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CITY OF GLENDALE, CALIFORNIA
REPORT TO THE CITY COUNCIL
AGENDA ITEM
Report: Introduction of Ordinance Amending Ordinance No. 6025 Establishing the Electric Rates for Glendale Water & Power for Fiscal Years 2024 to 2028 to Implement Adjusted and Redistributed Electric Rates Increases effective November 1, 2025, November 1, 2026 and November 1, 2027.
1. Introduction of Ordinance Amending Ordinance No. 6025 Establishing the Electric Rates for Glendale Water & Power for Fiscal Years 2024 to 2028 to Implement Adjusted and Redistributed Electric Rates Increases effective November 1, 2025, November 1, 2026 and November 1, 2027.
COUNCIL ACTION
Item Type: Action Item
Approved for September 30, 2025 Calendar
EXECUTIVE SUMMARY
The City Council adopted the last electric rate increase for ratepayers in November 2023. The rates were based on a COSA covering a five-year period from fiscal year 2024 through fiscal year 2028. The Council approved a three-year rate increase averaging 14.8% effective January 1, 2024; 11.3% effective July 1, 2024; and 11.3% effective July 1, 2025, with no rate increases in the final two years. Understanding the impact that the rates implemented to date had on customers’ utility bills, GWP staff made every effort to mitigate the impact of the final scheduled adjustment. After a careful analysis of cash balances, reserves, and projected revenues from non-rate sources, GWP staff recommended deferring the July 1, 2025 11.3% rate increase to November 1, 2025, and redistributing the increase as follows: 5% effective November 1, 2025; 2.95% effective November 1, 2026; and 2.95% effective November 1, 2027.
On June 3, 2025, the City Council adopted Resolution No. 25-80 whereby it approved GWP’s deferral and redistribution plan. This approach shifts the adjustment implementation to occur after the peak customer usage season, reducing impacts on customer bills. It also enables the Utility to recover the revenue necessary to support operations and capital projects within the COSA timeframe. Due to time constraints, only the general system average rates were presented at that time. Therefore, GWP staff is now returning to Council with the proposed rate changes by customer class, following coordination with the COSA consultant, NewGen Strategies. 29d
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The proposed ordinance will be presented for introduction on September 30, 2025 with anticipated adoption on October 7, 2025, which will make the effective date November 6, 2025. Because the ordinance will reduce and redistribute the rates that would otherwise go into effect on November 1, 2025, the proposed ordinance includes a provision to apply the redistribution retroactively to November 1, 2025 consistent with City Council’s direction.
RECOMMENDATION
Introduce an ordinance for the proposed redistribution of the planned 11.3% average rate adjustment - originally scheduled to take effect on July 1, 2025 - to November 1, 2025; November 1, 2026; and November 1, 2027, using the new customer class rates proposed by the City’s COSA consultant. The deferral, which was approved by Council on June 3, 2025, is intended to provide relief to ratepayers during the peak summer months, when energy usage and customer bills are typically at their highest. By spreading the adjusted increases over three years, the proposed redistribution reduces the financial impact on customers by avoiding a single, large rate increase. With the deferral and redistribution using the proposed customer class rates, total revenue received and projected will remain sufficient to support the utility’s financial obligations, including debt service payments, compliance with debt coverage ratio requirements, and maintaining an adequate number of days cash on hand.
Since these rates were originally adopted by ordinance, this proposed modification also needs to be adopted by ordinance. Staff is recommending that future establishment of rates be adopted by a resolution for process efficiency.
ANALYSIS
GWP’s last electric rate increase for Glendale ratepayers was adopted by City Council on November 14, 2023. Council approved a three-year rate increase averaging 14.8%,
11.3%, and 11.3%, which took effect on January 1, 2024, and July 1, 2024, with the final increase originally scheduled for July 1, 2025, respectively. These rate increases were designed to support the Grayson Repowering Project and provide partial funding for the Scholl Canyon Biogas Renewable Generation Project, City solar initiatives, and Glendale’s efforts toward fleet and building electrification. They also help offset rising costs associated with wholesale power purchases, renewable energy development, and fuel. Many of the financial commitments for these capital projects were expected to or did occur during the first three years of the COSA period, and since bonds were issued to cover those costs, most of the rate increases also needed to occur during that time to comply with bond covenants.
