DWP plans 37% rate hike over four years to cover cost increases
The Los Angeles Department of Water and Power is planning to boost the electricity bills of its customers by 37% over the next four years as part of its effort to cover steadily rising costs.
Officials with the city utility divulged their plans Thursday as the City Council’s Energy and Environment Committee debated Mayor Antonio Villaraigosa’s plan for boosting rates to help pay for renewable energy. Villaraigosa is seeking a 21% increase over the next year. That effort will be followed by other rate hikes by 2014, however.
“That’s an extraordinary burden on our homeowners and businesses,” said Councilman Paul Krekorian, who called the four-year plan “unacceptable.”
The numbers were provided as the council committee reviewed the first of four rate hikes planned by Villaraigosa, which would increase residential electric bills by 9% to 28%. The panel postponed a vote until Tuesday, the same day that the full council is now scheduled to decide whether to uphold the first increase or send it back to the DWP board for revision.
Thursday’s meeting took place an hour after former Vice President Al Gore appeared with Villaraigosa via satellite in support of the mayor’s plan, which would help the mayor meet his goal of ensuring that the DWP secures at least 20% of its energy from renewable sources by Dec. 31.
Villaraigosa has warned that the DWP would renege on a promise to have the utility send $73 million to the city’s troubled general fund, which pays for basic services, if the first increase is not approved by March 31. That money is enough to pay for 1,000 jobs in a year when the city is pondering layoffs.
Council members chastised the mayor for saying in a 14-page briefing paper that a rejection of the rate hike would force the city into bankruptcy since the utility would no longer be able to afford to make the general fund contribution. On Thursday, Villaraigosa disavowed use of the word “bankruptcy” yet continued to warn that unless his plan is approved, the city would run out of money by June 30.
Villaraigosa criticized foes of the rate hike for using his briefing paper as part of the debate, saying the report was meant for city staffers only. “That was another example of the kind of [political] opportunism I’ve seen in the last few days,” he said.
Some council members have signaled support for the DWP’s first increase -- adding 0.8 cents per kilowatt hour to the cost of electricity. But some also said that all of the money should go toward the DWP’s financial obligations, not the creation of new environmental programs.
Villaraigosa said he would fight efforts to rework his plan and insisted that some of the proceeds go toward new conservation and renewable energy programs. Those initiatives are needed, he said, because the state is planning to impose fines of at least $300 million per year on utilities that rely on fossil fuel.
The mayor said his DWP plan would also help the economy by creating 18,000 new jobs. That argument did not persuade board members of the Valley Industry and Commerce Assn., who voted Thursday to oppose the plan. Stuart Waldman, the group’s president, criticized the proposed business rate hike of up to 22% and expressed doubts about the mayor’s job-creation estimates. “They’re just making those up,” he said.