DWP rates may rise between 8% and 28% to pay for mayor's green initiatives
The hike would pay for more aggressive conservation programs and a solar plan designed to create 16,000 jobs as well as cover the fluctuating price of coal and natural gas.

By David Zahniser and Phil Willon

March 15, 2010 | 11:21 p.m.
Households that get their power from the Los Angeles Department of Water and Power could see their electric bills go up between 8.8% and 28.4%, depending on where they live and how much energy they use, under a plan unveiled Monday by Mayor Antonio Villaraigosa.

Appearing with labor and environmental leaders, Villaraigosa said the proposed increases would ensure that the DWP meets his goal of securing 20% of its energy from renewable sources such as wind and solar by Dec. 31.

The increased revenue would help pay for new environmental initiatives, including more aggressive conservation programs and a solar initiative designed to create 16,000 jobs.

But it also would address the DWP's failure to collect enough money to cover the cost of existing renewable energy initiatives and the fluctuating price of coal and natural gas, utility officials said.

"Nobody's denying that this is a big increase -- at least I'm not," said DWP Acting General Manager S. David Freeman. "Because we've put it off so . . . long, [ratepayers] have saved money in the last three years."

The mayor has been talking for weeks about the need for the DWP to charge more. Monday was the first day his team showed its estimate of the effects on consumers of the increase, which is scheduled to be phased in over a full year starting next month.

Under the plan, households that use the smallest amount of electricity -- technically known as Tier 1 customers -- would see an average increase of 8.8%. Those customers make up 58% of the DWP's residential ratepayers.

Tier 2 customers, who use more power and make up 36% of the utility's residential customers, would see an average increase of 16.8% to 18.9%. Tier 3 customers, who use the most power and make up the remaining 6%, would face hikes in their electric bills of 24.4% to 28.4%, according to documents provided by the mayor's office.

In the hotter San Fernando Valley, where ratepayers receive a slight break on their bills, the average Tier 1 customer would see monthly electric bills jump from $38.76 to $42.17 by April 2011. A Tier 2 customer in the Valley would see the monthly bill increase from $92.19 to $107.60, according to the proposal.

Businesses would see increases in the average bill ranging from 20% to 26%. Any increase would become less steep, however, once ratepayers adopt conservation measures or find ways to install solar panels and sell the excess power to the DWP, mayoral aides said.

The DWP board, whose members are appointed by the mayor, must approve the plan for the increases to go into effect; the proposal goes before the board Thursday. The City Council will review the plan in upcoming weeks and can affirm it or send it back for more work.

The mayor also warned that more increases would be needed to reach his next goal: securing 40% of the DWP's power from renewable sources by 2020.

"We could have raised our fees even more to address the long-term goal of taking us to 40% renewables by 2020 and coal-free," he said. "We knew we had to do this incrementally."

Either way, the proposal drew complaints from a Westside neighborhood activist, who described the increase as a hidden tax.

Mike Eveloff, president of the Tract 7260 Homeowners Assn., criticized the mayor for seeking more money at the same time the DWP is providing at least $220 million annually to balance the city's budget. "As long as the DWP is showing a surplus, then they have no rational reason for seeking a rate increase," he said.

Once all the increases are in place, the DWP will receive an additional $648 million per year.

Villaraigosa said the money would help pay for the hiring of "green doctors" to evaluate the energy efficiency of homes and stepped-up efforts to help residents obtain energy-efficient lightbulbs and refrigerators.

One union leader said residents would support the increases once they knew how the money would be spent.

"When they see that there is a clear-cut plan to do what we need to do in this city -- which is to be more green, to create jobs -- then I think that most people . . . are willing to go along with that," said Maria Elena Durazo, executive secretary-treasurer of the L.A. County Federation of Labor.