at
Current Rates
($000)
% Revenue Change
Needed
Residential $24,387 $19,767 23%
Small Commercial $2,253 $1,247 81%
Medium Commercial $4,840 $4,371 11%
General Service $2,736 $1,751 56%
Industrial Service $9,076 $6,707 35%
Well Service $1,484 $800 86%
Master Metering $1,062 $452 150%
Street & Security Lighting $644 $258 149%
Total System $46,483 $35,326 32%
Note: Totals may not add due to rounding.
As shown in Table 3, the total system revenues are projected to require a 32% increase to recover the projected revenue requirement for the TY period based on current rates. Some customer classes need higher revenue increases than others to meet their individual class COS. The proposed rate design in this Study is to bring each customer class closer to its individual COS over the five-year period, while attempting to avoid undue rate shock to the customers within each class. However, the overriding concern of this Study is to address BEU’s cash reserve position, while moving each class closer to its COS over the five-year rate plan period. Figure 1 below shows each customer class’s projected revenues as a percentage of their TY COS for each year of the five-year rate plan proposed herein.
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 112926
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 Figure 1 – Projected Revenues by Class as a Percent of Test Year Cost of Service As previously mentioned, it is critical that the City and BEU continue to review the actual and projected annual rate revenues by class. To meet a positive reserve fund cash balance by the end of FY 2028, large rate increases are needed in the first three years of the five-year rate plan. The City and BEU have the ability and responsibility to adjust rate changes included in the five-year rate plan if actual revenues are determined to be higher than projected for this Study.
Proposed Electric Rates
To meet the annual projected cash needs for BEU’s utility operations, NewGen proposes to increase rates for all customer classes for each year of the five-year rate plan. The cash needs for the electric utility operations are anticipated to exceed those provided by current rates in FY 2025. These rate changes were assumed to occur on November 1 of each year, based on direction provided by BEU.
As indicated previously, the FY begins on July 1 of each year, which means each FY of this Study will have two sets of rates. The previous FY’s rates will be in effect until October 31, and the current FY rates will be in effect for the remainder of the FY (November 1 through June 30). Figure 2 below provides a graphic of the timing of the proposed FY rate increases compared to the system usage during the rate periods. It is important to note that almost half of the system usage occurs in the first four months of the FY, and the resulting percentage rate increase will be larger than the targeted revenue increase for each class.
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 1130227
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 Figure 2 – Proposed Rate Increase Timing Compared to Fiscal Year The average revenue change for all the customer classes is proposed to be approximately 20% in FY 2026 and FY 2027. Afterward, the average revenue change for each class varies, as the goal of the rate revenue is to move each class closer to its COS, as discussed above. Table 4 below shows these proposed rate changes for each rate component, for each rate class, for each year of the five-year rate plan.
It is important to note that the proposed rate changes do not include a projection of the existing Power Cost Adjustment Factor (PCAF) charge. The PCAF charge is designed to recover a portion of the power supply costs incurred by BEU to serve customers, which varies by month based on wholesale power purchases. The PCAF charge has a separate process by which the value is adjusted based on actual and projected costs as determined by BEU, which is excluded from the base rate analysis developed for this Study.
