2 residential customers, typically increases substantially from June to July due to higher summer temperatures and little to no precipitation during July . Coupling the utility rate increases with the increase in ratepayer demand for electricity and water has an adverse bill impact on most ratepayers. Burbank Water and Power (BWP) and Public Works staff collaborated to discuss options and provide a solution with the most positive outcome for the ratepayers.
January is typically the deal month to implement a rate increase , as the bill impact will likely be subtle for most customers. Many customers use substantially more electricity in December due to the holidays, which can lead to a bill decrease in January. Additionally, most customers see a decrease in water usage in January due to more rainfall compared to December. In a typical year, the average rainfall in Burbank for January is 35% more than in December (3.3 inches compared to 2.44 inches). From a customer service perspective, implementing a rate increase in January may offer a more unassuming bill impact that allows customers to gradually adjust to rate increases.
Over the next two-year rate cycle, staff plans to shift from a July 1 rate implementation to a January 1 rate implementation. By adjusting the rate increase by six months, BWP anticipates losing six months of additional revenue associated with the rate implementation that traditionally took place on July 1. However, staff has integrated this new implementation date into the overall five- year financial outlook with the goal of obtaining reserve levels that meet the Council’s and BWP Board’s policy of recommended reserve levels for all four enterprise funds. Staff meticulously analyzed the inputs of the rate study to keep the proposed rate increases as low as possible, shifting the rate implementation to January while maintaining the financial integrity of the enterprise funds.
Water and electric rates will begin the January 1
st implementation in 2026. Solid wast e
and wastewater will still implement new rates o n July 1, 2025, and then shift to January 1 in 2027, and every year thereafter.
Electric Service
BWP is proposing an average 9.9% increase (the actual increase will vary by rate class) to the overall electric rates for each year due to:
• Higher costs associated with procuring renewables (two to three times higher) as required by the state and meeting many other unfunded regulatory mandates ; increased costs for transmission, capital costs, and operating costs; • Costs associated with repowering the Intermountain Power Project (IPP) with natural gas and retiring the coal plant; and
• The increase in costs due to the rebuild of the Southern Transmission System , which allows us to continue to procure zero- carbon resources from the east, and many years of under collections resulting from no rate increases or insufficient rate 3 increases which depleted reserves by 62% ( reduction from $80 million in June 2018 to $30 million in June 2023).
A cost-of-service (COS) analysis is key in setting utility rates. This analysis examines the utility’s projected revenue requirement over a particular time horizon and determines how to equitably divide these costs among the different classes of ratepayers. BWP’s current electric COS analysis, prepared by NewGen Strategies and Solutions, was conducted in 2022 and is valid through 2027. A new electric COS will be conducted in FY 2026-27 for rate setting beginning in FY 2027-28.
Water Service
BWP is proposing a 14% increase to the overall water rates for each year due to:
• I ncreases in the Metropolitan Water District of Southern California’s (MWD) rates of 8.5% to 11% each year for the next four years, which will increase BWP water supply expenses;
• A n increase in MWD meter charges (fixed charges);
• I ncreased capital costs due to maintaining and modernizing infrastructure, which includes the rebuild of reservoir two due to aging infrastructure and leakage; and • A r eduction in demand for potable sales due to successful conservation efforts.
The City has no local potable water rights and relies 100% on purchasing water from MWD.
The water COS and rate design was conducted by Raftelis Financial Consultants in 2022.
Raftelis conducted a comprehensive review of prior and projected utility costs, the allocation of those costs among customer classes, and recommendations for rate design.
A new water COS will be conducted in FY 2026-27 for rate setting beginning in FY 2027-
28. Financial Assistance Programs
As part of the rate -setting process, it is essential to have financial assistance programs to assist those in the community who may require aid. After reevaluating BWP’s existing robust financial assistance programs, BWP is proposing an increase in financial aid to its most vulnerable customers.
The following financial assistance programs are currently offered by BWP:
• Burbank Utility Service Subsidy (BUSS) Program
The BUSS Program offers an ongoing 12% discount on electric service to income- qualified residents. Most participants will have an average savings of $90-$180 per year on their electric bills.
• Low Income Home Energy Assistance Program (LIHEAP)
LIHEAP is a federally funded program that offers eligible applicants with a credit ranging between $152 -$1000 towards their utility bills. It is administered by two 4 providers. Interested customers may contact them directly to determine eligibility and to apply.
• Project Share
The Project Share program provides income -qualified customers with payment assistance of up to $100 in the form of a bill credit.
