The head of a Los Angeles City Council committee considering a proposed increase in water rates said Wednesday the Department of Water and Power will have to make a strong argument to the public to justify the hike.
Councilman Felipe Fuentes, chairman of the council’s Energy and Environment committee, said that with public trust in the DWP “at an all-time low, it’s critical (the DWP) makes its case for a new rate increase.”
The committee heard presentations from the DWP board, the city’s ratepayer advocate and DWP General Manager Marcie Edwards, all of whom fielded questions, but the panel did not immediately vote on the proposal.
The proposed rate increase would result in a 4.76 percent annual increase for the average customer, or about $3 a month, for each of the next five years.
A monthly bill of $57.79 for the typical residential water user would increase to an average rate of $72.90 at the end of the five years, according to an example in a staff report.
Residential water customers who use less water could see smaller hikes, while heavier water users could see bigger increases. Residential water users could see annual monthly rate hikes of between $1 and $11.
Commercial water users would see monthly bills go up between $3 and $60 annually.
The water rate hike proposal was approved last December by the Board of Water and Power Commissioners, with the City Council up next to decide whether to adopt the new rates. A proposal to raise DWP’s energy bills will be taken up by a City Council committee at a later meeting.
DWP officials say the revenue from the water rate increases will go toward upgrades on the city’s aging pipe system.
Mayor Eric Garcetti supports the rate hike plan, which has also received the blessing of Fred Pickel, the independent watchdog of the DWP.
The typical single-family household in Los Angeles could see its monthly electricity bill go up a total of $12 over five years under proposed electricity rate hikes backed Tuesday by the Board of Water and Power Commissioners.
The panel, which oversees the Los Angeles Department of Water and Power, voted to recommend that the City Council also back the rate hikes.
Board President Mel Levine said it would be “irresponsible” for elected officials not to approve hikes.
City officials have “no choice” but to increase electricity rates, since the majority of the rate hike revenue would go toward complying with state mandates to switch to renewable energy sources, he said.
The rest of the revenue would go toward fixing the city’s aging and broken electricity infrastructure, which would reduce and prevent blackouts, Levine said.
The electricity rate increases, which would be spread out over five years, already have the backing of
Mayor Eric Garcetti and Ratepayer Advocate Fred Pickel, who was appointed to watch over rate increases at the DWP on behalf of customers.
With Water and Power commissioners signing off on the rate hikes, the proposal will now be sent — along with proposed water rate hikes that were approved by the board last year — to the City Council and the mayor for consideration.
Garcetti said Monday the increases are “critical to modernizing our aging electricity grid and bringing our power system into the 21st century.”
“DWP needs to have the resources to be successful,” he said. “After five years of rate increases, the typical residential customer would see a $6 to $12 increase to their monthly bill. The price of inaction would be much higher than this.”
Garcetti said the rate hike proposal includes regular monitoring to determine if the extra revenue is being used to improve the DWP’s power system, and a formal review after two years.
“These reviews are critical as the utility industry is in a moment of transition and innovation,” Garcetti said.
He noted the DWP is expected to replace 70 percent of its power sources over the next 15 years “to meet state mandates, fight climate change and fund the energy efficiency programs that enable customers to lower their bills even as rates rise.”
Pickel, who leads the Office of Public Accountability tasked with monitoring the DWP, issued a report last week concluding the increase was “just and reasonable.”
Pickel also noted that the 21 percent average increase over the next five years — which averages 3.86 percent annually — is “less than what is needed” and the utility’s power system “will continue to be challenged to perform activities at planned levels.”
A typical single-family household that uses 500 kilowatt-hours per month — putting it in “zone 1” — could see a $12 monthly bill increase after five years, according to the OPA.\Monthly bills for such households would rise from the $76-$78 range to between $80 and $82 after one year, eventually going up to about $90 per month after five years, according to the report.
The rate hikes would mean that DWP power revenue would eventually grow to $4.22 billion in fiscal year 2019-20, up from $3.45 billion in fiscal year 2014-15, according to the OPA.
The OPA report also raised concerns that there would be inadequate staffing “for the growing levels of planned capital project expenditures, in part due to the anticipated personnel retirements and constraints on outsourcing.”
