Wednesday, January 10, 2001

Energy crisis may reach Burbank shortly

By Sylvia L. Oliande Staff Writer

BURBANK -- Although sheltered from the woes felt by other electricity providers, Burbank officials said Tuesday that a rate increase is "probably inevitable" because of skyrocketing natural gas prices that have put them $38 million over budget.

If that holds firm, Burbank Water and Power officials said, they expect to go to the City Council in the next few weeks to ask for authority to implement a rate increase on short notice.

The problems the municipal utility faces include a higher cost of natural gas for production and the rising costs of nitrogen oxide (NOx) credits issued by the South Coast Air Quality Management District to limit emissions from local power generation.

"We're in a very, very good position as far as keeping our customers supplied with energy with no possibility of blackouts and keeping them as insulated as we can from huge price hikes," Mayor Bill Wiggins said.

"What we're going to be faced with somewhere down the road is the possibility of rate increases to cover increased cost of gas and increased cost of NOx credits we're being forced to buy."

The City Council was scheduled to hear a presentation by The Gas Co. on Tuesday night describing how natural gas prices are affecting power production. At the same time, it got a report from the BWP on local generation.

Unlike local areas served by Southern California Edison, the cities of Burbank, Los Angeles and Glendale all have their own power plants and purchase energy from out-of-state sources. Because of deregulation, Edison and others are now forced to buy power in a volatile California marketplace.

But Burbank officials said in generating its own power, the city is subject to higher natural gas prices, which rose from an average of $5 last summer to highs of $50 and $60 in the past few weeks. And bids for NOx credits have risen from 50 cents to as high as $55.

According to a report from BWP General Manager Ronald Davis, when the 2000-01 budget was approved, the department's estimated operating costs were $76 million. But now that cost is projected at $113.5 million.

At the same time, the city has been able to sell off its excess power to those in need, bringing in net revenues of $15 million.

Davis said the BWP would avoid a rate change, while working to maintain adequate financial reserves. But if the condition continues, it might have to raise rates. Glendale recently announced a rate increase of 5 percent, and the city of Pasadena raised its rates by 10 percent.

Last week, the Public Utilities Commission approved a rate increase for major utility companies of 7 percent to 15 percent for businesses and 9 percent for residents. Edison and Pacific Gas and Electric officials said those hikes are not enough and that they will soon be insolvent if they don't raise more money.

In order to weather the storm, BWP officials have identified several ways to conserve energy and generate more power, including repairing some out-of-service units, adding a new, cleaner operating unit and launching an aggressive conservation campaign among customers.

http://www.dailynews.com/archives/2001/01/10/new18.asp

-- Martin Thompson (mthom1927@aol.com), January 10, 2001