DWP Outlines Plans for Series of Rate Hikes

Officials of Los Angeles’ giant utility on Saturday opened their campaign to win a water-rate increase and to reinstate a long-frozen surcharge on electricity bills.

During a sparsely attended two-hour presentation at the Department of Water and Power’s downtown headquarters, officials laid out their case for proposed hikes in water rates of 3.9%, effective July 1, and 3.5% more a year later.

Officials also want to reinstate an electricity surcharge, frozen in 1998, that would enable them to pass along to customers cost spikes in natural gas and other fluctuating expenses. They also propose establishing another surcharge to help offset the cost of developing renewable energy sources.

The proposals were contained in an outside financial audit of the DWP, released late last month. DWP officials plan public hearings over the next 90 days on the fiscal package, which also is posted on the department’s website, www.ladwp.org.

The proposed rate hikes and surcharges must pass muster with the DWP’s board, the Los Angeles City Council and the mayor.

The DWP said the water rate hike would add less than $1 a month to the typical residential bill in the first year. Officials estimate an increase of $4.16 a month for a homeowner with a 17,500-square-foot lot in one of the hottest spots in the city, such as the San Fernando Valley.

The typical increase for a small business would be about $1.25 a month in the first year.

In the second year, increases would amount to 83 cents a month for a typical home and less than $1 for a small business.

The power surcharges, while harder to calculate, probably would add up to $1.19 a month to a typical residential bill and $4.05 for a small business, officials estimate.

Even modest increases could prove a hard sell for the quasi-independent DWP, which has been under fire for large pay raises it awarded to its employees last year, and for its spending on lobbyists, a fitness center and other perks for employees.

Two years ago, a coalition of neighborhood councils, a growing political force in the city, forced the DWP to scale back a proposed water-rate hike from 18% to 11%.

Pressure from the council led the DWP to table another rate hike that was scheduled to go into effect Jan. 1 and to call for the audit, by Barrington-Wellesley Group.

In a letter to the DWP’s board president shortly after release of the audit, Mayor Antonio Villaraigosa outlined suggestions for ways to save enough money to reduce or eliminate increased costs to its customers.

The audit, Villaraigosa said, “has highlighted some significant issues” of increased costs and other looming expenses. “However, before the board finalizes any revenue actions, you should take all necessary steps to mitigate impact on ... customers.”

Los Angeles residents generally pay lower rates for water and electricity than do their counterparts in neighboring cities and throughout much of the rest of the state.