I am extremely disappointed in your vote to raise DWP rates. Why did the City Council do this and what will these rates actually do?
Phillip Anderson, Studio City
So everyone else knows, the City Council recently approved an increase in the DWP’s power rates. After extensive scrutiny for nearly a year, I supported the increase, and I want to let you know why.
When the DWP last came before the Council with a rate proposal in 2010, I helped lead the effort to defeat it. When the Council developed an alternative proposal to increase the rates, I fought against that one as well, largely because the public had been left out of the discussion. As a result of that experience, several of us on the Council insisted on the creation of an independent ratepayer advocate, which was approved by the voters in 2011. Those of us who had opposed the rate increase made clear that no future proposed increase would be considered until and unless the independent ratepayer advocate analyzed the proposal and the public was fully informed about the justification for the proposal.
The current proposal has met those tests. First, the Office of Public Accountability is now up and running and its Ratepayer Advocate thoroughly vetted this rate hike proposal, in stark contrast with previous practices.
The Ratepayer Advocate's review, analysis and conclusions have given the public, and me, an increased level of confidence that these new rates are justified and appropriate given the current infrastructure investment needs of the DWP.
Second, the Department's own actions have shown a significant improvement in transparency and public engagement. The DWP's new General Manager, Ron Nichols, has held 80 public meetings across the city with homeowners, business owners, neighborhood councils and more to engage in an open and honest public discourse about the Department's future and how the proposed rate structure impacts system reliability.
Third, the Department faces a long list of unfunded mandates imposed by state and federal law that will require wholesale changes in the way power is generated. These mandates, combined with the advanced age of much of the DWP's system, will require the Department to replace most of the infrastructure it developed over the last century in the next decade. The Department simply could not maintain its solvency while undertaking such massive investments without modifying the rate structure.
With the new rates, on the other hand, the Department will be able to make important upgrades to ensure system reliability, avoid blackouts and brownouts, improve environmental conditions, and reduce demand through efficiency and conservation.
When implemented, DWP's new electrical rates will still be lower than the rates of municipal utilities in surrounding cities like Pasadena, Burbank, Glendale, and they will be much lower than rates charged by investor-owned utilities such as Southern California Edison and San Diego Gas and Electric. On average, homeowners will see their bills increase by no more than about $1.57 per month in the first year, and $2.08 in the second year.
I'm very concerned about any increase in any costs to residents and small businesses in Los Angeles, who are already struggling in this difficult economy. If this increase could have been avoided or postponed, I would have urged the Council to do so, just as I did in 2010. In this case, though, the critical infrastructure needs of the Department, the important benefits to customers, and the relatively modest amount of the increase, made clear to me and to the Ratepayer Advocate that the only responsible decision was to approve the proposal.
I look forward to answering any more questions you may have.