Water, power revenue drops

Customers have been good about cutting back, but rates might be raised.

May 05, 2010|By Melanie Hicken

CITY HALL — As for heeding calls to cut back on water use amid ongoing drought conditions, Glendale Water & Power customers have been good, perhaps too good.

Utility officials Monday warned that because customers are using 18% less water compared with the benchmark 2006 year, revenues have taken a hit, and so rates may have to be raised in the near future to make up for the loss.

The City Council last year restricted outdoor irrigation to three days a week in response to reduced water allotments from the Metropolitan Water District of Southern California.


Officials have lauded residents for adhering to the conservation measures, which kept the Glendale Water & Power from incurring heavy financial penalties for going over its allotment. The utility imports almost half of its water supply, down from closer to 75% not too long ago.

But at the same time, officials said the conservation measures have hit the utility’s bottom line, resulting in $6 million less revenue compared with last year.

Utility officials on Monday told the Glendale Water & Power Commission that they would need to fix the “financial imbalance” with higher water rates, which would require City Council approval.

“There has been a substantial financial impact to the utility,” said Assistant General Manager Peter Kavounas. “It has been absorbed in the reserves the first year. And it most likely cannot be absorbed for a second year.”

Kavounas said rates will likely have to increase about 10% to meet expenses, which led some commissioners to express concern that residents could feel penalized.

“If you are saving more you want to get somewhat of a benefit,” said Commissioner Armen Adjemian.

The higher rates could also impact the ability of the utility to sell the water conservation message in the future, Commissioner Zanku Armenian said. Higher rates could potentially discourage conservation if not handled carefully, he added.

“That’s a pretty mixed message,” he said, “because in a way you are saying the more you conserve, the more you are going to end up paying later.”

But Kavounas emphasized that while water bills would jump from last year’s lows, the higher rates would only be used to bring tabs back up to what they were prior to mandatory conservation efforts.

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