City Council committee to begin reviewing DWP rate hike today

The City Council's Energy and Environment Committee is scheduled to begin today reviewing a rate hike approved by the Department of Water and Power board.

The meeting will take place because the City Council voted unanimously on Tuesday to assert jurisdiction over the rate hike.

The DWP and Mayor Antonio Villaraigosa have called for increasing the Energy Cost Adjustment Factor, or ECAF, which currently is set at 5.09 cents per kilowatt hour, by 2.7 cents per kilowatt hour over a year, starting April 1.

A briefing paper from the mayor's office said the rate hike, once fully implemented, would generate $648 million in additional revenue each year – $70 million of which can be transferred to the city's general fund.

Once that transfer is complete, 75 percent of the remaining revenue would be used to address DWP's failure in previous years to collect a large enough ECAF to offset fluctuations in the price of oil and natural gas and pay for existing renewable energy sources, according to the mayor's press deputy, Sarah Hamilton.

The other 25 percent – called the carbon reduction surcharge – would be used to pay for programs aimed at encouraging energy efficiency and developing new renewable energy sources, Hamilton said.

The briefing paper stated the carbon reduction surcharge would help create 18,000 jobs over 10 years.

Under the proposal, rates would go up incrementally – by 0.8 cents per kWH in April, July and October, and by .3 cents per kWh in January – until the ECAF reaches 7.79 cents per kWh.

Once all the increases have kicked in, Tier 1 customers – who make up 55-60 percent of all the DWP's customers – would be charged an extra $2.40-$3.40 a month, according to the briefing paper. That represents an 8.8 percent increase.

Tier 2 customers would see their monthly bills go up $11-$16. Tier 3 customers – high-end ratepayers who make up 5-7 percent of DWP customers – could expect an increase of up to 28 percent in their bills, equivalent to $52-$65, according to the briefing paper.

Hamilton said businesses would face a significant hike of 21-26 percent in their monthly bills unless they take steps to become more energy-efficient.

Mayor Antonio Villaraigosa planned to hold a news conference early this afternoon to discuss his green energy initiative. Joining him via satellite from Nashville will be former Vice President All Gore, who, according to the Mayor's Office, will announce his support for the city's Carbon Reduction Surcharge and Renewable Energy Trust Fund.