DWP board unanimously approves 4.8% rate hike

A Los Angeles Department of Water and Power distribution center.
A Los Angeles Department of Water and Power distribution center.
Omar Bárcena/Flickr

The Los Angeles Board of Water and Power Commissioners has voted to approve a one-time rate hike of about 4.8 percent for customers of the Department of Water and Power.

The rate hike will take effect July 1.

Chief operating officer Raman Raj said the delay in raising the power rate will make it "almost impossible" to meet the Mayor's long held goal of 20 percent renewable power by the end of this year.

The increase of about six-tenths of a cent per kilowatt hour in what's called the Energy Cost Adjustment Factor is the same size as the one rejected by the board just over two weeks ago.

At that time, the DWP board rejected the pleas of LA City Council president Eric Garcetti and Councilwoman Jan Perry to approve a compromise increase, recommended by a narrow majority of city councilmembers. Instead, the commission sent an increase of seven-tenths of a cent to city council, which was rejected unanimously less than an hour later.

It's estimated the difference in revenue would have been about $30 million. As a result of the vote, DWP leadership announced they would not recommend that the utility transfer $73.5 million to the city's anemic general fund.

The city council had voted yesterday to recommend the six-tenths of a cent rate hike. The vote was called after the council learned that the DWP board would hold a special meeting on rates.

DWP officers repeatedly have argued that a one-time increase in the ECAF would cost ratepayers more in the long run. They reason that a bond rating lowered by political bickering and financial uncertainty would make money more expensive to borrow and pay back — an expense, the DWP says, that would get passed on to customers.

In late March, L.A. Mayor Antonio Villaraigosa said that he didn't have the authority to force his appointees on the commission to decide a certain way. In advance of this vote, Villaraigosa issued a statement immediately after the city council's vote Wednesday approving the rate hike as a reasonable compromise.

It's possible — even likely — DWP rates will go up again in October. Before that happens, the L.A. City Council wants the DWP to prepare a detailed report about its finances.

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