CITY OF GLENDALE, CALIFORNIA
REPORT TO THE CITY COUNCIL
AGENDA ITEM
Report: Introduction of Ordinance Amending Ordinance No. 6016 Establishing the Electric Rates for Glendale Water and Power for Fiscal Years 2024 to 2027 to Add the Standby Service Rider for Medium Business Dispatchable and the Standby Service Rider for Large Business Dispatchable Rates.
1. Introduction of Ordinance Amending Ordinance No. 6016 establishing the Electric Rates for Glendale Water and Power for Fiscal Years 2024 to 2027 to add the Standby Service Rider for Medium Business Dispatchable and the Standby Service Rider for Large Business Dispatchable rates.
COUNCIL ACTION
EXECUTIVE SUMMARY
On November 28, 2023, City Council adopted Glendale Water and Power’s (GWP) electric rate increase effective January 1, 2024. During the implementation of the new electric rates in the NorthStar Customer Information system (CIS), it was noted that the new rates for the Standby Service – Medium Business Dispatchable and the Standby Service – Large Business Dispatchable were not included in the rate tables included in the ordinance. This service and the related rates historically have not had any customers; however, there are expected to be a small group of co-generation customers utilizing these rates and services beginning in 2024 and, as such, these rates were considered and included in the COSA. GWP is also proposing some additional edits to the Standby Service Rider including a Time of Use (TOU) option which would provide needed benefits and cost savings to the customer through a monthly peak demand verses a ratcheted 12-month peak demand.
RECOMMENDATION
Provide the Standby Service desired by customers and needed to properly recover costs for GWP and approve the recommended additions/changes to the four rates for the Standby Service Rider – Medium Business Dispatchable and the Standby Service Rider – Large Business Dispatchable Standard and Time of Use (TOU) rates. {{section.number}}b
Item Type: Action Item
Approved forMarch 26, 2024 Calendar
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ANALYSIS
On November 14, 2023, GWP presented the City Council with proposed new electric rates for Fiscal Years 2024 through 2027 for the standard customer classes. On November 28, 2023, the proposed rates were approved and adopted by the City Council via Ordinance No. 6016. Four specific rates, providing a unique Standby Service Rider option for Medium LD-2 and Large Business PC-1 including Time of Use (TOU) customers were omitted from that submittal. This service rider and the related rates historically have not had any customers; however, there are expected to be a small group of customers utilizing these rates and services beginning in 2024 and, as such, these rates were considered and included in the COSA. This service and rates provide GWP standby generation capacity for customers with large amounts of dispatchable self-generation behind the meter. Standby Service provides generation service to these customers if and/or when their behind the meter self-generation fails or has a scheduled outage. For customers utilizing this service, GWP incurs costs to procure and ensure generation capacity for these customers. GWP procures generation capacity and services in the amount of the customers behind the meter self-generation capacity. These costs, known as a Reservation Charge, are included in the Standby Service rates, and charged on a monthly basis to the customers.
The medium and large standby service rider currently uses the standard PC1 and LD2 rate structure with a 12-month ratcheted peak demand. The billed demand usage is based on the highest peak demand recorded within the prior 12 months and the customer would be billed that demand until either a higher peak demand occurs, or the 12 months have expired, then they would revert to the next highest peak demand.
The requested change to the standby service demand rate will eliminate the 12-month ratcheted peak demand for medium and large standard and TOU standby service riders, and only charge the billable monthly peak demand for the current bill period.
This is a cost benefit to the co-generation customers as they will not get penalized for a high peak demand generated by a system outage or unscheduled or scheduled maintenance. In most cases the customer would realize an average annual savings of $19,000 by being on the Standby Service Rider.
GWP is also proposing extending the standby service rider to the Medium Business Dispatchable and Large Business Dispatchable TOU LD2B and PC1B rates, which were not included in the adopted COSA and omitted from Ordinance No. 6016, to allow the co-generation customers the option to be on a standard or TOU standby service rider and benefit from the monthly peak demand and the annual saving it may provide.
The attached rates are redlined changes from the recent ordinance adopted on November 28, 2023 (see Exhibit 1). These changes will update the Standby Service rates to align with the 2023 COSA and other conventional rates adopted on November 28, 2023.
STAKEHOLDERS/OUTREACH
Not applicable.
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FISCAL IMPACT
The increase in the standby service rider rates will increase revenues by approximately $220,000.
ENVIRONMENTAL REVIEW (CEQA/NEPA)
Pursuant to California Environmental Quality Act (CEQA) CEQA Guidelines Section 15273, CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agency which the public agency finds are for the purpose of (1) meeting operating expenses including employee wage rates and fringe benefits, (2) purchasing or leasing supplies equipment or materials, (4) meeting financial reserve needs and requirements, for obtaining funds for capital projects necessary to maintain service within existing service areas, or (5) obtaining funds necessary to maintain such intra-city transfers are authorized by City Charter. As set forth in the report dated November 14, 2023 and in this report, the electric rate increases recommended and approved are for the express purposes of meeting existing operating expenses of GWP, purchasing supplies, equipment or materials necessary to operate the utility, funding certain capital improvements necessary to supply electricity to the residents and businesses within Glendale’s service area, and to ensure the Glendale City Charter authorized intra-city transfer can be maintained.
CEQA Guidelines Section 15273(c) requires the City Council to incorporate written findings in the record of any proceeding in which an exemption under this section is claimed setting forth with specificity the basis for the claim of exemption. The required findings are set forth in the Ordinance Establishing Electric Rates for Glendale Water and Power Customers accompanying this staff report.
CAMPAIGN DISCLOSURE
Not Applicable.
ALTERNATIVES TO STAFF RECOMMENDATION
Alternative 1: Not to approve the actions requested and recommended in this report.
Alternative 2: Consider any other alternative not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Mark Young, General Manager - Glendale Water and Power
Prepared by:
Scott K. Mellon, Assistant General Manager - Power Management Adrine Isayan, Assistant General Manager - Finance & Risk Management Michelle Nall, Utility Business Systems Support Administrator {{section.number}}b4
Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Exhibit 1: Standby Service Rider Rate Tables