Auditor to Study Rate Plan

Two Los Angeles City Council panels agreed Tuesday to hire a private auditor to determine whether a water rate increase is justified a year after rates went up 11%.

The Department of Water and Power is considering raising water rates by up to 4.3% in January and an additional 15% over the following four years.

Councilwoman Janice Hahn said a recent agreement with the city’s network of more than 80 neighborhood councils calls for the councils to be given 90 days to review major DWP proposals.

“In the instance of a proposed rate hike, neighborhood councils have a right to sort of hear from a third party audit on whether or not it really is necessary,” said Hahn, who is chairwoman of the City Council’s Education and Neighborhoods Committee and a member of its Commerce, Energy and Natural Resources Committee.

The two panels held separate hearings on the rate hike.

The Times reported on the proposals May 21, and neighborhood council activist Jim Alger said he questioned raising water rates to cover the DWP’s annual transfer of surplus revenue to the city general fund. The rate increase would raise nearly $28 million, which is how much the DWP is budgeted to transfer to the general fund under a traditional practice allowed by the City Charter.

DWP General Manager Ron Deaton told each panel that the increases are needed to pay for meeting federal and state water-quality requirements, including plans to build covers on city reservoirs.

Deaton said he supports annual audits to justify water rates.

“I expect that I’m going to be able to convince enough people that I’m right, to get what I’m recommending,” Deaton told the commerce committee. “If I don’t, then it won’t happen.”

An auditor can be hired within 90 days and complete an audit in an additional 45 days, allowing time for the neighborhood council review and City Council approval, said Gerry Miller, the council’s acting chief legislative analyst.

The audit, to be paid for by the DWP but overseen by Miller, will look at the department’s revenue and expenditure projections and the effect of not increasing rates on agency reserves, bond ratings and the transfer to the city’s general fund.

Hahn was concerned that the neighborhood councils have not received enough notice, but leaders said the budget with proposed water revenue increases was provided to a task force in December.

“We knew then this was coming down the line,” said Rusty Millar of the Silver Lake Neighborhood Council. “I don’t think from a neighborhood council standpoint that we’ve been left out of the loop on any of this.”