Mayor backs Alarcon’s plan to OK DWP rate increase

Days after City Council members balked at his proposal for boosting electricity prices, Los Angeles Mayor Antonio Villaraigosa threw his weight Monday behind Councilman Richard Alarcon’s plan to approve the first of four rate hikes -- while putting the next three under greater scrutiny.

With another council vote set for Tuesday, Villaraigosa described Alarcon’s plan as a compromise that would preserve his “lockbox” for renewable energy and conservation programs at the Department of Water and Power.

Villaraigosa said the plan responds to the concerns of businesses, which have warned that they would cope with the increases by laying off workers. Yet hours after his news conference, three business groups -- the Valley Industry and Commerce Assn., the Los Angeles Area Chamber of Commerce and the Central City Assn. -- came out against Alarcon’s plan.

Those groups say the money in the first increase should be used exclusively to preserve the DWP’s bond rating and address the utility’s financial woes, said Carol Schatz, president and chief executive of the Central City Assn. “The lockbox was rejected by everyone in the room,” she added.

Alarcon’s plan would revive the DWP board’s March 18 decision to approve the first of the four increases, which would add an estimated 6% to the average residential bill and up to 7% to the average business bill.

Alarcon called on the DWP board to develop a strategy for reducing the plan’s financial burden on businesses, which face increases of 21% to 22% once all four are in effect. His plan also asks the board to consider spreading the four increases over two years instead of one.

Villaraigosa sounded open to a more extended timetable. “I would urge the board to evaluate that option and implement it if it’s financially feasible,” he said. “If it’s not, we would go back to the council and explain why we cannot do it.”

The mayor has been seeking the additional funds to help the DWP pay for such expenses as the fluctuating cost of coal, existing renewable energy contracts and new conservation programs.

The first increase would add 0.8 of a cent to the cost of each kilowatt-hour of electricity consumed by ratepayers. Of that total, 0.3 of a cent would go toward programs to conserve energy and reduce the DWP’s reliance on coal. Unless coal usage is reduced, the DWP will face hundreds of millions of dollars in state penalties, the mayor said.

Villaraigosa has escalated his campaign against council members, saying that they have not done their homework on the DWP’s financial situation. The head of the powerful county Federation of Labor called out Councilman Ed Reyes specifically, accusing him of describing the mayor’s plan as irresponsible.

“I say it’s irresponsible not to go forward with this plan,” said Maria Elena Durazo, the federation’s executive secretary-treasurer.

Reyes actually said last week that he believed the mayor was irresponsible for warning that the city would go bankrupt if the rate increases were rejected.

Villaraigosa later disavowed the use of the word “bankruptcy” but continued to warn that the city would run out of money unless the DWP got its rate increase.

That extra money would allow the DWP to transfer $73 million to the city’s general fund by June 30, he said.

david.zahniser

@latimes.com