Los Angeles City Council Opts for Control Over DWP’s Rate Hike

By EGP Wire Service

The Los Angeles City Council voted unanimously Tuesday to assert jurisdiction over a proposed rate hike approved by the Department of Water and Power board and slated to kick in April 1.

The move gives the council authority to review the plan and either affirm it or reject it and send it back to the DWP with recommendations.

“I think the residents of Los Angeles, the ratepayers and businesses, as well as our environmental community, deserve a more transparent process,” City Council President Eric Garcetti said. “We need to take incremental steps instead of — in the midst of a recession — putting a gun to people’s heads and saying ‘pass this increase.’”

Mayor Antonio Villaraigosa’s office contends that rejection of the proposed increase “would be the most immediate and direct route the bankruptcy the city could pursue.”

In a briefing paper distributed to council members on Monday night, the mayor’s office asserted the DWP needed the rate hike or it would not be able to transfer $73 million into the city’s depleted general fund as promised. The city has a projected deficit of $685 million over the next 14 months.

“If the city does not receive the additional $73 million transfer, it will run out of cash before the end of the fiscal year,” sending the city’s finances into a “tailspin,” the briefing paper reads.

“Let me be clear: the city of Los Angeles is not going bankrupt,” City Administrative Officer Miguel Santana told the council after speaking with the mayor. He added, however, they would have to move quickly to determine when the city would literally run out of cash.

The utility has proposed increasing the Energy Cost Adjustment Factor surcharge by 2.7 cents per kWh over a year, starting April 1, to generate $648 million in annual revenue.

About 75 percent of that money would be used to address DWP’s failure in previous years to collect a large enough ECAF to offset fluctuations in the price of oil and natural gas and pay for existing renewable energy sources.

The other 25 percent — called the carbon reduction surcharge — would be used to pay for programs aimed at encouraging energy efficiency and developing new renewable energy sources.

Tier 1 customers —55-60 percent of all DWP customers — would be charged an extra $2.40-$3.40 a month; Tier 2 customers’ monthly bills would go up $11-$16 and businesses would face a 21-26 percent hike in their monthly bills.

The plan drew protests from Carol Schatz, president and chief executive officer of the Central City Association and the Downtown Center Business Improvement District.

“On a large high-rise in downtown, we’re talking about $1 million more a year in power rates…” she said

“It is huge and they have no way to budget for it,” Schatz said. “It was sprung on them with less than 30 days notice.’’

Villaraigosa has set a goal of having renewable energy make up 20 percent of the DWP portfolio by the end of this year, and 40 percent by 2020. He also wants the city to be coal-free by 2020.

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March 25, 2010  Copyright © 2012 Eastern Group Publications, Inc.

Comments

One Response to “Los Angeles City Council Opts for Control Over DWP’s Rate Hike”

  1. Kurt Williams on March 25th, 2010 2:09 pm

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    We are able to offer customers a 30% lower price per fixture compared to other mfg. companies.
    Can you help us?
    If the electrical rates go up 20 – 30% and we can lower the consumption by 80%, the businesses can still be ahead of the game by 50 – 60%
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    Thanks
    Kurt

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