A Water and Power Department advocate on Tuesday explained his recommendations for increasing power and water rates.
Dr. Fred Pickel, a ratepayer advocate for DWP, presented his Aug. 28 report to the Mar Vista Community Council, showing that a 10.6 percent increase in the next two years is necessary – mostly to comply with state and federal mandates that require costly renewable energy sources. Pickel is part of the Office of Public Accountability, an agency separate from DWP that provides public independent analysis of actions such as rate increases. He is encouraging DWP board members, that are meeting on Wednesday, to approve the rate increase plan. If approved, city council will review the proposal as early as Sept. 25.
If the rate hike clears the final hurdle – the mayor’s signature after the city council meeting – the power rate increase will go into effect in November and the water increase in July 2013.
Offsetting the additional expenses of generating renewable energy, Pickel said that “the new management team set cost reducing plans and met those targets.” And that the agency has become more “visible and transparent.”
In 2006, Gov. Arnold Schwarzenegger signed Assembly Bill 32 into law, requiring that California reduce its greenhouse gas emission to 1990 levels by 2020. Expending the parameters of AB32, another bill, SB2X that passed in March 2011, requires utilities to generate 33 percent of electricity from renewable energy resources.
It requires that by 2013, 20 percent of a utilities’ portfolio is renewable, by 2016, 25 percent and by 2020, 33 percent.
The Water and Power Department currently receives about 40 percent of its power from two coal-fired plants – the Intermountain Power Plan in Delta, Utah and the Navajo Generating Station on the Navajo Indian Reservation near Page, Ariz.
State law mandates that DWP cannot renew its contracts with these plants once they expire later this decade. Transitioning away from coal will be a substantial expense – about $7.4 billion over the next five years, according to Pickel’s report.
DPW is also considering preliminary increases of about seven percent every year from 2014 to 2017. Pickel said one of his major victories as an advocate was removing this five-year rate hike from this round of proposed increases.