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 1131228
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 Table 4
Proposed Base Rate Changes by Class
Rate Class / Base Rate Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Residential
Basic Service Charge ($/month) $34.00 $43.00 $43.00 $43.00 $43.00 $43.00 Energy ($/kWh) $0.1619 $0.1878 $0.2366 $0.2413 $0.2461 $0.2461 Small Commercial
Basic Service Charge ($/month) $67.00 $80.00 $80.00 $80.00 $80.00 $80.00 Energy ($/kWh) $0.1369 $0.1636 $0.2078 $0.2473 $0.2572 $0.2572 Multi-Phase Service Charge ($/month) $4.52 $4.52 $4.52 $4.52 $4.52 $4.52 General Service
Basic Service Charge ($/month) $67.00 $80.00 $80.00 $80.00 $80.00 $80.00 Energy ($/kWh) $0.1369 $0.1636 $0.2078 $0.2473 $0.2572 $0.2572 Medium Commercial
Basic Service Charge ($/month) $228.00 $290.00 $290.00 $290.00 $290.00 $290.00 Energy ($/kWh) $0.1259 $0.1574 $0.1968 $0.1988 $0.2048 $0.2048 Demand Charge ($/kW) $19.42 $20.00 $21.00 $22.00 $23.00 $23.00 Industrial Service
Basic Service Charge ($/month) $456.00 $525.00 $525.00 $525.00 $525.00 $525.00 Energy ($/kWh) $0.1150 $0.1380 $0.1615 $0.1809 $0.1845 $0.1845 Demand Charge ($/kW) $16.52 $20.00 $23.50 $26.00 $26.50 $26.50 Well Service
Basic Service Charge ($/month) $342.00 $400.00 $400.00 $400.00 $400.00 $400.00 Energy ($/kWh) $0.1198 $0.1438 $0.1697 $0.1952 $0.2147 $0.2362 Demand Charge ($/kW) $15.38 $18.50 $21.50 $24.50 $27.00 $29.50 Master Metering
Basic Service Charge ($/month) $34.00 $43.00 $43.00 $43.00 $43.00 $43.00 Energy ($/kWh) $0.1619 $0.1935 $0.2245 $0.2660 $0.2953 $0.3248 Notes: Proposed rate components are rounded to four decimal places for energy and two decimal places for the Basic Service Charge and Demand Charge, as applicable. Excludes PCAF (see text).
Revenue Recovery from Proposed Base Rates
The projected revenues from the proposed base rates were estimated to be sufficient to meet the net revenue requirements of BEU’s electrical operations for the Study period, as well as to produce a positive electric fund balance by the end of FY 2028 (as provided in Table 1).
Residential Bill Comparisons
BEU requested a review of the potential impacts from the recommended utility base rate changes. Table 5 below provides a comparison of the current and future monthly electric utility bills for an average Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 1132229
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 residential BEU customer. The current bill includes an estimated PCAF charge of $0.0075/kWh for all years, while the actual PCAF will change according to BEU’s policy. The total current bill for this residential customer was estimated based on an assumption of 511 kWh of energy per month, which equates to approximately $118.00. As indicated herein, the rates for electric services are proposed to increase on November 1, 2025, resulting in a monthly total bill increase of approximately $15.00. The proposed changes for residential electric services in November 2026 would increase that portion of the bill by approximately $26.00 per month (based on the estimated usage). As noted herein, the subsequent rate changes are relatively modest, however, the impact of the November 1 rate change is evident in the percentage increases shown for the estimated residential customer monthly bill impact in Table 5.
Table 5
Estimated Residential Customer Monthly Bill Impact
Bill Component Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Energy Use (kWh) (1) $117.66 $132.56 $159.08 $177.91 $183.24 $188.73 Difference ($) N/A $14.89 $26.53 $18.82 $5.34 $5.49
Difference (%) N/A 13% 20% 12% 3% 3%
(1) Assuming 511 kWh monthly energy consumption, based on average BEU residential customer.
Recommendations
Based on the analysis developed in coordination with the City and BEU for this Study, NewGen recommends the following:
The City and BEU should adopt the recommended rate changes proposed herein to address the immediate cash reserve needs of the utility.
The City and BEU should monitor the performance of its new rates on an annual basis to ensure that revenues are sufficient to meet its cash reserve needs and related policy objectives. The City and BEU should establish a Working Capital Reserve fund that is equal to 1/8th of its estimated annual O&M expenses (excluding fuel costs) by 2030.
The City and BEU should establish a policy for a minimum 90 DCOH. This DCOH policy should be calculated using the total fund balance of the Electric Operations and Rate Stability Funds, as discussed herein.
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 113320
Arturo Vela
October 6, 2025
Banning Electric Utility_COS and Rate Study Report_Final Draft_10.06.25 We greatly appreciate the assistance of the City and BEU staff throughout the development of this Study.
If you have any questions regarding our methodology, analysis, and recommended rates, please contact me directly at (720) 259-1762 or [email protected].
Sincerely,
NewGen Strategies and Solutions, LLC
Scott Burnham
Partner
Docusign Envelope ID: F9C29D31-8184-4C68-8AD1-F83236B3D32A 113421