DWP officials said they were “pleased” with Pickel’s assessment of the planned rate hikes, which were proposed to pay for the replacement of aging infrastructure needed to keep electricity service reliable.
If ultimately adopted, the rate hikes would “allow us to continue the transformation of our power system to a clean energy future that protects the environment, while complying with regulatory mandates,” according to a statement issued by the utility.
A judge Monday gave conditional approval to a proposed settlement that calls for the Los Angeles Department of Water and Power to pay out tens of millions of dollars in refunds to customers who billed inaccurate amounts during a problem-filled overhaul of the utility’s customer billing system.
Superior Court Judge Elihu Berle said he supports the deal “in principal,” but wants changes to be made in the agreement to make the refund claims process less complicated for DWP ratepayers, according to attorney Gillian Wade, who represents one of the plaintiffs critical of the deal.
Berle also would not commit to $13 million in attorneys’ fees that, under the current proposed agreement, would be given to the lead attorney seven days after the deal’s final approval, according to Wade. The judge said he would decide after actual refund amounts — rather than estimated figures — have been calculated, the attorney said.
Another hearing was set for Feb. 5 to consider preliminary approval of the deal, Wade said.
Berle had delayed granting preliminary approval in two previous hearings, after attorneys for some of the plaintiffs raised objections to the way another attorney had drawn up the terms with the DWP.
Consumer advocates also said they were concerned about the deal because its terms give DWP officials too much power in deciding how much they would refund or back-bill customers.
But utility officials say the deal, if accepted by the court, would result in $44 million total in overcharges to be credited back to customers and would give back “100 cents on the dollar to every customer affected by our billing system problems.”
They added that the settlement also gives customers a “thorough and fair neutral process for resolving claims, including the opportunity to have their claims heard directly by the court.”
The most recent version of the settlement, which was filed in court last month, includes all 12 revisions requested by Berle, according to DWP officials. Those changes include putting in signature lines for class plaintiff representatives, using six languages on the claims forms, setting up an online claims submission system, and giving clearer information about the kinds of claims ratepayers could make.
Consumer advocates critical of the deal said before today’s hearing that despite the recent revisions, the settlement terms still would give DWP too much power to dictate the refund amount.
Consumer Watchdog President Jamie Court last month called the revised settlement “remarkably flawed,” and the claims process it would set up “confusing.”
Court also lashed back at the DWP’s statements, saying that the attorney who crafted the settlement will get his $13 million in fees as soon as the settlement deal goes through, while customers may need to wait until 2017 or later to get their checks.
A Los Angeles city panel called Tuesday for outdoor watering to be restricted to two days per week if the city fails to meet monthly goals for slashing water use amid the statewide drought.
The proposed restrictions come just weeks after Los Angeles Department of Water and Power officials recommended rate hikes of 2.4% to 5.4% to pay for infrastructure needs and to achieve water and energy conservation goals and improve customer service.
L.A. currently limits outdoor watering to three days per week as required under “phase II” of the city’s emergency water conservation ordinance.
The city would be able to switch to phase III – which includes the two-day-per-week schedule along with other measures – more quickly if the city falls behind on monthly water use goals, under the plan advanced Tuesday by the Department of Water and Power Commissioners.
Failing to meet the mayor’s monthly water goals or the state’s 16 percent reduction target would trigger ramped-up water reduction efforts soon after the city falls short of its water reduction targets, DWP officials said.
The city met its water reduction goals for June, but only by a “very narrow margin,” according to a DWP report.
If the city uses more water than is allowed by the state, the city could be hit with fees, but the current process for putting phase III restrictions in place could take as many as two to three weeks, DWP officials said Tuesday.
The City Council and mayor will be given a water use “report card” at the end of each month as a precursor to entering phase III, officials said.
The twice-a-week outdoor watering schedule in phase III would allow watering to take place Mondays and Fridays for odd-numbered addresses, and Sundays and Thursdays for even-numbered streets.
The resolution advanced Tuesday is subject to approval by the City Council and Mayor Eric Garcetti.
Los Angeles water and power users would see their rates increase 2.4 percent to 5.4 percent annually for five years under a proposal unveiled by Department of Water and Power officials Wednesday.
The plan was presented to the Los Angeles Board of Water and Power Commissioners, with officials saying the rate increases are needed to replace aging infrastructure, further water and energy conservation goals and improve customer service.
