Rate Proposal FAQs

Find answers to the most frequently-asked questions about the 5-year rate proposal.

 

Why does RPU need a rate increase?

Why is a rate increase important at this time?

How much will electric and water rates increase?

How much revenue will the rate increase generate, and how will it be used?

What is RPU doing to keep rates low?

How do RPU's rates compare to other agencies in our area?

One of the reasons why we enjoy living/doing business in Riverside is the lower utility costs. Is this going away?

How are rates affected by state legislative and regulatory mandates?

Why are you asking for us to conserve and then asking for more money?

What's the difference between fixed costs and variable costs?

What is the Network Access Charge, and why is it needed?

What's the difference between the Network Access Charge, the Customer Charge, and the Reliability Charge?

Are rates changing because so many RPU customers are taking advantage of solar?

I am in the process of installing a solar system - will I have to pay for this rate increase?

When was the last time RPU increased rates?

What have RPU's rates paid for since the last increase?

How much have costs increased since RPU's last rate increase?

When will my bill change?

With our climate, my bill really goes up in the summer. How will the rate plan help me?

Are there other ways I can save on my bill?

I am a low-income customer on a fixed income. How can RPU help me?

What tools and resources are available to help better manage my monthly bill?

How will the proposed rates encourage conservation and sustainability?

Does RPU offer discounted rates to utility employees?

How can I learn more and provide comments on the proposed rate increase?

 

Why does RPU need a rate increase?

Public health and safety requires additional revenues to replace aging utility infrastructure in order to ensure reliable electric and water service now and in the future. In addition, RPU is facing increased costs to buy more expensive renewable power, as required by California state law, in order to reduce greenhouse gas emissions. Fortunately, RPU can meet these challenges while keeping rates affordable and competitive when compared to neighboring electric and water providers. RPU also needs updated rate structures to recover fixed costs in a way that is fair and equitable to all customers. RPU's electric and water rates have been frozen for seven years to help the community recover from the Great Recession. Further delay puts at risk our community's public health and safety, and will lead to significantly higher costs when critical systems fail and require emergency repairs.

 

Why is a rate increase important at this time?

The proposed rate increase is vital for the public health and safety of Riverside's residents and businesses. A city is a “system of systems” - health care, schools, commerce, public safety, utilities - and all of these systems are connected. When one system fails, it directly impacts all the other systems, and our economy and community suffers. All infrastructure eventually needs to be replaced, or it will eventually fail, endangering residents and businesses and requiring emergency repair and replacement. Not only is it important to replace critical infrastructure for the health and safety of the community, but it is far less expensive to replace infrastructure ahead of time than under emergency conditions.

 

How much will electric and water rates increase?

Each customer's rate increase will vary depending on customer type (residential, commercial, etc.) and usage. On average, the projected annual rate increase will be 4.8% for electric and 8.6% for water. See the following charts for averaged increases based on high, medium, and low use residential and commercial accounts. To estimate how the residential rate increase will affect you, try our electric rates calculator or our water rates calculator

 

How much revenue will the rate increase generate, and how will it be used?

Over five years, the electric rate increase will generate $185 million and the water rate increase will generate $47 million. These revenues will help fund over $400 million in capital projects to replace aging infrastructure, 75% of which will be financed using bond proceeds. Revenues will also be used to acquire renewable energy to meet greenhouse gas regulations.

 

What is RPU doing to keep rates low?

Before asking for a rate increase, RPU has looked for every opportunity to reduce costs and improve operational efficiencies. RPU uses bond funds and reserves to mitigate cost impacts associated with capital projects, and our high credit ratings save ratepayers millions in lower interest payments. RPU also keeps rates low by generating revenues through use of existing assets. For example, RPU sells excess water to neighboring agencies, remarkets renewable energy credits, has installed solar panels at well sites to lower water production costs, leases RPU-owned properties while preserving utility access, and receives payment for scheduling other cities' power supplies through the state grid. Finally, RPU will obtain an $85 million line of credit which will reduce cash reserve requirements and keep rates low. All of these activities result in a lower rate increase proposal: 4.8% instead of 6.3% for electric, and 8.6% rather than 17.5% for water.

