Colton Faces $24 Million Utility Deficit, Considers Rate Hike for 2025-2029

Facing a $24 million deficit in its electric utility, the Colton City Council held a special meeting on Feb. 24 to review an electric rate study and discuss potential rate increases, with implementation targeted for October 2025.

The workshop, led by the city’s utility rate consultant Amber Gschwend, examined the cost of service and financial sustainability of the city’s electric utility. The study, which forecasts rates from 2025 to 2029, aims to align costs with expenditures while ensuring long-term reliability, safety, and compliance with state mandates.

City’s Financial Challenges and Proposed Adjustments

Colton’s last base rate increase occurred in 2009, with decreases in 2011 and 2013. Measure D implemented a rate freeze from 2016 to 2021, leaving the city with a $24 million deficit before the implementation of an 8.5 cent per kilowatt-hour (kWh) Power Cost Adjustment (PCA) in April 2023.

Gschwend outlined that power costs increased by $17 million in a single year, further straining the city’s resources. To address these financial concerns, the study recommends no rate increase in 2025, instead utilizing reserves to cover costs. Incremental rate adjustments would follow: 3% in 2026, 2% in 2027 and 2028, and 1% in 2029.

Projected rate revenue is expected to rise from $53.9 million in 2025 to $87.4 million in 2029, while PCA revenue is projected to drop from $27.8 million in 2025 to just $619,924 in 2029. Operating and maintenance expenses are forecasted to increase from $60.9 million in 2025 to $71 million in 2029.

Colton also faces additional costs from aging infrastructure, wildfire hardening, system expansion, and state-mandated electrification and fleet conversion requirements, which could total between $6 million and $10 million.

Public Reaction and Council Debate

During public comment, longtime resident and owner of Nickelodeon Pizza, Gary Grossich, questioned the study’s revenue projections and suggested more frequent rate evaluations.

“Interesting presentation. They’re showing revenues of $53 million. I don’t know if we’re expecting a 15-20% drop in utility revenues,” Grossich said. “The city of Colton has been a success story; we’ve lowered rates twice, and residents have benefited. I’d like to offer a suggestion that we need to do a rate study every three to five years, not 15 years later.”

Resident Richard De La Rosa expressed concerns about delays in implementation and suggested immediate action.

“I suggest one of you call a special meeting for the utility commission and ask why it hasn’t been vetted,” De La Rosa said. “You have the rate study numbers, but I ask that you immediately increase these rates as they are suggesting and not wait until October 2025.”

City Officials Weigh In

Mayor Frank Navarro acknowledged the financial strain but emphasized the importance of ensuring the utility’s sustainability.

“We went 14 years between the 2009 rate increase and April 2023 rate increase—that’s 14 years without an increase,” Navarro said. “We have to provide sustainability for our utilities. It’s time we realize we have to provide revenues to the utilities to have quality of life in the city.”

Navarro pointed out that while the state of California warned of brownouts and blackouts, Colton maintained stable energy service.

“The state of California said to be ready for brownouts and blackouts this year—Colton didn’t have that,” he said. “We have a robust utility system.”

Mayor Pro Tem John Echevarria raised concerns about the PCA and proposed immediate action to sunset the charge.

“The question kept being asked, if we sunset, will the rates go up or down?” Echevarria said. “And that is subjective—we are assuming. Rates are going up everywhere. I want to make a motion to sunset the PCA today.”

However, the PCA falls under the authority of the electric utility director, not the City Council. The council instead directed City Manager William Smith to explore options with the utility director. Smith cautioned that eliminating the PCA could impact the city’s general fund transfer and recommended allowing the utility process to play out before enacting any rate adjustments.

Next Steps

The Utility Commission’s next scheduled meeting is in April 2025, but officials are considering adding the rate study discussion to the March agenda. Councilmember Kelly Chastain recommended hosting a joint workshop between the City Council and the Utility Commission to further discuss the matter.

Navarro noted that had rate adjustments been made incrementally over the past decade, the city might not be facing significant increases today.

“The reality is, had rates been adjusted in between those years, we wouldn’t be here having to raise them today,” he said.

With a potential rate increase looming, the council and utility officials must now navigate community concerns while ensuring financial stability for Colton’s electric utility.