DWP officials estimated that the typical residential water and power customer would face a 3.4 percent increase, which translates to paying an additional $4.75 a month, under the proposed hikes.
But customers could see increases of as little as 2.4 percent, a roughly $1.95 per month hike, or as high as 5.4 percent, which is about $17.64 per month, depending on usage.
DWP officials tried to make the case today for the rate hikes, saying they have worked to save $467 million through reductions in labor and other costs.
In order to keep up with rising power and water costs over the next five years, DWP would need to bring in an additional $900 million for its power service, and $230 million for its water service, officials said.
Commission President Mel Levine said this is just the start of conversations about the rates, and there will be outreach efforts over the next several months.
“I anticipate this will indeed be a dialogue involving both informing customers and most importantly listening to feedback from these important stakeholders and from the community,” he said.
The discussion will also involve the City Council and Mayor Eric Garcetti, the ultimate decision-makers in whether the rate hikes are adopted, Levine said.
Los Angeles Department of Water and Power customers reduced their water use by 18 percent in May, compared to the same month two years ago, according to figures released July 1 by the State Water Resources Control Board.
Statewide, water use dropped by 28.9 percent, according to the board.
Gov. Jerry Brown has called for an overall 25 percent drop in water use over 2013 totals because of the continuing drought, though individual water suppliers have been assigned varying cutback targets.
“The numbers tell us that more Californians are stepping up to help make their communities more water secure, which is welcome news in the face of this dire drought,” said State Water Board Chair Felicia Marcus.
“That said, we need all Californians to step up – and keep it up – as if we don’t know when it will rain and snow again, because we don’t,” she said. “If the drought continues beyond this year, we’ll all be glad we did.”
In Long Beach, residents reduced their water use by 20 percent in May, according to the state. City officials said they have already calculated June water use and found a 19 percent reduction from two years ago, dropping to the city’s lowest level since 1956.
“I’m very proud of the effort by our residents, businesses, schools and very own water department,” Long Beach Mayor Robert Garcia said. “We continue to lead statewide.”
Customers of the San Gabriel Valley Water Company reduced their use by 35 percent in May, compared to May 2013, according to the state. Garden Grove residents reduced by 24 percent, Pico Rivera by 25 percent, Azusa by 27 percent, Anaheim by 25 percent, La Habra by 29 percent, Buena Park by 30 percent and South Pasadena by 31 percent.
public officer crime, A former audio-visual technician for the Department of Water and Power will be arraigned next week on more than two dozen felony counts for allegedly misappropriating more than $4 million in public funds.
Thatcus Carl Richard, 64, of Moreno Valley, was arrested Wednesday and is charged with multiple counts of conflict of interest, public officer crime and embezzlement by a public officer.
Between July 1996 and March 2014, Richard — who was in charge of managing video and audio jobs for the utility — allegedly enlisted friends to establish audio-visual companies and then helped award DWP contracts to them, according to the District Attorney’s Office.
In return, the companies would allegedly subcontract the work to a company owned by the defendant called Top Line Communications.
Richard is also accused of using DWP equipment and resources for his personal gain, according to prosecutors.
Agents from the District Attorney’s Bureau of Investigation arrested Richard Wednesday in San Bernardino County.
Prosecutors have recommended that bail be set at $1.2 million.
If convicted of all charges, Richard faces up to 20 years in state prison, according to the District Attorney’s Office.
“Any employee who violates the public trust and defrauds the LADWP and our customer owners should be prosecuted to the fullest extent of the law,” said DWP General Manager Marcie Edwards. “I am grateful that the suspected criminal activity was investigated by our own security services division and reported to law enforcement.”
DWP officials said that as a result of the case, the utility has begun reviewing all of the contracts initiated by its small business units over the past five years and has bolstered training for contract managers. It also established a vendor-authentication unit to verify the legitimacy of companies doing business with the DWP for the first time.
“Since this investigation was initiated, we have taken significant steps to strengthen our ability to detect fraud and deter a scheme like this from ever occurring again and will take additional steps to better detect and prevent the fraud that occurred in this case,” Edwards said. “I have also requested that the city attorney file a civil action to attempt to recover the money that was stolen by this former employee.”
