Equipment replacement is central to DWP's rate hike, its leaders say, because it makes electricity more reliable. The DWP has said it wants to speed up its equipment replacement schedule.
On Wednesday, the L.A. Department of Water and Power begins the final push in its year-long campaign for higher electricity rates. DWP's last rate debate was bitter and divisive. The mood this time is different.
The utility will tell the City Council's energy committee that it wants to raise monthly bills about 5 percent for most residential customers, and around 11 percent for many businesses.
Money from DWP's proposed increase would help pay for brick-and-mortar projects, such as substations. The utility says it also needs new revenue to support L.A. Mayor Antonio Villaraigosa's goal of ending the city's reliance on coal within 8 years. DWP general manager Ron Nichols says a lot of solar and wind projects are coming on line too, a dramatic shift in the utility's energy portfolio.
“It took us 100 years to get here and we're going to replace 70 percent of it in 15 years,” Nichols says. “That is a high hurdle.”
That transformation is not entirely by choice. One state law, AB 32, forces utilities to reduce contributions to global warming. Another mandate promotes renewable energy. Nichols says these laws require immediate, across-the-board action.
“It's reducing our energy use by 10 percent. It's getting that 33 percent renewable energy. It's backing out of our coal fired plants. It's replacing all of our coastal natural gas fired plants to get off of once-through ocean cooling,” Nichols says. “It is definitely all of the above."
Ratepayer advocate Fred Pickel has reviewed DWP's plans, and last month he told water and power commissioners he likes what he sees.
“The bottom line is, having reviewed the finances and the business cases supporting these components, I recommend approval of the power rate proposal as it stands,” said Pickel at the August board meeting.
Pickel's support may explain the lack of opposition to higher rates from interest groups this time around. The Central City Association, which usually lobbies to keep business costs down, favors the DWP's plans. The Sierra Club's Evan Gillespie argues that the utility's adoption of renewables serves L.A.'s economic and environmental needs.
“They seem to be headed in the right direction. They're making new investments in clean energy, which are wildly popular with the public,” Gillespie says. “These are programs that are going to create jobs, they're going to help customers save money on their bills. In the end they're going to bring new economic development in the city.”
Once-frosty relations between the utility and the L.A. City Council have thawed too, says councilman Jose Huizar, chairman of the energy and environment committee.
“I think there's a sense of trust generally speaking by the council toward DWP and general manager Nichols,” Huizar says. “The ratepayer advocate being there certainly helps with this trust. But we certainly have a long way to go.”
Huizar says he'll have questions about electricity rates for low-income and senior customers when Nichols appears before his committee. Nichols may also have to answer questions about why the city's energy efficiency program isn't meeting its goals.
Ratepayer advocate Pickel says he has an even bigger concern: the labor and pension costs of thousands of unionized electrical workers. Pickel believes DWP pay is too high, although the city would have a tough fight on its hands if it were to ask the union to accept lower salaries and benefits.
But on Wednesday, when the energy committee considers DWP's request to approve a rate hike, don't expect any fireworks. The full council is expected to say yes before the end of the month.