• Lifeline Program
The Lifeline Program offers income-qualified customers (ranging from an annual household income of $44,150 for a one- person household up to $ 83,250 for an eight-person household) with at least one member of the household being sixty- two years old or permanently disabled, a reduced rate and exemptions from the monthly customer service charge and Utility User’s Tax.
• Utility Bill Payment Arrangements
Utility bill payment arrangements are available to customers having trouble paying their bills and may need additional time beyond the due date to pay the amount owed. This is a one-time option that customers may exercise.
BWP is proposing enhancing the following financial assistance programs:
• Burbank Utility Service Subsidy (BUSS) Program
The BUSS Program offers an ongoing 14% discount on electric service to income- qualified residents. Most participants will have an average savings of $90-$180 per year on their electric bills; an increase of 2% from the current 12% discount.
• Project Share
The Project Share program provides income- qualified customers with payment assistance of $250 in the form of an overall bill credit; an increase of $150 from the current $100 credit.
• Lifeline Program
The Lifeline Program offers income-qualified customers (ranging from an annual household income of $44,150 for a one- person household up to $83,250 for an eight-person household) with at least one member of the household being sixty - two years old or permanently disabled, a 45% reduction in electric rate and exemptions from the monthly customer service charge and Utility User’s Tax ; an increase of 5% from the current 40% discount.
Wastewater Service
Public Works is proposing a 6.0% rate increase for wastewater service in FY 2025-26 and a 6.0% increase in FY 2026-27. For the average residential customer, this equates 5 to a monthly increase of approximately $1.70 for FY 2025-26 and $1.80 for FY 2026-27.
There were previously 4% rate increases in both FY 2024-25 and FY 2023-24, a 2.0% increase for sewer service in FY 2022-23, and there were no increases for wastewater service in FY 2021-22 and FY 2020-21. The proposed increases in wastewater charges are due to increased charges from the City of Los Angeles for sewage treatment services, capital improvement projects, and labor, chemical, and electrical costs to operate the Burbank Water Reclamation Plant.
Solid Waste Services
Public Works is proposing an 8.0% rate increase for solid waste services in FY 2025-26 and an 8.0% increase in FY 2026-27. For the average residential customer , this will increase the cost by about $3.38 for FY 2025-26 and $3.65 for FY 2026-27. This follows increases of 6.0% over each of the prior two fiscal years. The proposed increases in solid waste rates are due to negotiated salary and benefit increases, increases in costs allocated to other departments , and upcoming capital projects and capital purchases of vehicles. Another primary driver of these rate increases is the need to comply with state and local mandates, such as S enate Bill 1383 (Organics Disposal) and the new Waste Reduction Ordinance.
COMMUNITY OUTREACH
Staff will send out the regulatory required notice of notifying property owners and ratepayers of the proposed rate increases and their right to send a protest (“no”) vote per the regulatory guidelines of Proposition 218. Protest votes will be accepted beginning when the mailer is sent out and will continue until the close of the public hearing. There is a 45-day legal requirement for the City to send out the notice before the public hearing date, which will be met by mailing the notice during the week of March 31, 2025. The public hearing and request for Council to approve the rates is set for May 20, 2025.
BWP Staff is proposing holding three town hall meetings for all stakeholders to discuss the proposed BWP rate increases, what the funds will be used for, the drivers of the rate increases, and to educate on the financial assistance programs available to ratepayers.
The proposed town hall meetings are tentatively scheduled for April 23, 2025, on the BWP campus, April 26, 2025, at the Joslyn Center, and May 8, 2025, at the Community Services Building Conference Room 104. In addition to these town hall meetings, BWP’s General Manager has scheduled numerous community events, referred to as “Keeping Current with the Community”, beginning in March 2025 and going through June 2025.
Additional public outreach will include using the City’s and BWP’s social media and website platforms to distribute educational information.
ENVIRONMENTAL REVIEW
6 This item is for informational purposes only and does not have a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment . In addition, this item involves governmental fiscal activities unrelated to any specific project. As such, is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) 14 Cal. Code Regs § 15378.
CONCLUSION
Staff seeks Council’s feedback on moving forward with the utility’s proposed FY 2025- 2026 and FY 2026-2027 rate increases for:
1) A verage electric rate increase of 9.9% to go into effect January 1, 2026, and 2027; 2) A verage water rate increases of 14% to go into effect January 1, 2026, and 2027; 3) Rate increase of 6% for wastewater going into effect on July 1, 2025, and January 1, 2027
4) Rate increase of 8% for solid waste going into effect on July 1, 2025, and January 1, 2027.
ATTACHMENT
None.