An expert explains: As a not-for-profit utility, we ensure that customers are protected from rate shock due to energy and natural gas price increases.
If you use natural gas to heat your home as I do, you were in for a surprise in February upon receiving your January gas bill. For many, it was two to three times their usual monthly bill. Burbank Water and Power (BWP) received many calls and emails confusing us with the gas company, needing to understand how prices could soar that high and worried their electric bill would be next.
Increasing costs are something we are all too familiar with. BWP has had its fair share of price increases from our own vendors, as recently shared by Mandip Samra, our Assistant General Manager of Power Supply, in her article on how BWP manages power price increases. However, as your community-owned utility, we manage our business in a way that balances your need for reliable electricity at an affordable price. The Energy Cost Adjustment Charge (ECAC) is a portion of the electric bill that represents the cost of generating, buying, and delivering power to the Burbank community from our diverse energy sources, including natural gas, coal, solar, and hydro. The ECAC is used by most utilities across the country to recover volatile energy costs. Without the use of an ECAC, a utility faces the risk of depleting cash reserves on power purchases. This will impact BWP’s bond rating, affecting our ability to invest in capital projects to maintain our infrastructure as well as our ability to respond to natural disasters such as earthquakes or floods.
BWP’s Energy Cost Adjustment Charge (ECAC) protects our community from rate shock.
To keep the lights on 24/7, BWP must always have power running through our system. Sometimes this means having to buy when prices are at their highest. As utility experts, we know that prices fluctuate, so our team works hard to get the best deals by monitoring energy costs, pre-buying at a set price, or negotiating steady prices. BWP uses the ECAC to track and collect power costs, and there is a 10% limit to how much BWP can increase the ECAC each month. This limit protects our community from rate shock. For example, BWP saw natural gas and energy prices increase five-fold in September 2022’s heat dome and the January 2023 cold snap. Still, your ECAC remained the same, as we anticipated lower costs for purchasing power in the future. If we don’t see those prices come back down, which we are closely monitoring, BWP will look to increase the ECAC by a maximum of 10% per month, which will be reduced once the costs are recovered. If BWP increased the ECAC today by the maximum 10%, the result would be an average increase of $3.26 on the monthly bill of a typical apartment/condo and an $8.15 monthly increase for a typical single-family home. BWP will never double or triple the price of power in one month; we spread the costs to maintain affordability.
You too can help BWP manage rate increases by conserving when energy costs are at their peak.
When we ask customers to conserve energy during heat waves, like in September 2022, we ask for your partnership to avoid millions of dollars in energy costs from buying gas at peak prices. As your community-owned utility, BWP’s rates are set to cover expenses. There are no shareholders, so our community benefits from lower energy costs. Burbank is one of the most affordable and reliable utilities in the region. The regional average electricity rate is $0.25/ kilowatt-hour (kWh). Burbank rates are 24% less at $0.19/ kilowatt-hour (kWh). The Burbank community also enjoys electric reliability 99.999% of the time. If you know BWP, you know we are always there for you.
As your not-for-profit community-owned utility, we want to ensure you understand how your utility manages its finances. BWP strives to provide transparency in our budget proposals and minimize the impact of rate increases on our most vulnerable customers. We will continue to do so on April 6, 2023, at the BWP Board Meeting, on May 9, 2023, at the City Council meeting, and on June 6, 2023, at the public hearing on rate increases.
This year BWP is proposing an electric rate increase of 8.5% in 2023/24 and 8% in 2024/25, which will help cover the costs of power and other increases. If a rate increase will present a significant struggle to your household, BWP has a suite of programs to help manage bill increases, regardless of income level. For more information about our financial help programs, please visit our website at burbankwaterandpower.com or contact us at (818) 238-3700.