LA's Ratepayer Advocate Supports 11.2% 2-Year Power Rate Increase

UPDATE 9-8-12 DWP Committee Meeting

Fred Pickel, the Ratepayers Advocate, discussed why he supports the DWP’s proposed two year, 11.4% increase in our power rates. Driving the rate increase are environmental mandates, the need for investment in the infrastructure to improve reliability, and investments in energy efficiency and conservation.

Ratepayers Advocate: Review of LADWP Power Rate Proposal
http://www.dwpreform.lacity.org/documents/OPAproposal20120822.pdf

Fred also referred to the PA Consulting report.  While the report is 143 pages, you can get an a quick understanding by reviewing the Executive Summary as well as Appendix E: Table of Recommendations (16 recommendations: 4 on Rate Restructuring, 9 on Cost Savings Studies, and 3 on Processes Reviews).

Power System Financial Review and Rate Restructuring Analysis
http://www.dwpreform.lacity.org/documents/CostReductionReport20120823.pdf

It is anticipated that the DWP Board of Commissioners will meet on September 12 at 10:30 AM.

It is expected that the Energy and Environment Committee will begin its review the following week and that the new rates will be effective in November or December.

There is concern that once again homeowners, especially those in The Valley, will be subject disproportionately higher tiered rates.

We discussed the need for increased transparency related to the implementation of the 16 recommendations, the relationship with the IBEW, pet projects, the dumping of 1,480 City employees and their unfunded pensions on the DWP, the efficiency and timing of the environmental mandates, and the legality of the $250 million transfer from the Power System to the City’s General Fund as a result of the Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) that was passed by the voters in November of 2010.

The DWP Committee passed the following motion with a unanimous vote:

All Department of Water and Power labor negotiations should be open and transparent, they should be conducted by DWP management, and the Ratepayers Advocate should have access to all information on a timely basis.

The proposed increase in our water rates requires additional review and analysis.


Dear Fellow Stakeholders: DATE: August 22, 2012 4:24:11 PM PDT Neighborhood News and Information Alert Statement by Los Angeles Department of Water and Power General Manager Ronald O. Nichols Following Today’s Report by the Ratepayer Advocate, Dr. Fred H. Pickel, On LADWP’s Requested Two Year Power Rate Increase "We are pleased that the Ratepayer Advocate has presented his review of LADWP’s two-year power rate request. To make this review possible, the LADWP provided more information than has ever been released in the history of the Department in connection with a rate increase. It has been an exhaustive, but important effort to honor the Charter Amendment approved by voters nearly 18 months ago, which created the Office of Public Accountability and instituted a process for independent review of LADWP rate requests. The summary report reaffirms that the cost increases our Power System is facing to comply with legal mandates and invest in basic reliability are unavoidable and absolutely necessary. The Ratepayer Advocate recognizes that LADWP has taken significant steps to cut costs and it affirms the approximate 10% system average power rate increase proposed by LADWP. We look forward to receiving the Ratepayer Advocate’s report on requested water rates and moving forward with consideration by the Board of Water and Power Commissioners and City Council in September. There is no doubt that there remain continued cost pressures beyond the two-year period covered by the rate proposal. The Ratepayer Advocate has addressed this issue in his report. During the next year we will be looking to refine our estimates for those mandated and critical investments. We will also remain completely committed to reducing our costs as much as possible to keep future rate increases as low as possible for our customers, while maintaining reliable service, and we will work with the City to do so." To learn more about LADWP’s proposed two-year rate proposal and use a customer friendly rates calculator, please visit www.ladwp.com/rates.