By Mary O’KEEFE

Glendale Water and Power (GWP) has been reaching out to the community to let it know about an upcoming proposed rate hike. Mark Young, GWP general manager, has been spearheading efforts to get information out to the community.

On Feb. 8, 2022, Young said GWP came to Glendale City Council and indicated a rate increase was needed because of projects it was doing with “renewable assets.”

“As a municipal [utility company] we don’t make a profit, so the amount of money it costs us to operate the utilities is the amount of money we are supposed to receive [via] rates,” Young said. “We under-collected by about $15 million this year so we have to make those adjustments.”

The City of Glendale has committed to finding more renewable energy; however, there are a lot of factors to get power into the homes of Glendale residents and businesses.

One of the projects, Eland Solar and Storage Center, would provide 25 megawatts of new solar power and 18.75 megawatts of battery storage, according to the Glendale Environmental Coalition.

“We always looked at buying into large projects so Eland … was a 400 megawatt project that we partnered with Los Angeles. We were able to negotiate the cheapest solar project price in the country, if not the world,” he said.

However, the federal government is preventing the forward movement of the project while it determines if the solar panels were produced by forced labor. So despite the best efforts of Eland and GWP, this solar project is not up and running and the delay has a lot to do with the increase in rates.

Several projects had been delayed for a variety of reasons. Young explained why some of the projects were delayed and added he had been speaking about the hike for some time. He said these delays have monetary consequences.

“In 2017 we were going to pay [for the Scholl Canyon project] in cash. What has happened now is the price went from about $26 to $30 million up to $70 million,” he said.

The reasons for the increase are due to a number of factors including supply chain issues left over from the pandemic.

“Everything has become more expensive and it takes longer to secure [items]. When I look at Scholl Canyon replacement costs … Scholl Canyon was supposed to produce about 10 to 11 megawatts every hour of every day of every month of every year,” Young said.

Due to this project not being up and running, GWP had to purchase replacement energy from an outside market, which costs $7 million a year. Had the plant been completed in 2019, GWP would have saved that $7 million annually.

Young added another example of power costs rising includes the summer months of July, August and September.

“If we were to look at those prices back in 2014, to buy a megawatt of energy would have been about $55 and in 2018 it was $44. So when we are looking at doing the Scholl Canyon Project, initially that heavy load energy in the heat of the summer would have cost about $44,” he said. “This year it was $204 [per megawatt].”

In addition to the increased costs of production and buying energy there is also the increased cost of borrowing money.

Young explained that if the projects were completed when they projected they would not have to raise rates; however, that was not the case.

“We had indicated there would be no rate increase because the [previous] rate of borrowing was cheap,” he said.

Supply chain issues affected prices, whether it was an artificial increase or not, and prices are now over 50% more expensive.

“And a couple of years ago the cost [of borrowing] money went from 1% to 1.5% to almost 5%,” Young added.

If GWP is not able to supply the City with energy, the federal government will come in and levy fines on the City and there will be rolling blackouts for customers, Young said.

During a Glendale City Council meeting Councilmember Paula Devine was surprised by the possible rate hike.

“I will see a 20% increase [if the proposed rate increase is approved],” she said. “I was devastated and shocked by this report.”

GWP will be presenting its findings to the Council at the Nov. 7 Glendale City Council meeting that starts at 6:30 p.m.