Panel Backs 11% Hike in Water Rates

A plan to raise water rates in Los Angeles by 11% this year was backed by a key City Council panel Tuesday, even as city officials warned that rates probably would increase by 21.5% more over the following four years to pay for improvements to the aging water system.

Presented along with the Department of Water and Power’s five-year-plan for rate hikes was a recommendation by the Commerce, Energy and Natural Resources Committee for the city to hire an outside auditor to review DWP finances and determine whether increases were necessary.

Councilman Tony Cardenas, committee chairman, had opposed a previous proposal to increase water rates by 18% over two years. But he said he was convinced Tuesday that the 11% increase, at least, was justified.

“I think it’s important for people to understand that clean, reliable water is not cheap,” Cardenas said.

The DWP hired the accounting firm Deloitte & Touche to look at the proposed rate increases.

The firm estimated that the DWP would need to boost water rates by an average of 6.5% per year for five years -- or a total of 32.5% -- to help pay for a $2.2-billion plan for security measures and improvements in water quality.

The plan includes increased security to guard the water supply against terrorism and proposals to cover outdoor reservoirs to meet state and federal water quality standards.

If the 11% increase were approved but no other raises put into place, the DWP would face a shortfall of $800 million during the next five years, said Bernie Uffelman, an executive with the accounting firm.

Cardenas and Council President Alex Padilla said they would wait to see the independent audit recommended Tuesday before deciding whether to support water rate increases after this year.

“We’re going to have to be convinced,” Cardenas said.

Leaders of neighborhood councils have been critical of the proposed rate increases.

Jim Alger, a leader of the Northridge West Neighborhood Council, said the 11% rate hike for this year would generate $24 million at a time when the DWP plans to transfer $29 million in surplus money to the city general fund.

“I’m very skeptical,” Alger said of the future increases. “I know they don’t need that much.”