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L.A. City Council challenges DWP rate hike

March 19, 2010 12:00:00 AM PDT
LADWP customers in Los Angeles could see their rates go up. A controversial carbon reduction surcharge has been approved by Department of Water and Power commissioners.It was proposed by L.A. Mayor Antonio Villaraigosa to help the city shift toward "green" energy. But other city leaders say it's hardly the right time.

There appears to be a revolt brewing in the Los Angeles City Council over the LADWP electric rate increases. Rates could go up as high as 28 percent.

Homa Mahmoudi is a homeowner in Brentwood and is hoping to retire soon.

"Every little bit affects us and the budget we have for our lives and also the retirement funds that we have," said Mahmoudi.

The Council received a motion Friday that would allow it to revisit the decision to raise rates, and vote to rescind them.

The rates could go as high as 21 percent for businesses.

"It's a big jump and I think it's difficult for some people to bear and some businesses to bear too," said L.A. City Councilwoman Jan Perry.

"This is more anti-business than adding an additional tax to the businesses and the residential customers," said Councilman Dennis Zine.

Mayor Antonio Villaraigosa favors the rate increases. An outside consultant recommended a 2.7-percent rate increase.

"It's being levied because we are under-collecting for the power that we use," said Villaraigosa.

The city could face fines in the future for using dirty energy from coal-fired plants. And the DWP's credit rating is jeopardized.

"What we don't want to do is undermine the credit rating of the Department of Water and Power. What we don't want to do is not collect enough ratepayer money to pay for the energy that we use in this town," said Villaraigosa.

The nation's largest municipal utility also helps the city balance its budget with a transfer of its profits.

L.A. City Councilman Bill Rosendahl still wants to hear the utility justify its rate hikes.

"It's very tough for people to make all their payments on all the issues they're dealing with, and to be confronted with another rate increase on their DWP bill is a big deal," said Rosendahl.

The City Council revolt comes to a head next week when they'll vote on whether they will rescind or veto the DWP rate hikes.