LA WATCHDOG - Our Department of Water and Power is proposing to increase our power rates by almost 12% over the next two years.
In May, the DWP presented Dr. Frederick Pickel, the Ratepayers Advocate, with its 105 page Power System Rate Proposal, along with 14 Appendices. Since then, Pickel has been working with PA Consulting, a highly respected firm very familiar with DWP, in analyzing the proposed rate increase. He expects to release his findings during the week of August 20, shortly after the DWP Board of Commissioners is scheduled to approve the rate increase on August 15.
And on September 19, the City Council’s Energy and Environment Committee is scheduled to begin its review of the proposed rate increase.
Underlying this double digit increase is the need to fund the Power System’s Power Reliability Program (read infrastructure and power poles), salary and benefit increases, and most significantly, its power supply replacement program and other mandated environmental initiatives.
Over the next two years, the Power System is projecting capital expenditures of over $3.1 billion, 75% of which will be funded by newly issued debt. This, in turn, will increase the Power Systems debt ratio to 62%, significantly higher than the 50% ratio several years ago, seriously endangering its AA- (Double A minus) credit rating.
But these capital expenditures are chump change compared to the capital expenditures that are going to be required to meet the state’s unfunded environmental mandate that 33% of DWP’s power be generated from renewable resources by 2020.
And, as a result, it would not be surprising if our power rates reached 25 to 30 cents a kilowatt hour by 2020, an increase of 100% to 125% from our current rate of 12.7 cents.
In the upcoming review and analysis of this rate hike, we need a better understanding of the many components driving the rate increase and whether there is a disproportionate impact on homeowners.
But we also must demand TRANSPARENCY.
We have the right to know what rates will be in 2020.
We have a right to know whether DWP is an efficient organization. This will require ‘benchmarking,” a recommendation in the last two charter mandated Industrial, Economic, and Administrative Surveys, a move vigorously opposed by Union Bo$$ d’Arcy.
We have a right to know about “DWP’s Gold Plated Jobs” (a term coined by the editorial board of The Los Angeles Times) as well as the IBEW Labor Premium that costs Ratepayers an estimated $250 million a year. And that does include the impact of overly restrictive work rules.
We have the right to know why DWP’s benefits are so much more expensive than those of City workers, a request made last August by Council Members Bernard Parks and Jan Perry, the elected official most responsible for our Ratepayers Advocate. (Thank you!)
We have the right to know about City Hall’s pet projects, whether it is the Los Angeles River, Griffith Park, the Headworks Reservoir and River Supply Conduit, or burdening DWP with undue costs or responsibilities.
We have the right know about the dumping of 1,600 surplus City employees on DWP, along with $200 million in unfunded pension liabilities that were absorbed by DWP’s already underfunded pension plan.
We also have the right to know the impact of AB 32, California’s Global Warming Solutions Act, on more than just our power and water bills.
This is our Department of Water and Power and we have the right to know what is going on.
And to date, the management of our Department of Water and Power has done a very good job of lifting the veil of secrecy and addressing Ratepayers in a straight forward manner.
And now that there is an upcoming election, we have leverage to demand that the Mayor, the Controller, and the City Council endorse and implement absolute transparency.
Note: On Saturday, August 4, 2012, the Neighborhood Council DWP Memorandum of Understanding Oversight Committee will be meeting at 8:45 AM at the Hollywood Constituent Center. Our special guest is Dr. Frederick Pickel, the Ratepayers Advocate. All are welcome.
(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at: [email protected]) –cw
CityWatch
Vol 10 Issue 62
Pub: Aug 3, 2012