Glendale Water and Power
2023 Electric Rates Cost of Service
Analysis (COSA)
November 14, 2023
Scott K. Mellon, Assistant General Manager – Power Management Glendale Water & Power
ITEM 8.C
2 Background
2018 2019 2022 2022
Last Rate
Increase
COSA
conducted
to support
proposed
Grayson
Repower
Project
COSA
conducted
to support
proposed
VPP
Project
Council
approves
3 Wartilas
for
Grayson
Repower
Project
2023
COSA
conducted
to support
Council
approved
Capital
Projects
Operating
at the
Lowest Cost
Possible
Delivering Customer
Value
Providing
Safe,
Reliable, and
Sustainable
Power
Policy
Recommendations
are Based on this
Balance
3 Factors that Impact Rates
Infrastructure/Capital Improvements &
Maintenance
Supply Chain
Material Limitations
Labor Availability
4 Factors that Impact Rates
Borrowing Costs
5 Factors that Impact Rates
Power Procurement Costs: 52% increase in 2023
6 7
Factors that Impact Rates
Adoption of Clean
& Renewable
Energy
Technologies
Electrification
of Vehicle &
Buildings
Clean Energy Goals & Initiatives
7 Levelized Cost of Energy – Capital Cost Comparison
City Owned Solar Development Program
Grayson Repowering & Scholl Biogas
Commercial Solar
Whitegrass
Eland
8 8
Proposition 26
• Approved by voters in 2010
• Electric rates may not exceed the reasonable cost of service • Electricity may not be provided to those not charged
• Cost of Service is unique to customer billing classes, e.g. residential, commercial
9 10
BOND ISSUANCE SCENARIOS___________________________________________________________________________ Five Bond Issuance Scenarios were considered when determining the lowest impact to customer rates
10 11
11 12
RATE STRATEGY AND BILL IMPACTS
Rate and Bill Impact Strategy: no class gets more than 1.25 times the system average rate increase, work towards the COS each year or phase, and aligns with COS in final year FY 2027.
___________________________________________________________________________ Option 1 (RECOMMENDED) FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Cumulative Residential 18.6% 14.0% 13.8% 0.0% 0.0% 53.9%
Small Business 18.2% 13.5% 12.6% 0.0% 0.0% 51.1%
Medium Business 9.7% 7.5% 7.4% 0.0% 0.0% 26.7%
Large Business 12.1% 9.4% 9.5% 0.0% 0.0% 34.3%
Total System Average Bill Changes 14.8% 11.3% 11.3% 0.0% 0.0% 42.2% 12 13
RATE STRATEGY AND BILL IMPACTS
Option 2
• Reduces the yearly increase compared to Option 1
• Increases the number of “increase years” and cumulative increase ___________________________________________________________________________ Option 2 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Cumulative Residential 17.0% 10.8% 10.8% 10.8% 0.0% 59.1%
Small Business 16.8% 10.2% 10.2% 10.2% 0.0% 56.2%
Medium Business 8.9% 6.4% 6.3% 6.3% 0.0% 30.9%
Large Business 11.3% 7.7% 7.5% 7.7% 0.0% 38.8%
Total System Average Bill Changes 13.6% 9.0% 9.0% 9.0% 0.0% 47.1% 13 14
OPTION #1 AVERAGE MONTHLY BILL
RESIDENTIAL SINGLE FAMILY
14 15
OPTION #1 AVERAGE MONTHLY BILL
RESIDENTIAL MULTIFAMILY
15 16
OPTION #1 AVERAGE MONTHLY BILL
LOW INCOME MULTIFAMILY
16 Historical Rate Adjustments
17 CUSTOMER ENGAGEMENT
GWP Staff and Consultants held three Community Meetings:
• October 18th at Glendale Police Department Community Room • October 19th at Sparr Heights Community Center
• October 25th at Adult Recreation Center
Customer Outreach
• Social Media, Emails, Postcards, Websites, TV, and bill mailings • Generated approximately 1.2M “impressions” just in October 18 CRITICAL TIMELINE
19 Date Milestones
November 14, 2023 Electric Rate Adjustment Introduction November 28, 2023 Electric Rate Adjustment Adoption
December 29, 2023 Electric Rate Effective Date
January 2024 Bond Ordinance Approved/Issued
RATE ADJUSTMENTS – A CRITICAL PATH
Consequential Impacts without Rate Increase:
• Inability to meet City’s Electric Load
• Insufficient Reserve Capacity
• Inability to fund, invest, or participate in Renewable projects • Reduction/removal of GWP Fund Transfer impacting City Services • Breach of statutory/contractual obligations to FERC, California, SCPPA, and BAASA(LADWP) including potential fines and/or damages • Potential loss of Glendale publicly owned utility due to lack of revenue and/or inability to meet load obligation
20 21
Questions?
Parking Lot Slide
22 U.S. Treasury Rates
23 July 23, 2019: Council
approves LNTP for
Alternative Grayson
Repowering Plan.
December 15, 2020: Council
authorizes funding for
Alternative 7 & 8 and a new
PR-DEIR for alternatives.
February 8, 2022: Council
directs negotiations for
VPP. COSA = 7%, 4%, 2%,
2%, 2% over five years.
March 1, 2022: Council
adopts modified Alternative
7 (5 Wartsilas). Direction to
stop until December.
August 16, 2022: Council
approves Contract
Amendments. Approves
short-term funding (LNTP 2).
December 13, 2022:
Council approves
Wartsila purchase
(3 Wartsilas).
Grayson Decision Points
February 15, 2022:
Council approves
EIR, 5 Wartsilas.
U.S. Treasury Rates
24 July 23, 2019: Council
approves LNTP for
Alternative Grayson
Repowering Plan.
December 15, 2020: Council
authorizes funding for
Alternative 7 & 8 and a new
PR-DEIR for alternatives.
February 8, 2022: Council directs
negotiations for VPP. COSA = 7%,
4%, 2%, 2%, 2% over five years.
August 16, 2022: Council
approves Contract
Amendments. Approves
short-term funding (LNTP 2)
December 13, 2022:
Council approves
Wartsila purchase
(3 Wartsilas)
Grayson Decision Points
March 1, 2022: Council
adopts modified Alternative
7 (5 Wartsilas). Direction to
stop until December.
February 15, 2022: Council
approves EIR, 5 Wartsilas.