An expert explains: Utility inflation is actually higher than the national average, but BWP continues to find ways to balance reliability, affordability, and sustainability.
As a not-for-profit community-owned utility, Burbank Water and Power (BWP) rates are set to recover our costs, nothing more. In the last year, BWP’s net income has been heavily impacted by increasing inflation. Prices for materials, goods, and services are much higher than what we budgeted, which means we must use our savings, find grants to offset costs, or find opportunities for operational efficiencies. BWP does all three to balance affordability while ensuring you receive reliable and sustainable water and energy. Without these actions, inflation would need to be directly passed on to the community.
U.S. inflation has climbed as high as 9.1%, and in many cases, we are seeing higher expenses for utility-grade materials and inputs to produce energy. Based on the U.S. Bureau of Labor Statistics, between January 2022 and January 2023, the energy consumer price index (a proxy for inflation) increased by 17.5%. Costs of water treatment components have also increased significantly, with some tripling in price.
BWP Increases in infrastructure, generation, chemicals, and construction materials
BWP actively looks for opportunities to save money and offset costs
One of BWP’s values is continuous improvement. During this time of price increases, we have leaned into this value finding more than $27M of cost savings in the last 12 months. BWP employees are always looking to find ways to make things more affordable, from cutting unnecessary steps out of a process, leveraging technology to improve efficiency, or re-evaluating or renegotiating contracts. Some examples in the last year are the termination of gas contracts that were no longer the best deal ($444K); the evaluation and selection of a different vendor for Technical Data Management Streaming (TDMS), which resulted in a $7M savings; and utilizing our Intermountain Power Plant when alternative power pricing was too high saved us $2.3M.
BWP is also applying for numerous electric and water infrastructure grants from the federal government and the state. If awarded, they will enable us to build back some of our expended reserve funding, helping to reduce future rate increases. BWP was recently awarded $1 million for electric vehicle DC-fast chargers from the State of California. Other grants awarded include $125,000 from the American Public Power Association for a battery storage project, $125,000 from the Bureau of Reclamation for a Drought Contingency Plan, and $85,000 to study the feasibility of broadband to the home. BWP anticipates receiving $10.4 million in Inflation Reduction Act credits to aid in the cost of solar projects as well as funding from local developers to aid in the construction of the Willow substation. To date, BWP is waiting to hear back on the $70 million of grants we have applied for to assist in hardening our grid, updating our water metering infrastructure, and providing additional money to customers to replace turf grass with low-water-use plants.
BWP is always there for you!
BWP needs to increase electric and water rates to cover the cost of delivering you service. 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.
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.