 

How do RPU's rates compare to other agencies in our area?

RPU's rates are and will continue to be low compared to neighboring electric and water utilities, even after the proposed increase. Under the rate plan, RPU's typical residential customer's electric rate will be 15% less than Southern California Edison, and RPU's typical residential customer's water rate will be 40% less than Western Municipal Water District. Please click here for graphs comparing RPU's proposed rates to other area utilities.

 

One of the reasons why we enjoy living/doing business in Riverside is the lower utility costs. Is this going away?

No. In comparison to surrounding utilities, RPU will continue to offer water and electric rates that are competitive and among the lowest in Southern California even after this proposed rate increase.

 

How are rates affected by state legislative and regulatory mandates?

A number of state legislative mandates are directly impacting RPU rates. For electricity, state mandates to increase use of renewable energy and decrease greenhouse gas emissions have required RPU to decrease the utility's reliance on thermal (coal, gas, nuclear) resources and increase procurement of more expensive renewable resources. For water, the recent state-mandated drought restrictions reduced RPU's water revenues by $33 million while the costs to maintain the water delivery system remained the same. All of these pressures are forcing RPU to increase rates more than what would be required if these mandates were not in place.

 

Why are you asking for us to conserve and then asking for more money?

RPU encourages all customers to be wise and efficient energy and water users. At the same time, RPU's finances need to keep up with the increasing costs to operate and maintain reliable electric and water systems. Most of these costs are fixed costs that RPU incurs regardless of customer usage. The rate plan proposes to increase fixed charges in order to ensure adequate recovery of costs. RPU will continue to provide tiered rates which enable customers to see their usage charges go down as they use less water and electricity.

 

What's the difference between fixed costs and variable costs?

Fixed costs represent costs that RPU incurs regardless of how much electricity or water we sell. Fixed costs include things like infrastructure maintenance, labor, and debt payments. In contrast, variable costs are directly related to the amount of electricity or water we sell. Examples of variable costs include purchased electricity, transmission access fees, and water pumping and treatment. Approximately 60% of RPU's electric costs and 90% of RPU's water costs are fixed.

 

What is the Network Access Charge, and why is it needed?

The Network Access Charge is a new fixed charge designed to recover part of the costs for maintaining RPU's electric distribution system. The electric distribution system has been built to serve all RPU customers and is a fixed cost to RPU. These costs have historically been included in the energy charge which is based on usage (i.e., variable, not fixed). The Network Access Charge is designed to be a more fair and transparent way to recover these fixed costs.

 

What’s the difference between the Network Access Charge, the Customer Charge, and the Reliability Charge?

The Network Access Charge recovers part of RPU's costs for maintaining the electric distribution system. The Customer Charge recovers customer-related costs such as meter reading, billing, and customer service. The Reliability Charge recovers RPU's costs associated with building a second point of interconnection to the regional grid and internal natural gas generation plants to meet summer peak energy needs. Together, the Network Access Charge, Customer Charge, and Reliability Charge are designed to recover 31% of RPU's fixed costs by the fifth year of the rate plan (currently, fixed charges recover only 23% of RPU's fixed costs). For an explanation of all utility bill charges, please click here.

 

Are rates changing because so many RPU customers are taking advantage of solar?

No. The proposed rate increase is driven by increasing costs and the need to replace aging infrastructure.

 

I am in the process of installing a solar system - will I have to pay for this rate increase?

How much a solar customer pays under the proposed rates will depend on their Net Energy Metering agreement. Solar customers, like all other customers, are required to pay monthly fixed charges (Network Access Charge, Customer Charge, and Reliability Charge) in order to maintain the electric delivery network on which all RPU customers depend. However, the Network Access Charge will be based on a customer's net energy usage, which may benefit solar customers who reduce their energy use.

