DWP budget hinges on approval of new water, power rates

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Higher water and power rates are essential to the Department of Water and Power's $3.8 billion budget, according to the utility's general manager.

The Department of Water and Power's $3.988 billion budget for fiscal year 2012-13 is based on the assumption that the Los Angeles City Council will approve higher water and power rates for Angelenos, the utility's general manager said today.

DWP General Manager Ron Nichols presented a preliminary budget for the utility that includes plans to upgrade the city's power system and bring the water system into compliance with state and federal mandates. To pay for those projects, rates will need to increase 4.6 percent on the water side and 10.5 percent on the power side over a two-year period, starting July 1.

"The programs that we're talking about simply can't go forward to meet basic, legal mandates without an adjustment," Nichols said.

"This budget overall does not meet what we would like to be able to meet. There are a lot of issues that still aren't fully addressed at this spending level. We're trying to be reasonable and prudent in balancing between our system needs and the rates."

This is the first year the utility's budget has been presented this early to the Los Angeles City Council. In 2011, voters approved Measure J, which requires DWP officials to present the budget by March 31. The Budget and Finance Committee will get a look at the final budget numbers on May 3. The Board of Water and Power Commissioners are expected to sign off on the financial plan at the end of May, with the fiscal year beginning on July 1.

The Los Angeles City Council also approved a $380,000 contract extension for PA Consulting to help the ratepayer advocate, Fred Pickel, get up to speed on the proposed rate increases.

"Whether they agree or disagree, (Angelenos) are the owners of this utility and we have to see that the owners of this utility have been told what this is all about," said Councilman Jose Huizar, chair of the Energy and Environment Committee.

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