The deferral and redistribution of the final average 11.3% rate increase is projected to reduce retail revenues by approximately $24.2 million in fiscal year 2026, $13.1 million in fiscal year 2027, and $3.9 million in fiscal year 2028- a total reduction of $41.2 million compared to the original revenue estimates in the 2023 Cost of Service Analysis.
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The Electric Fund is able to absorb the impact of these revenue reductions for the following reasons:
Actual and projected revenues from sales to other agencies, interest income, and sales of carbon allowance credits are now expected to exceed original forecasts.
The actual expenses realized and projected for purchased power and natural gas are now anticipated to be lower than originally forecasted. Delay in Capital expenditures on projects resulted in higher-than-anticipated cash balances yielding higher interest revenue from invested funds.
On June 3, 2025, the City Council approved GWP’s recommendation to defer the July 1st increase and implement adjustments of the rate increases utilizing general system average rates for fiscal years 2025-2026, 2026-2027 and 2027-2028, with the understanding that GWP staff would return to Council with rate adjustments by customer class for formal adoption. NewGen Strategies, the city’s COSA consultant subsequently updated the COSA for fiscal years 2025-2026, 2026-2027, and 2027-2028 to determine the appropriate rate adjustments by customer rate class. The updated analysis confirms that the proposed deferral and redistribution of the 11.3% average rate adjustment remains in line with the City’s overall cost recovery obligations. The table below presents the results of the COSA analysis by customer rate class while meeting obligations set forth in Proposition 26 (see Exhibit A).
Rate Adjustments by Customer Rate Class
If the proposed ordinance is introduced at this meeting and is adopted on October 7, 2025, it will be effective on November 6, 2025. Because the proposed ordinance will reduce and redistribute the rates that would otherwise go into effect on November 1, 2025, the proposed ordinance includes a provision which makes the implementation of the proposed adjusted and redistributed rates retroactive to November 1, 2025.
STAKEHOLDERS/OUTREACH
N/A
R ate Class 11/1/2025 11/1/2026 11/1/2027 Cumulative
O verall S ystem 5.00% 2.95% 2.95% 11.30%
R esidential 6.10% 3.58% 3.58% 13.80%
S mall Business 5.63% 3.27% 3.27% 12.70%
M edium Business 3.29% 1.95% 1.95% 7.40%
Large Business 4.23% 2.50% 2.50% 9.50%
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FISCAL IMPACT
The proposed deferral and redistribution of the system average rates by customer class, as outlined in the report, is estimated to reduce revenues by approximately $41.2 million over the three-year period. However, this reduction in revenue can be absorbed within the existing COSA due to higher-than-forecasted non-rate revenues and savings in Purchased Power expenditures.
ENVIRONMENTAL REVIEW
The action requested herein is ministerial and thus not a project for the purposes of California Environmental Quality Act; therefore, CEQA does not apply.
ALTERNATIVES
Alternative 1: Not introduce the Ordinance amending Ordinance No. 6025 establishing the Electric Rates for Glendale Water & Power for Fiscal Years 2024 to 2028 to Implement Adjusted and Redistributed Electric Rates Increases effective November 1, 2025, November 1, 2026 and November 1, 2027, in which case, rate adjustments will default to the originally adopted rate increases approved in November 2023 of 11.3% on average for Fiscal Year 25-26.
Alternative 2: Consider other alternatives not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Scott K. Mellon, P.E., General Manager - Glendale Water & Power Prepared by:
Adrine Isayan, Assistant General Manager - Finance & Risk Management David Davis, Utility Finance Manager
Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS / ATTACHMENTS
Exhibit A: Rate Table