 

When was the last time RPU increased rates?

The last rate increases were approved by City Council about 10 years ago (2006 for water, and 2007 for electric), and the last annual rate increase for both water and electric went into effect in 2010. At that time, utility rates were frozen to help the local economy recover from the economic downturn in 2008.

 

What have RPU's rates paid for since the last increase?

The most recent rate increases helped pay for (1) a new power plant to help meet our summer peak energy needs, (2) additional high voltage transmission lines within Riverside to connect us to the regional grid, (3) the replacement of an aging water reservoir that had earthquake damage, (4) a new water treatment plant so we have an independent supply of water, and (5) ongoing reactive maintenance of the electric and water distribution systems. Current rates do not provide sufficient funds for critical infrastructure replacements and increased costs associated with new regulatory requirements.

 

How much have costs increased since RPU's last rate increase?

Just like your household budget, costs tend to increase over time. The Consumer Price Index for general consumer goods has increased 13% since 2010 (RPU's last rate increase). Additionally, the State of California has passed new laws and regulations that have increased costs associated with renewable power, energy and water efficiency, and other areas of utility operations. RPU rates have not kept up with these increasing costs.

 

When will my bill change?

The first rate adjustment will appear on bills starting in April 2018. Subsequent annual rate adjustments will appear on bills after January 1 of each of the following four years (2019 through 2022, respectively).

 

With our climate, my bill really goes up in the summer. How will the rate plan help me?

The proposed rate plan will expand the residential summer electric rate from 3 to 4 months, from June through September, allowing customers to benefit from more generous summer tiers and reflect summer weather and usage patterns.

 

Are there other ways I can save on my bill?

Energy and water conservation measures are the easiest way to save money on your bill. RPU offers a large number of rebate programs that can assist customers in using less energy and water. Customers can pick up a free energy and water conservation kit at a customer service center to get started. There are also LED light bulb rebates that will help lower your bill for a minimal investment. Replacing 10 incandescent bulbs with LEDs can save up to $7 per month and the bulbs last up to 20 years.

 

I am a low-income customer on a fixed income. How can RPU help me?

Qualifying low-income customers can receive $150 towards their bill per year through the SHARE program, as well as a refund of their Reliability Charge (typically $10 per month). RPU also offers low-income customers a no-cost energy and water home audit with free measures including LED light bulbs, heating and cooling system tune-ups, smart power strips, and refrigerator replacement and recycling. Finally, RPU assists low-income customers with solar installations through reimbursement of permitting fees. For more information on RPU assistance programs, please visit our assistance programs page.

 

What tools and resources are available to help better manage my monthly bill?

RPU offers a variety of tools to help customers manage their monthly bills. These include an online "audit" that helps customers find where they use energy and water in the home and identify ways to save. RPU also offers energy and water rebate programs to help customers purchase more efficient appliances. For tips and information on how customers can use energy and water more efficiently, visit GreenRiverside.com.

 

How will the proposed rates encourage conservation and sustainability?

RPU's rates are structured to fairly allocate costs and meet California state law requirements. In general, the lower tiers cover costs associated with serving the basic needs of RPU's electric and water customers, while revenues generated by the higher tiers pay for more expensive sources of supplies. The tiered rate structure encourages residential customers with high energy and/or water use to reduce consumption, especially during hot (peak use) periods from June through September. In addition, the Network Access Charge is based on a customer's energy usage; the less energy a customer uses and the lower their demand on the system, the lower the charge.

 

Does RPU offer discounted rates to utility employees?

No. RPU employees who are also RPU customers pay the same rates as all RPU customers, without exception.

 

How can I learn more and provide comments on the proposed rate increase?

RPU is hosting community meetings across the city to explain the rate proposal and receive comments. Additional questions will be addressed through updates to this FAQ. All customers comments and questions will be submitted to the Board of Public Utilities and City Council.