The Los Angeles Department of Water and Power officials say the utility needs rate increases of at least 15 percent over the next three years to keep the city's lights on and taps flowing.
DWP Chief Ron Nichols says that in the first year, the minimum rate hike under consideration would add about $2.25 to the typical household's monthly water bill, and $4 a month to the energy bill. Nichols emphasizes that'll cover basic business needs, like replacing water pipes and electric wires – and some existing expenses.
"We're negative today," says Nichols. "We're effectively digging into the piggy bank for our operating costs today."
Much of that increase would pay to protect the utility's credit rating. That helps DWP borrow to meet mandates, like ending the use of seawater to cool its coastal power plants.
It wouldn't completely end the use of coal within nine years, as L.A. Mayor Antonio Villaraigosa once pledged the DWP would do, but it does include terminating power from the Navajo coal-fired plant within 3 years – ahead of the legal deadline.
"We're taking a pretty aggressive stance on getting off of coal," says Nichols. Nichols says using more natural gas is riskier for rates. Utility officials argues that the market's volatile when it comes to gas and renewables.
DWP will formally present its case to the Water and Power Commission and the L.A. City Council later this year. This week and next, the DWP will host public meetings around the region to explain its priorities and its pricing for power and water.