The Un-Announced, Illegal Electric Rate Increase
By Frank Gallo
In the table below, as part of the City’s own electric rate Cost of Service Analysis (COSA), two things stand out. First, a City transfer shows as an integral cost of providing the electric service, and second, no money is being put aside in reserves.
There is no legal ground to support a transfer of revenue as a necessary cost to provide electricity to ratepayers (Prop. 26) and second, the Glendale City Charter requires that money be put aside to provide for the necessary maintenance costs of the utility.
When asked about compliance with the State Constitution and the City Charter, the reply by those who presented the COSA report was simple: “We are following the instructions of the City Council.” Obviously, the contractor that prepared the COSA knows that his study would not stand a court challenge and there is one coming soon.
The proposed rate increase clearly violates the State Constitution and the City Charter and discourages energy saving and the use of clean energy. The rate increase almost doubles the connection fee and increases the per-kilowatt cost to residential customers. Furthermore, the proceeds of the rate increase would go to pay for a City Transfer that is illegal and to pay for a proposed Bond with an undetermined amount.
Under those circumstances is hard to believe that a Council Member in his/her right mind would approve the presented rate increase. Especially when last fiscal year the Fund that receives the transfer had a $15 million dollar surplus and trimming some cost from that fund could keep the transfer from being a necessity to balance the General Fund Budget. Second, the debt servicing line can’t, and should not be increased when there is no accurate estimate of the possible cost of refurbishing the utility.
The City was already found by a lower court in violation of the State Constitution and the City Charter because of the same transfer that is now included in the proposed electric rate increase. The City has appealed but the odds are against the City. The chances that the City’s appeal could be decided by the Court shortly before the next Council election are very high and based on this Electric Rate COSA it would be hard for any court to side with the City. So, how would a running incumbent justify a decision that placed the City in the position of a law breaker and that cost the public millions of dollars in unnecessary legal fees?
Finally, how can a Council Member justify a rate increase that would discourage energy saving and the use of clean energy? Furthermore, the City Manager that endorsed the General Fund Transfer in the 2013 rate increase is no longer around. Why would anyone support an illegal, un-needed transfer, especially in the face of an adverse court decision?
