DWP board approves power rate hike to raise $720 million
The board that oversees the Los Angeles Department of Water and Power approved a plan Tuesday to increase power rates in a move it said was necessary to meet a slew of energy-related mandates and repair the city’s degrading power infrastructure.
If approved by the City Council, the rate hike would result in a systemwide 3.86% average annual rate increase and generate about $720 million over the next five years, DWP said.
Agency officials say typical residential customers would see a smaller change — a 1.56% average year-over-year increase to their monthly power bills.
But the city’s ratepayer advocate said monthly bills for many of those customers would jump about $4 in the first year; the five-year cumulative total increase would be about $12.
The board’s 5-0 vote supporting the power rate increase came about a month after it endorsed a similar water rate hike.
Board President Mel Levine said it would be “irresponsible” for City Council members to vote against the proposed power rate increase in the weeks to come.
“You would be voting to tell the citizens of Los Angeles that we are not going to comply with mandates that we have no choice but to comply with, and that we’re going to allow blackouts to continue,” Levine said.
DWP officials estimated that about 80% of power revenue would go toward meeting clean energy and climate change goals and requirements. In the coming years, the department must expand its use of renewable energy to cover 33% of power sales, eliminate “once-through” ocean water cooling (which will involve rebuilding nine generating units) and eliminate the use of coal-fired power.
Much of the remaining 20% of the revenue would enable the department to replace infrastructure, such as utility poles.
During Tuesday’s meeting, nine speakers from various neighborhood, business and environmental groups spoke in support of the increase. But some expressed concern about the annual transfer of power revenue — currently 8% — to L.A.'s general fund.
Attorney Walt McNeill, who represents plaintiffs in a class-action lawsuit challenging the legality of the transfer, was the sole speaker opposed to the rate increase. The transfer, he said, “patently violates” Proposition 26, a statewide initiative passed by voters in 2010 that says government agencies cannot charge more for certain services than they cost to provide.
As part of his review, Ratepayer Advocate Fred Pickel examined how DWP spends revenue. With the assistance of outside consultants, he found that compared with its peers, DWP paid out higher amounts of overtime and could improve productivity. Still, the report he issued Friday called the power rate increase “just and reasonable.”
Then, on Monday, Mayor Eric Garcetti added his support, calling the increase “critical to modernizing our aging electricity grid and bringing our power system into the 21st century.”
DWP officials said they hope to have the rate ordinance in front of the City Council by mid-February and in effect by April 1.
If approved, the rates would go under formal review about 36 months later, Pickel said. The rate proposal also includes provisions requiring DWP to report periodically to the board and the ratepayer advocate on a series of key performance metrics.
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