FAQ - Electric Rate increase

BEU Customers Ask: Why Are Electric Rates Increasing?

The cost of providing our community with reliable and sustainable electric services continues to rise. This includes maintaining the equipment and parts that keep our lights on, new capital infrastructure for new residential and commercial developments and securing long-term sources of renewable energy. Banning Electric Utility (BEU) last raised its electric rates back in 2013 and most recently, an emergency 13.9% rate increase was approved on November 1, 2024.

As a not-for-profit utility, BEU rates reflect the cost of providing electric services to our customers. There is no profit added to the cost with reliability for electric while doing our best to maintaining the low rates and meeting conservation and sustainability goals.

On October 14, 2025, the City Council approved a 5-year Electric Rate increase. Beginning on November 1, 2025, BEU will be increasing its electric system rate by 20% for all classes and cancelling the 13.9% increase that was previously approved by the City Council. 

Why Are We Seeing a Cost Increase?

There are several factors driving the need for rate adjustments. These include:

• Financial Stability: During the last couple of years, BEU has under collected its revenues causing the utility to operate in the negative and utilizing its fund balance to support the operation expenses and ability to invest in infrastructure, which has caused a major financial strain on the utility.
• Financial Health: BEU must begin to rebuild its financial reserves and maintain a healthy electric fund balance. BEU looks forward to returning to being a highly rated bond utility which will enable us again to secure funding for major projects at favorable interest rates, and have at least a 90 days cash on hand in order to stay prepared to respond swiftly to emergencies or natural disasters that may damage critical infrastructure.
• Infrastructure Maintenance: Upgrading and maintaining critical systems like transformers and switchgear to ensure reliable service. As a result of climate change, weather and wildfire mitigation impacts, BEU needs to perform ongoing maintenance on existing infrastructure – which includes inspecting and replacing more poles, wires and other equipment.
• Capital Projects: Investments in long-term reliability, such as replacing aging electric poles, equipment, and aging electric substations.
• Regulatory Compliance: Meeting California’s state-mandated goal of 100% carbon-free energy by 2045.
• Production Costs: Rising costs for electricity including natural gas, transmission costs.
• Raw Materials: Increased prices for essential materials like copper, steel, and aluminum.

Each of these factors has a significant financial impact for BEU. Combined, they create a monumental challenge as we balance reliability, affordability, and compliance with state mandates and our current financial liabilities.

Unknown impacts of Tariffs on Utility Rates:
 Supply chain disruptions from COVID-19 resulted in rising costs for essential resources and materials necessary to maintain energy infrastructure, in addition to long lead times. Proposed tariffs on imported goods may further escalate the expense of equipment, technology, and maintenance supplies required for reliable electric service. While the potential tariff impacts are not currently known nor accounted for in the BEU proposed adjustments to our electric rates, BEU remains committed to delivering uninterrupted, high-quality electric services to the Banning community. Should tariffs be implemented, the additional costs may need to be reflected in the proposed rates to ensure the continued reliability and sustainability of our operations.

Renewable Energy Costs

Transitioning to 100% carbon-free energy by 2045 requires significant investment. Managing the grid to ensure Banning is energized and delivering a reliable and affordable supply of electricity every time a switch is flipped is a complex process requiring management of available electricity sources, real-time energy cost analysis and hedging supplies of natural gas. 

What Is BEU Doing to Manage Costs?

To help offset these increases, BEU has aggressively pursued cost-saving measures, deferring important capital projects, resulting in approximately $1 million in savings over the planned capital projects. Additionally, BEU continues to seek grants for funding new pilot projects and infrastructure. 

Programs to Help Customers

As your community-owned utility, we prioritize reliability and affordability and offer a suite of programs to help customers manage bill increases, regardless of income level. 

Visit BEU’s residential Rebates & Programs webpage to learn more and apply for assistance.

• Flexible payment arrangements
• BEU Low Income Assistance
• BEU Medical Discount
• Riverside County Community Action Partnership