“We’re just very excited we were able to do this,” said Glendale Water & Power General Manager Glenn Steiger.
“This really gives us a lot of flexibility and allows us to control our fuel costs as we move forward.”
He added that it would also protect against price volatility in the natural gas market, which could result in even more savings, which would then be passed on to customers.
Glendale Water & Power Commissioner John Miller said the buyout was an effort to respond to customer complaints about the city’s high electricity rates.
In recent years, Glendale’s electric rates have ranked among the top three cities in California depending on the formula.
Approved by the City Council last year, the utility’s five-year strategic plan called for a rate reduction of 35% compared with Southern California Edison by 2014.
“A lot of people have been concerned about the comparatively high rates that are present in Glendale compared to other regions in Southern California,” Miller said.
“This contract was a major contributor to that.”
Originally negotiated in the early 1990s for below-market rates for natural gas, the Scholl Canyon contract in recent years has proven to be expensive, Steiger said.
“We have been paying a pretty high premium for that landfill gas, well above the cost of natural gas,” he said.
City officials initially tried to renegotiate the contract, but the third-party operator declined. So the city proposed the buyout, which was aided by the relatively low market rates of natural gas, Steiger said.
Negotiations were completed Thursday.
