Report to City Council
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TO: Mayor and City Council
FROM: Melissa Walker, Public Works Director/City Engineer
AGENDA DATE: December 16, 2025
TITLE: ADOPTION OF A RESOLUTION TO APPROVE THE
MORENO VALLEY ELECTRIC UTILITY RULES AND
RATES (REPORT OF: PUBLIC WORKS) (ALL
DISTRICTS)
TITLE SUMMARY: Adoption Of Resolution 2025 -__, A Resolution Of The City Council Of The City of Moreno Valley California To Approve And Update The Moreno Valley Electric Utility Service Rules, Fees, Charges, and Electric Rates
DISTRICT: All Districts
Recommendation(s)
That the City Council:
1. Approve Resolution 2025-__, a resolution of the City Council of the City of Moreno Valley, California, to confirm the Electric Service Rules, Fees, Charges, and Electric Rates for Moreno Valley Utility to be effective January 2026; and.
2. Authorize the Public Works Director/City Engineer to make minor updates to the Electric Service Rules, Fees, and Charges for the Moreno Valley Electric Utility, subject to the approval of the City Attorney.
SUMMARY
The previous Moreno Valley Utility (MVU) business model r equired MVU rate parity with Southern California Edison (SCE) pursuant to the ENCO contract. Now that the MVU operations are under a new contract, the business model proposes shifting from rate parity with SCE to a cost -of-service-based model that better r eflects the true cost of
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providing electricity. This approach ensures fair, transparent rates, maintains financial stability, and supports local reinvestment in reliability and clean energy. Despite rising renewable energy and capacity costs, MVU recommend s a modest rate reduction while remaining fiscally responsible.
DISCUSSION
There are two utility providers that currently serve electric service in the City of Moreno Valley - Moreno Valley Electric Utility (MVU) and Southern California Edison (SCE).
Between the two electric utilities, there are over 60,000 electric accounts. Historically, MVU has aligned its rates with SCE under a rate-parity philosophy. However, this approach has limited MVU’s ability to align rates with the actual cost of providing service.
MVU now proposes to transition to a cost -of-service-based rate model that more accurately reflects the underlying costs of generating, transmi tting, distribut ing, and maintaining the electric system, while retaining the core benefits of public power.
A cost -of-service methodology allocates all utility costs (fixed, variable, capital, operations, maintenance, and administrative) to customer classes based on cost causation, and then recovers those costs through rates designed to reflect how and when customers use electricity from the grid. This approach ensures that:
Each customer class pays for the demand it imposes on the system (rather than subsidizing or being subsidized by others).
The utility can maintain adequate reserves, fund capital reinvestment, and provide stable service over the long term.
Rate adjustments are more predictable, transparent, and defensible.
The b enefits of this cost -of-service model directly flow to our customers and to the community. Public power utilities typically:
Operate on a not -for-profit basis, with no shareholder profits embedded in rates (unlike investor-owned utilities).
Are locally accountable and subject to community oversight in rate decisions. Can finance capital investments with tax -exempt mun icipal debt, reducing borrowing costs.
Make targeted reinvestments (e.g. in reliability, modernization, clean energy) in our own community.
Under the proposed cost-of-service framework, the new rates will provide an average rate reduction of 26% across MVU’s rate classes compared to SCE’s current rates. This rate reduction is both viable and prudent given current and projected revenues, loads, and system needs. This reduction still aligns MVU with prudent fiscal practices and positions MVU to invest in future infrastructure and reliability improvements without overburdening customers.
Currently, MVU non -residential customers account for approximately 70% of MVU revenues, while residential customers only account for around 30% of MVU revenues.
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The requirement for utilities to purchase greater amounts of renewable energy continuously increased, moving from an amount equal to 20% of retail sales by 2017 to 33% by 2020, to 60% by 2030, and 100% carbon -free energy by 2045. In addition, the focus on renewable, clean energy has impacted the capacity market by limiting the amount of generation capacity available to cover peak demand periods, thus reducing supply and driving up prices. In Calendar Year (CY) 2018, the cost per kW -month for capacity products was approximately $1.30. In Calendar Years 2021 and 2022 cost per kW- month was approximately $6.20, and in CY 2024, the cost per kW-month increased to over $23.00.
MVU has seen a significant increase in power costs over the last decade and requires investments in technology to upgrade the system to maintain reliability and resiliency for its customers. For this reason, MVU will continue to assess its costs to serve and adjust rates as needed in the future to ensure that rates align with the utility’s fully burdened cost to serve.
The proposed rate changes were presented to the Utilities Commission on November 19, 2025. The average expected change by customer class is included in the attachments.
ALTERNATIVES
1. Approve and authorize the recommended actions as presented in this staff report.
Staff recommend this alternative to allow MVU to align its rates with its cost -to- serve, which will provide a reduction in rates on average for its customers and benefit the customer base.
2. Do not approve and authorize the recommended actions as presented in this staff report. Staff does not recommend this alternative as it will prevent MVU from being able to properly align its rates with the true cost to serve.
FISCAL IMPACT
The recommended rate reductions will align MVU’s fully burdened rates with the actual cost of serving both residential and non -residential customers. These adjustments are designed to maintain fiscal neutrality, resulting in no adverse impact on MVU’s financial operations and no impact on the General Fund.
NOTIFICATION
Posting of the agenda.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Lesia Bowers Melissa Walker, P.E.
Customer Service Manager Public Works Director/City Engineer Concurred By:
Jason Niccoli, P.E.
Electric Utility Division Manager
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CITY COUNCIL GOALS
Positive Environment: Create a positive environment for the development of Moreno Valley's future.
Public Facilities and Capital Projects: Ensure that needed public facilities, roadway improvements, and other infrastructure improvements are constructed and maintained.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
Objective 1.1: Proactively attract high-quality businesses.
Objective 1.2: Market all the opportunities for quality industrial development in Moreno Valley by promoting all high -profile industrial and business projects that set the City apart from others.
Objective 1.6: Establish Moreno Valley as the worldwide model in logistics development.
Objective 1.7: Promote small business development and entrepreneurship.
Objective 4.1: Develop a Moreno Valley Utility Strategic Plan to prepare for the 2022 expiration of the ENCO Utility Systems agreement.
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Report Approval Details
Document Title: STAFFREPORT_PW_MVU_RATES.docx
Attachments: - Resolution Dec 2025 Rates.docx
- EXHIBIT A_ MVU Rates_DRAFT.pdf
- EXHIBIT B_MVU_RulesFeesCharges_Dec2025_DRAFT.pdf
Final Approval
Date:
Dec 9, 2025
This report and all of its attachments were approved and signed as outlined below:
Melissa Walker
Sean Kelleher
Natalia Lopez
No Signature - Task assigned to Dena Heald was completed by workflow administrator Patty Rodriguez
Dena Heald_Deleted
Launa Jimenez
Brian Mohan
Patty Rodriguez