An expert explains: As a not-for-profit community-owned utility, we set our rates to recover the cost of providing reliable water and electric services to our customers – nothing more. While rate increases are necessary for several reasons, Burbank Water and Power (BWP) continues to look for opportunities to generate revenues and obtain funds from existing and new sources beyond electric and water charges to minimize the need for rate increases now and in the future.
Revenue resources offsetting rate increases
Revenues are used for a myriad of utility purposes; although in certain cases laws and regulations affect what types of revenue opportunities we can pursue and limit how the revenues can be used. Below are examples of revenue sources that we utilize to minimize rate increases:
- Wholesale energy trading – When we generate excess energy or have excess transmission capacity, we sell energy on the wholesale market, which increases our revenue and ultimately brings down rates.
- Aid-in-construction fees – These are fees developers pay to cover BWP’s costs for electric and water service for their construction projects. These fees ensure that developers fully cover the added electric and water capacity costs.
- ONEBurbank – Our fiber optic and broadband service has supplied the business community with hyper-speed internet access for years. To potentially increase revenues, we are studying the feasibility of expanding the ONEBurbank program to residential customers.
- Low Carbon Fuel Standard credits – The California Air Resources Board offers credits based on the electricity we provide to electric vehicles. We sell these credits and use the funds to invest in additional electric vehicle charging infrastructure and to provide incentives for customers. While the revenues from the sale are restricted to electrification-related infrastructure development, it provides our Burbank residents with a continuously expanding EV charging network at a lower cost.
- Grants – BWP received funding to help reduce money owed to us from late customer payments because of the pandemic, for electric vehicle chargers, for drought contingency planning, for a feasibility study of broadband to the home, and for a battery storage project. Additionally, BWP has applied for and is waiting for funding decisions on several other grants amounting to over $70 million. These grants offset the cost of projects and activities that we must undertake, by reducing and in some cases eliminating the amount we need to fund from collected rates.
- Interest income – Burbank invests public funds that are not required for immediate day-to-day operations in safe and liquid investments. These investments are governed by state law and have requirements on how and where the money may be invested. The investments are low risk with a goal of preserving capital and maintaining a steady flow of income.
We will continue to pursue other revenue streams to supplement what our customers pay. The pressures felt by BWP are industry-wide, but we are committed to actively looking for ways to save on costs, avoid costs, and increase alternative revenue sources to minimize rate increases for our residential and business customers now and in the future.
Our commitment to the Burbank community
In the past 12 months, we faced many challenges, including a summer heat dome and winter cold spell that spiked gas and energy prices, sky-high inflation, and supply chain issues resulting in unprecedented lead times for many necessary utility supplies. We anticipate continuing to face these and many other challenges in the foreseeable future, including obtaining and delivering electricity from renewable energy sources, meeting regulatory compliance, modernizing aging infrastructure, and adapting to climate change.
Burbank residents and businesses have enjoyed several years of low or no rate increases, before and during the pandemic, while we used cash reserves to make up the difference. Cash reserves are now too low to continue this practice. We are proposing electric and water rate increases to:
- Cover the cost of delivering utility services
- Meet the state’s renewable energy portfolio goals and avoid millions in penalties
- Replenish reserves in case of an emergency
- Uphold our excellent credit rating
- Replace aging infrastructure to maintain exceptional reliability
Beginning July 1, 2023, BWP is proposing an electric system average rate increase of 8.5% and a water system average rate increase of 9%. Next year, on July 1, 2024, the proposed rate increases are 8% for electricity and 9% for water.
We do not take rate increases lightly and understand the implications rate increases have on our customers. 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 or contact us at (818) 238-3700.
