LADWP Begins Educational Campaign on Rate Increases

A two-month outreach campaign intended to educate Angelenos on the  Department of Water and Power’s costs of doing business and to gauge ratepayers’ interest in paying for additional conservation, efficiency and infrastructure projects kicked off today with the utility’s general manager making his initial presentation to the Board of Water and Power Commissioners.

Chart courtesy of LADWP

It is the goal of Ron Nichols to educate elected officials and DWP customers on the cost of running the country’s largest municipally-owned utility before ultimately asking the Los Angeles City Council to increase water and power rates over a three-year period.

“If you don’t do something this year, it’s a snowplow effect. You’re pushing those costs into future years,” Nichols said in a briefing with reporters.

On the water side, the cost of doing business will increase $360 million over the next three fiscal years because of regulatory mandates, pensions and inflation. The greatest increase — $181 million — is needed to show rating agencies that DWP has enough money to cover its debts.

Right now, DWP is able to borrow money at a 4.6 percent interest rate, ultimately paying $453 million a year in interest. A drop in the utility’s credit rating would increase that interest rate to 5.3 percent and cost an additional $73 million a year in interest payments.

The cost of business on the power side is expected to increase $952 million over three years, again due in large part to regulatory mandates, pensions and “protecting (DWP’s) ability to borrow.”

What that all means for Angelenos is that they could see their water bills jump 15.3 percent and power bills another 16.8 percent over a three-year period.

An average DWP customer who uses 500 kilowatt hours of power is currently paying $67 a month, according to the utility. That customer could theoretically see his bill increase $4.04 per month beginning Nov. 1, with a second increase on July 1, 2012 and a final increase on July 1, 2013, ultimately bringing the new power bill to $79.12 per month.

The 3 percent of DWP customers who use 1,500 kilowatt hours or more could expect to see the average power bill increase from $212.10 per month to $248.43.

On the water side, right now the average DWP customer pays $44.50 per month. To cover the utility’s basic business needs, customers could expect a monthly jump of $2.24 for three years, bringing the new bill to $51.22 For  high-use customers, the average monthly bill could increase from $102.50 to $120.68.

Those possible increases, however, do not include discretionary spending on things such as new pipes, water conservation, coal replacement and energy efficiency, Nichols said. Depending on how important those issues may be to ratepayers and electeds, “strategic” improvements to the water and power systems could add as much as another $2.37 per month to the average bill.

While all this is happening, the Los Angeles City Council is still struggling with getting the voter-approved ratepayer advocate in place. Council members have said they will not approve rate increases before the Office of Public Accountability is established.

“We have to move forward,” Nichols said. “We need to get to a point before this calendar year to get an adjustment, but we think if the council moves quickly, and if we can even get someone on an interim basis, if we can get a ratepayer advocate there, they can pitch in during the course of this time.”

“We welcome (the ratepayer advocate) and we’d like to see it happen as quick as we possibly could,” Nichols said.

DWP reps will make their 2011 rates process, water rates and power rates presentations to the public, neighborhood councils and Los Angeles City Council members over the next two months. Nichols said he hopes to present rate increases to the Board of Water and Power Commissioners in August so the city council can approve and implement the new fees by Nov. 1.

Below is a listing of the DWP’s public workshops on the rates. For more information, log onto the DWP’s L.A. Forward website:

Wednesday, June 15, 6:30 p.m. – 9:00 p.m.
Marvin Braude Constituent Center
14410 Sylvan Street
Van Nuys

Thursday, June 16, 6:30 p.m. – 9:00 p.m.
Holiday Inn – Warner Center
21101 Ventura Blvd.
Woodland Hills

Saturday, June 18, 10:00 a.m. – 12:30 p.m.
Los Angeles Mission College
13356 Eldridge Ave.
Sylmar

Monday, June 20, 6:00 p.m. – 8:30 p.m.
Boyle Heights Technology Youth Center
1600 E. 4th Street
Los Angeles

Tuesday, June 21, 6:30 p.m. – 9:00 p.m.
California African American Museum
600 State Drive
Los Angeles

Wednesday, June 22, 6:30 p.m. – 9:00 p.m.
Stephen S. Wise Temple
15500 Stephen S Wise Drive
Los Angeles

Monday, June 27, 6:30 p.m. – 9:00 p.m.
Crowne Plaza Los Angeles Harbor
601 S. Palos Verdes St.
San Pedro