Explaining the Parts of the Recent Glendale Electric Rate Increase
Before the recent electric rate increase ratepayers were charged a basic rate consisting of two components: a fixed charge for having a meter (to cover costs incurred regardless of amount of power used) and a fixed charge for each unit of electricity (use more units, pay more; use less, pay less). Any changes in these fixed charges require council action.
Additionally, there was an adjustable charge based on cost of fuel and energy purchases. If these costs increase or decrease they’re automatically passed through to the ratepayer without City Council action. The rate increase added two additional adjustable charges: the Energy cost adjustment charge (ECAC) and the Regulatory adjustment charge (RAC)
Under the ECAC if costs of complying with federal, state and local regulations (including environmental regulations) are greater or less than current projections the ratepayers will automatically be surcharged or credited accordingly, without Council action. You must decide if the ECAC will likely result in automatic increases or decreases.
Under the RAC if actual electric revenues are less than current projections, there’s an automatic surcharge to compensate for the shortfall; if there’s an excess, there’s an automatic credit reflecting that. You must decide if, under the RAC, it’s likely that ratepayers will conserve and be rewarded with automatic surcharges.
It’s reminiscent of the city’s successful water conservation campaign where the utility sought and got a rate increase, in part, to make up for lost revenues due to ratepayers’ conservation efforts. That increase required a public hearing and Council action; under a RAC that’s by-passed and electric rates automatically increase.
