The Los Angeles Board of Water and Power Commissioners is expected to vote today on a carbon reduction surcharge proposed by the mayor to help fast-track the city's transition to clean, renewable energy.
The surcharge would add about $2.50 a month to the bills of residential Department of Water and Power customers while increasing rates for businesses by about 20 percent.
Mayor Antonio Villaraigosa – who wants renewable energy to account for 20 percent of the DWP portfolio by the end of this year, and 40 percent by 2020 – called for gradually phasing in the surcharge starting next month.
Once fully implemented as part of the so-called Energy Cost Adjustment Factor, or ECAF, the surcharge will generate an annual $168 million, which is to be deposited into a Renewable Energy and Energy Efficiency Trust Fund, said mayoral spokeswoman Sarah Hamilton.
Villaraigosa said the money should be spent to teach Angelenos how to retrofit homes and businesses to make them more energy-efficient, as well as to help owners of businesses with rooftop solar panels sell electricity to the DWP.
He estimated these programs would create 18,000 jobs over a decade.
Villaraigosa said the surcharge should help the DWP compensate for failing in previous years to collect sufficient funding through the ECAF for existing renewable energy programs.
At present, an ECAF of 5.09 cents per kilowatt-hour is added onto customers' monthly bills, according to the Los Angeles Times. The Board of Water and Power Commissioners can raise that, but only up to 0.1 cent per kWh per quarter.
A recent study by PA Consulting called for allowing an increase of up to 2.7 cents per kWh over the course of a year to help the DWP maintain its renewable energy targets and credit rating.
If the board adopts that recommendation, DWP customers would see an increase of 0.8 cents per kWh in April, July and October, and 0.3 cents per kWh in January – until the ECAF hits 7.79 cents per kWh.
PA Consulting estimated that would result in the average residential customer's monthly payments increasing $11 to $14 over the course of a year under the current rate structure – a 16-21 percent hike in the current average bill.
So far, Villaraigosa's proposal calls for increasing average residential customers' monthly payments by $2.50. He said, however, that further hikes may be necessary.
Some City Council members objected to the surcharge on Tuesday.
"I think it's the wrong timing and also it's excessive," Councilman Bernard Parks said, noting many households across Los Angeles are dealing with unemployment and foreclosure. Councilman Dennis Zine described the carbon surcharge as a form of tax and said, "absolutely not."