The Los Angeles Department of Water and Power ranks poorly in customer service when compared to comparable utilities, and spends less in that area, according to study findings released Tuesday by Mayor Eric Garcetti’s office.
The study, conducted by PA Consulting, compared the operations and costs of the department against those of other utilities and concluded the DWP should increase spending on customer-focused programs.
Garcetti said the study highlighted the DWP’s customer service struggle, “reinforcing our work to hire 190 customer service representatives since April 2014 to drive call hold times down to under five minutes.”
“Under our new leadership at the DWP, we are changing the culture to focus more on customer service, because that’s what our customers deserve,” he said.
The study gave favorable rankings for the utility’s spending levels and reliability.
“I am very pleased with the initial results of this study, which will help us find and achieve real cost savings and greater efficiencies within LADWP’s operations,” said General Manager Marcie Edwards, who was hired about five months after the department rolled out a revamped billing system and started experiencing major problems.
The study has two more phases. The next phase will focus more closely on customer service, power distribution, energy loss and expenses that go uncollected. The third phase will look at ways to improve the DWP’s operations, such as cutting back on energy loss and uncollected expenses.
The study was released a week after a state audit found that the troubled 2013 rollout of DWP’s billing system could wind up costing ratepayers more than $200 million.
The system launch resulted in some customers receiving wildly inflated bills and others receiving no bills at all.
The state audit found that as of November, the utility was still trying to collect more than $681 million from customers for past-due bills. DWP officials said only about $245 million of that amount is attributable to the new billing system.
Councilman Felipe Fuentes introduced a motion Tuesday requesting that the state auditor and the DWP ratepayer advocate give reports to the City Council about the billing system’s problems.
He also asked the DWP to report on how soon the state auditor’s recommendations could be adopted.
“It is my expectation that the information revealed by the state audit and the ratepayer advocate’s analysis will continue to improve the management of the utility and restore the trust expected by our residents and ratepayers,” Fuentes said.
He added that residents and the City Council “are eager to get this matter resolved, once and for all, so we can finally focus our efforts on modernizing and maintaining our aging infrastructure to make room for a growing, robust Los Angeles.”
Los Angeles City Attorney Mike Feuer announced earlier this month that his office filed a lawsuit against the accounting firm of PricewaterhouseCoopers, which the city hired to implement the DWP billing system.
Feuer alleges the company misrepresented its level of experience handling such a system, costing the city “millions” of dollars. But Daniel J. Thomasch, an attorney for PwC, called the lawsuit “meritless,” contending it was a “transparent attempt by the DWP to shift blame away” from the utility.
Department of Water and Power officials asked water customers in downtown and northeast Los Angeles this week to conserve water for the next two months while the Eagle Rock and Solano reservoirs undergo repairs.
The Eagle Rock Reservoir, which serves northeast Los Angeles, is getting valves in preparation for a new cover, and a liner is being installed at the Solano Reservoir, which serves areas near Dodger Stadium, such as Echo Park, and parts of downtown Los Angeles.
The work will put a strain on the amount of water that will be available for the area, DWP officials said.
“We are making these short-term operational changes to our system to make sure we can safely work on key infrastructure repairs in Eagle Rock and Solano while maintaining dependable water service for our customers,” said Marty Adams, LADWP Senior Assistant General Manager of the water system.
The utility is taking steps to make sure the work will not affect service in these areas, Adams said, but “the distribution system will definitely be stretched to its limits for the next two months.”
“We continue to urge Angelenos to conserve water as part of Mayor Garcetti’s goal of reducing citywide water consumption by 20 percent,” he said.
El despliegue atribulado de facturación del sistema del Departamento de Agua y Luz (DWP), el cual dio lugar a que algunos clientes recibieran facturas exageradamente altas mientras otros no recibían ninguna, podría terminar costándole a los contribuyentes más de $200 millones, de acuerdo a una auditoría estatal publicada el martes.
La auditoría también encontró que hasta noviembre, la compañía todavía estaba tratando de colectar más de $681 millones en facturas vencidas de los clientes, debido a un sistema fallido. Funcionarios del DWP dijeron que sólo alrededor de $245 millones de esa cantidad es atribuible al nuevo sistema de facturación.
