With backing from the city's independent ratepayer watchdog, the Los Angeles City Council today tentatively approved two years of Department of Water and Power electricity rate increases that will cost the average residential ratepayer an additional $3.65 per month over that period.
Small commercial customers will pay about $15 more per month as early as November, if a majority of the council approves the increase in a follow-up vote next week.
Department of Water and Power General Manager Ron Nichols said the rate increases are needed to meet a variety of state renewable energy targets and to rebuild coastal power plants that currently use ocean water for cooling.
The rate hikes are also necessary to replace aging power infrastructure, including decades-old utility poles, and for energy conservation programs that will keep rates low into the future, Nichols said.
The council voted 10-4 in favor of the rate increases, narrowly garnering the two-thirds majority necessary to make the change. Council members Mitchell Englander, Bernard Parks, Jan Perry and Dennis Zine cast opposing votes.
Englander and Perry said they were unsatisfied with the utility's disclosure of how it plans to use the $330 million the rate increases will raise. Perry said the department also failed to show that it had done enough to reduce costs on employee salaries and pensions.
Nichols downplayed the role of labor costs, saying they account for only
one-quarter of the department's budget. He said union contracts cannot be adjusted until September 2014 and that reducing salaries and pensions would have little impact on the amount of future rate increases.
Supporters said the rate increases would help the nation's largest public utility improve the city's power reliability and sustainability.
"The DWP rate increased approved by City Council minimizes the impact on ratepayers while improving reliability, funding cost-saving conservation measures and strengthening L.A.'s position as an environmental leader," Mayor Antonio Villaraigosa said.
The department is on track to replace nearly 70 percent of its power generation and supply system in the next 15 years, a transformation Councilman Jose Huizar called "the most ambitious in our history."
Councilman Paul Krekorian credited Nichols with explaining the need for the rate increases to the public during more than 80 outreach meetings, something past LADWP general managers failed to do, he said.
"By stark contrast, our new general manager has led the way in bending over backwards really to reach out to the public and engage as many people as possible," Krekorian said.
The rate increases were supported by the voter-approved ratepayer advocate charged with vetting Department of Water and Power Rate proposals, Frederick Pickel.