Proposal Cuts Water Rates for Most Customers

Most Los Angeles homeowners and businesses would see reductions in their bills under a massive rate restructuring proposed Wednesday by the mayor’s Blue Ribbon Committee on Water Rates.

The loss in revenue would be made up by a new rate policy directed at big and wasteful residential and corporate users among the Department of Water and Power’s 650,000 customers.

Under the proposal, which requires approval of the DWP commissioners and the City Council, rates would be cut for 71% of single-family homes. The median water bill for a household would drop by $23 a year--from $310 to $287.

For businesses, the savings would be even more substantial; the median annual bill would drop from $370 to $300.

The savings would come through simplification of the DWP’s complex billing system, which now includes an array of fixed charges and special assessments.

Under the new plan, a two-tier system for residential users would be adopted in which any household using more than 175% of the city median would pay a substantially higher rate for the excess amount.

Businesses would be subject to a similar two-tier system in which they would pay a higher amount for exceeding 125% of their own average use. The business average would be based on usage during the winter months.

The simplification would not stop at the rates. Those who have scratched their heads over Byzantine water bills would find relief in a new, simple, three-line format.

Mayor Tom Bradley endorsed the proposal, calling it a “more understandable, more humane approach” to the politically difficult task of deciding what the public will pay for one of the most basic city services.

W. Anthony Willoughby, chairman of the committee, said the intent was to propose a policy that would encourage conservation, while making large users pay the full cost of the water they consume. The higher tier rate would be priced at the “true cost of acquiring and delivering additional water,” the report states.

At the same time, Willoughby said, the committee did not want to place new burdens on the business community, which is already suffering from the longest economic downturn in 50 years. As a result, large but efficient users will pay the same rate as a small homeowner.

Under the proposal, 65% of commercial and industrial users would enjoy lower rates. Most of the remainder would see increases of less than 10%, the study found.

Michael Gage, president of the DWP board of commissioners, said, “I still have to take a hard look at it,” but acknowledged that the restructuring “will probably be approved.”

The DWP has scheduled hearings on the proposal for July 21 at the agency’s downtown headquarters and for July 23 in the San Fernando Valley.

Jerry Gewe, a DWP resources engineer who assisted the committee, said, “I believe it will work. As a staff member, I’m comfortable with it.”

If all the changes are made, the DWP will end up with the same revenues it currently takes in, the report said. The only change, it added, would be in how the charges are distributed among customers. Currently, all customers pay the same rate for water, regardless of how much they use.

The DWP was forced to make huge internal budget cuts earlier this year when the City Council rejected a 12% rate hike proposal and instead granted the utility a 3.6% increase. Most of the council members were unhappy even with that amount, and they directed the DWP to return with a restructuring proposal by September.

Bradley formed the committee in June, 1991, when the city was in the midst of a prolonged drought and was forced to impose a mandatory conservation program.

While the committee report was long awaited, it was not universally acclaimed Wednesday.

Sharp increases in water rates would have to be shouldered by a small group of customers, primarily homeowners who have significant landscaping, such as canyon residents, horse owners and others with large lots.

Barbara Fine, vice president of the Federation of Hillside and Canyon Assns., said the proposal “sounds equitable at this time,” but expressed concerns about the burden it could levy on a select group of homeowners as water costs go up.

Jean Plumb, an unpaid adviser to Councilman Hal Bernson on equestrian affairs, said the proposal could also be unfair to land owners in the West San Fernando Valley, where property is zoned for only one house on an acre or half acre.

“Many of us were here long before the city was overbuilt,” said Plumb, adding that a one-acre property with horses still uses less than an acre densely developed with 25 condominiums. “You can’t single out one group,” she said. “Everyone has to conserve.”

Still, Councilwoman Joy Picus, a vocal critic of the DWP, said the proposal appears to be “along the lines of what we were looking for.”

Picus said she sympathizes with homeowners, but pointed out that the strength of the proposal is that it allows for individuals to make their own decisions about water use. They could, she noted, plant drought-tolerant lawns and shrubs to cut down on water use.

The proposal also seeks to address the sticky problem of pricing water in a drought. In the current drought, the DWP was forced to raise its rates to cover expenses, even as it ordered customers to cut back on usage.

“The committee . . . felt that it was important to create rates that did not penalize customers who conserve during a shortage,” said Willoughby.

Under the committee proposal, the two pricing tiers would be shifted downward in a drought. Instead of allowing residents 21 billing units in the lower, cheaper tier, the amount would be knocked down to between 19 billing units and 16 billing units. A billing unit is 748 gallons.

Water consumption above that amount would be priced at the higher, second-tier level. This, Willoughby said, would raise additional funds while giving users an incentive to conserve.

Willoughby said the move may keep the DWP from becoming “a political football” every time there is a water shortage.

Finally, the proposal seeks to extend low-cost lifeline rates to more of the city’s poor. Under the proposal, apartment dwellers who do not have their own water meters would for the first time be eligible to receive a $10 monthly credit on their electric bill.

Water Rate Proposal

A massive rate restructuring proposed Wednesday by the mayor’s Blue Ribbon Committee on Water Rates could lead to widespread reductions in the water bills of the Los Angeles Department of Water and Power’s 650,000 customers.

The proposal involves changing the DWP’s complex billing procedure into a simpler two-tier system. It is expected to win approval from the City Council and the DWP Commission.

Current Proposed Annual Bill Annual Bill for Median User for Median User * Single Family/Residential $310.68 $287.28 * Multifamily/(Per Unit) $144.42 $143.64 * Non-Residential/Business $370 $300

% of Users Who Could Get a Reduction * Single Family/Residential 71% * Multifamily/(Per Unit) 63% * Non-Residential/Business 65%

SOURCE: Mayor’s Blue Ribbon Committee on Water Rates