“El departamento originalmente presupuestó $87 millones para la implementación del CIS (Sistema de Información al Cliente), sin embargo, redobló ese presupuesto a casi $181 millones a través del tiempo”, según el informe de la Auditoría del Estado de California.
“Sin embargo, inmediatamente después del lanzamiento del CIS, se hizo evidente que el sistema no estaba todavía listo y que la decisión del departamento para implementarlo era cuestionable.
“Por lo tanto, los clientes del departamento comenzaron a quejarse de facturas tardías, avisos de cancelaciones injustificados y tiempos excesivos de espera para hablar con los representantes de servicio al cliente”, de acuerdo con la auditoría.
Los auditores encontraron que el departamento había gastado $187 millones implementando y estabilizando el sistema CIS para septiembre de 2014, y su inestabilidad de cobrar cuentas atrasadas “podría añadir más de $40 millones al precio total de CIS”.
El Abogado de la Ciudad de Los Ángeles Mike Feuer anunció la semana pasada que su oficina había presentado una demanda contra la empresa de contabilidad de PricewaterhouseCoopers, que la ciudad contrató para implementar el sistema de DWP. Feuer reclamó que la compañía falsificó su nivel de experiencia al manejar dicho sistema, costándole a la ciudad “millones” de dólares.
Daniel J. Thomasch, abogado de PwC, llamó a la demanda “sin mérito”, alegando que era un “intento transparente por el DWP para desviar la culpa” de la compañía.
El DWP “reconoció por escrito el año pasado que PwC ha cumplido cada una de sus obligaciones contractuales y pagó a PwC en su totalidad”, dijo Thomasch. “Nosotros defenderemos el excelente trabajo de PwC y este caso vigorosamente”.
La mayoría de los problemas con el sistema han sido arreglados, dijo la semana pasada el Jefe Adjunto del Fiscal de la ciudad Jim Clark, pero “los problemas son tan graves, y el encubrimiento fue tan extenso, que es difícil decir hoy que esta completamente arreglado”.
El DWP, dijo que no estaba preparado para hacer frente al alto volumen de llamadas provocadas por los problemas en el sistema de facturación, pero ya contrató a representantes de servicio para el cliente y se abrieron centros de servicio al cliente los sábados.
En respuesta a la auditoría estatal, la Gerente General de DWP Marcie Edwards de nuevo culpó a PricewaterhouseCoopers, diciendo que su propia auditoría determinó que el contratista “intencionalmente falsificó su capacidad” para implementar el sistema.
“Quiero asegurar a nuestros clientes que desde el lanzamiento del nuevo sistema de facturación al cliente, hemos corregido de forma rutinaria facturas inexactas estimadas mediante la cancelación y la re-facturación a aquellos clientes de acuerdo con datos reales de [lecturas de] metros”, dijo Edwards. “Sin embargo, los problemas que tuvimos fueron significativos, y entendemos la ira y la frustración experimentada por quienes fueron afectados”.
Dijo que con la contratación de más de 200 representantes del servicio al cliente y metro-lectores, los tiempos de espera por teléfono han disminuido de más de 35 minutos a menos de cinco minutos. Ella dijo que el DWP también está ofreciendo un programa de perdón por pagos tardíos y opciones de planes de pago por Internet.
La auditoría del estado recomendó que la comisión del DWP cree un comité para “supervisar y evaluar de manera crítica la situación de varios proyectos de tecnología de información del departamento”. También recomendó que el DWP establezca normas para la frecuencia y el contenido de las actualizaciones de estados de IT y establezca un proceso de aprobación más detallado de los proyectos de tecnología que tienen “un efecto potencialmente significativo en operaciones de negocios o servicio al cliente”.
Aunque los funcionarios del DWP continuaron culpando a PricewaterhouseCoopers por los fallos de sistema, el jefe del sindicato que representa a los empleados de DWP estableció la culpa a ex dirigentes del departamento.
“Este proyecto fue un fracaso épico”, dijo Brian D’Arcy, gerente de negocios de la Hermandad Internacional de Trabajadores Eléctricos, Local 18.
“El ex Director General Ron Nichols y su equipo directivo fracasaron en la implementación de uno de los proyectos críticos del departamento y pusieron en peligro casi $1 billón en ingresos, mientras crearon un ambiente de trabajo hostil para empleados dedicados que trabajan para DWP”.