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Sparks continue to fly over DWP rate hike

April 1, 2010 12:00:00 AM PDT
Customers of the Department of Water and Power won't see an increase in their rates just yet because the Los Angeles City Council shot down a rate hike during an emergency meeting on Wednesday night.The DWP could try again in a few months for a rate hike. All sides seem to agree that a rate hike is inevitable, but it's the size of the increase that continues to generate heat.

If the DWP had gotten its way, the average Los Angeles customer's electricity bill would have gone up 5.7 percent.

"It's difficult right now, I mean everything is so expensive, and it's just, it's ridiculous," said L.A. resident Linda Lawrence.

"With water cutting back and everything, I don't feel like we're getting the services anyway, and then to pay more for it is really annoying," she said.

The city council had approved a smaller rate hike on Tuesday that would have raised the average customer's monthly electricity bill by about 4 percent. Council members told the utility that was the maximum increase they would accept.

"This has been a volleyball contest between the commission and the council. Many of us did not think it was justified," said Councilman Dennis Zine.

But the board of DWP commissioners, all appointed by Mayor Antonio Villaraigosa, met Wednesday night and voted for a larger hike. The mayor supported the higher rate because it would help fund his renewable energy proposals.

"I think they really were derelict in their fiduciary duty, and turning down what I think was a very appropriate compromise was a big mistake," said Councilman Paul Koretz.

Within an hour of the board's decision, the council unanimously rejected it.

"The DWP, months and months ago, should have been making their case, should have been working with neighborhood councils, and if there was any justification for this kind of an increase they could have made that case to the public," said Councilman Paul Krekorian.

The DWP has threatened to withhold $73 million from L.A.'s cash-strapped general fund.

"This decision not to raise the rates could jeopardize our credit rating and also other important decisions. So we'll make those assessments and move on from there," Villaraigosa said.

If the DWP doesn't transfer the money to the city, which it needs to balance the budget, there could be more layoffs.

"I think they've been very clear they are not and we hope we can cause the transfer in some other fashion" said Councilwoman Jan Perry.

Perry isn't certain what their options are and it doesn't appear that legal action would work on the city's own utility.

An independent audit found that the DWP deserved some rate hike. The utility was losing some $125 million a year under collecting for increased power costs.

However, council members say the DWP didn't handle it properly.

"This wasn't a negotiation," said Council President Eric Garcetti. "They are the ones who waited, didn't meet for two weeks, and we said what we would vote for, and they didn't vote that through."

The DWP has missed the deadline to raise its rates starting Thursday. California law allows the DWP to increase its energy-cost adjustment factor surcharge only at the beginning of each quarter.

The earliest the DWP can try again for a rate hike is July 1.