DWP Approves Proposed Rate Hikes
The Los Angeles Department of Water and Power approved a temporary electricity rate hike proposed by the Los Angeles City Council.The three-month increase amounts to 0.6 of a cent per kilowatt hour, or a 4.5 percent increase. The rate hike will go into effect for the quarter starting July 1 and be reviewed in October.The April 15 decision came two weeks after a drawn-out dispute between the City Council, Los Angeles Mayor Antonio Villaraigosa and the DWP.
The renewed efforts to increase the cost of electricity come after the mayor announced and then retracted a plan to shutter some city departments for two days a week. The city, he said, was quickly running out of money, due in part to the first fracas between the City Council and the DWP. When the City Council and the DWP were unable to agree on a rate hike, the DWP announced it would be unable to give the city the $73 million it had promised to contribute to Los Angeles’ “general fund.”
The mayor kicked things off last month with a proposal to increase electricity rates to offset alternative-energy efforts. Villaraigosa’s plan, announced on March 15, caused an uproar among Los Angeles–area business owners, who would have seen their DWP bills grow by as much as 28 percent in the coming year and up to 37 percent by 2014.
The City Council then recommended a 4.5 percent increase for residents and a 5 percent to 6 percent increase for businesses in a compromise to Villaraigosa’s proposal.
The Los Angeles Department of Water and Power rejected the City Council’s compromise, calling for a 5.7 percent increase in rates. But on March 31, the City Council vetoed the DWP’s proposal, and many had thought the issue had been tabled until next quarter.As it was originally proposed, Villaraigosa’s plan would raise more than $600 million per year toward investment in renewable-power supplies and transmission, thanks to a “Carbon Reduction Surcharge.” The goal of the surcharge was to fund the city’s move away from coal-fueled power, reducing its dependence on coal by 20 percent in 2010. The mayor also argued that failure to approve his rate increase and the DWP’s withholding of the promised $73 million could push the city further into the red.—Alison A. Nieder and Erin Barajas
