The Los Angeles Department of Water and Power rolled out its proposal for higher rates Wednesday, increases that would add about $24 to the typical customer's monthly bill by 2020.
The new rates could take effect by early next year . Depending on their usage, customers would see percentage increases from about 2.4 to more than 5 percent in their combined water and power bills each of the next five years.
The DWP plans about four months of public outreach at neighborhood councils, business groups and other places. A coalition of neighborhood councils in the San Fernando Valley will be one of the first public venues on Thursday.
The DWP board would vote on the increase in October. The City Council would vote the increase up or down in late November or early December. The mayor must also approve the increase.
In the lead up to those votes, the department will campaign to win the trust of customers and persuade the City Council to support the rate increase. DWP must overcome bad publicity from its poor oversight of $40 million given to two trusts run by its employee union, a recently-discovered embezzlement of several million dollars by an employee, and the botched rollout of its new customer billing system.
A massive water main break under Sunset Blvd. in July 2014 that flooded the UCLA campus has also been part of DWP's case. DWP General Manager Marcie Edwards was only half-joking during a pre-meeting briefing when she said she wished the break had occurred while the rate increase was before the City Council because it underscored the need for more pipes to be replaced more quickly.
To help tell its story, the DWP Wednesday launched a new rate increase website for public consumption.
Edwards prefaced the rollout of the rate increase by announcing the agency's progress toward several goals the City Council had set when it denied a 2012 water rate increase.
She pointed to the DWP's new labor contract and pension savings, improvement in customer service telephone wait times, and a reduction in inaccurate invoices from the agency's new customer billing system.
She stressed that, rate increases notwithstanding, LADWP water and power bills would remain among the lowest in the metropolitan area.
The new water rates would expand to four tiers from the current two. About half of DWP's customers would fall into the lower-priced tiers — called "basic" and "efficient" — for those homes that use the least amount of water.
The two higher tiers, dubbed "high use" and "excessive," are for homes that use more water, and the rate increase for those tiers would be higher
The rates would bump up a typical customer's combined water and power bill by about $4.75 each year for five years, an annual increase that averages 3.4 percent. A customer paying about $132 today would be paying about $156 by 2020.
The rates of the increases are a smaller percentage for low-use customers, about 2.4 percent more per year. They are higher for high-use homes, about 5.4 percent increase per year.
Small businesses would see about a 3.5 percent increase in combined water and power bills each of the next five years. A business paying $240 per month today would be paying $285 per month by 2020.
The rate increases are mostly aimed at raising money to upgrade and replace old pipes and power poles. The $1.3 billion in additional money raised in the new rates over the next five years breaks down to $230 million for water projects, and $900 million for power projects.
That $1.3 billion in new money will enable the DWP to borrow about $17 billion for projects like replacing major water trunk lines, moving the power system off of coal power plants, stoping the use of ocean water to cool power plants, and increasing the system's water supply and reducing its dependence on purchased imported water.
At the current pace of pipe replacement, a city pipe with a 100-year life span would be replaced once every 280 years or so. The DWP projects that replacement cycle would be brought down to 150 years with the new rate.