Duration of DWP rate hike questioned

One week after the Los Angeles City Council voted to seek a 4.8% electricity rate hike, two council members said Wednesday that they want city officials to explain just how long the increase will last.

Council members Jan Perry and Bernard C. Parks, both of whom voted against the increase last week, called on their colleagues to ask city lawyers and policy analysts to clarify whether the increase at the Department of Water and Power will go into effect for just three months or permanently.

Mayor Antonio Villaraigosa and council President Eric Garcetti’s office said the increase, which begins July 1, does not expire. Perry said she was under the impression that it was temporary.

“I think there is some confusion,” said Perry, who said she would pose her questions at the council’s Energy and Environment Committee on Tuesday, the council’s last day to reconsider the increase.

Councilman Tony Cardenas, part of the narrow majority that backed the proposal, said he experienced no confusion and always expected the increase to be permanent. “When it comes to rates, unfortunately, what goes up hardly ever goes down,” he said.

The increase will be added to ratepayers’ bills in the form of a surcharge, known as the Energy Cost Adjustment Factor. For each of the last 14 quarters, the DWP board has increased the size of that surcharge by 0.1 cents per kilowatt hour.

When the council members voted on electricity rates last week, their written proposal said the quarterly increase to the surcharge would be 0.6 cents per kilowatt hour, but only from July 1 to Sept. 30. One day later, the DWP board said the size of the increase would be 0.6 cents “only for the fiscal quarter July 1, 2010, to Sept. 30, 2010.”

Days later, both Villaraigosa and Garcetti spokeswoman Julie Wong said the increase would be permanent. The surcharge, which is added to DWP customers’ base rates, will go from 5.09 cents per kilowatt hour to 5.69 cents per kilowatt hour, a top utility official said. Under the current plan, the DWP board would be able to increase the surcharge by only 0.1 cent for the quarter that starts Oct. 1.

Villaraigosa spokesman Matt Szabo said he considers the debate to be irrelevant, since the surcharge is going to be redesigned over the next three months anyway.

Szabo said DWP board members are taking steps to break the surcharge into smaller pieces, with one line item covering fossil fuels and another dealing with renewable energy. They will come back to the council with their next proposal Sept. 1, he said.

“There’s going to be a complete reassessment,” Szabo said.