DWP General Manager Ron Nichols told utility commissioners the department needs a 5 percent annual hike in both water and power rates.
Nichols said it's needed to comply with new environmental requirements and also to protect the company's credit rating.
The DWP held its first meeting Wednesday, the first of a series of public hearings to inform and discuss with the public why they need to raise rates.
"We're digging into our reserves right now, we're digging in the piggy bank," Nichols said. "If we don't get the adjustments by the end of this year, we're going to have to make some very Draconian-types of cuts on things."
Some residents said the raise hike could do them in, especially small business owners
"It's killing me. I'm an electrical contractor. We had to make severe cuts," said Jamie Cordaro, who was at the meeting. "I went from a girl in the office having 40 hours, now she's down to 30 hours."
Under the proposal, small businesses like Cordaro's could see the biggest increases.
If approved, the first rate increase would take effect Nov. 1.
For water, the hike would initially go up by 4.2 percent. Over a three-year period, it would rise to 15.3 percent.
For power, the rate would initially go up by 6 percent. At the end of three years, it would be up by 16.8 percent.
The DWP says it has some of the lowest rates in the state. The DWP says an aging system and the need to plan for a sustainable future costs more than they have.
Nichols said they have already cut more than $300 million from their budget.
There will be six more public hearings in June and two more in July. Ultimately, it will be up to the Los Angeles City Council to determine whether the DWP will get the proposed increase.