Utility to ask for water rate increases

Revenues are on the decline as costs from suppliers increase.

April 08, 2011|By Mark Kellam

Citing falling revenues and rising costs, the Burbank Water and Power Board on Thursday recommended a 4.9% water rate increase, the first of what could be three rate hikes in the coming years.

The utility plans to ask for another 4.9% water rate increase in fiscal year 2012-13 and for a 3.9% bump in 2013-14.

Utility officials cited the high cost of developing renewable energy and imported water in pushing for the latest rate increase, which would come less than a year after the City Council approved a 13.5% rate hike. Two weeks later, the council approved an 11% salary increase for Burbank Water and Power executives.


The City Council must still sign off on the latest proposal.

Part of the revenue decrease is related to a dramatic rise in water conservation, the direct result of city-mandated water restrictions implemented in 2008, said Ron Davis, general manager of Burbank Water and Power.

Revenues brought in through recycled water also were much lower than expected –- approximately $1.6 million, compared to about $2.1 million projected when this year’s budget was drafted. There was also a decline in revenue from potable water, which at $19.8 million was far below the $24 million that was projected.

Burbank Water and Power board member Wendy James pointed out the paradox of residents being told to reduce water usage, only to see their rates rise.

“But we have to cover our costs,” Davis said.

No salary increases or bonuses were included in the utility’s latest budget plan.

Also driving the need for a rate hike are annual increases in charges from Burbank’s largest wholesale water supplier, the Metropolitan Water District of Southern California. The agency raised its rates by 14% in January 2009, 20% in September 2009 and another 7.5% on Jan. 1.

City Councilman Gary Bric, who won reelection in February, said he had not yet seen Burbank Water and Power’s proposed budget, but understood the need for a rate increase.

“I know we’re paying a lot more for water from [Metropolitan],” he said. “We won’t be passing along the total cost to residents. We’ll have to look at the numbers.”

Metropolitan plans another 7.5% rate hike next year, officials said.

Burbank Water and Power also has been dealing with increased costs related to state mandates for renewable energy sources. The state is requiring utilities to have 20% of their power portfolio come from renewable energy over the next three years. That requirement will ratchet up to 25% by the end of 2016 and to 33% at the close of 2020.

Costs related to renewable energy are expected to increase by $2.7 million, according to the utility’s budget plan.

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