LA WATCHDOG--Our Department of Water and Power is proposing to increase our utility rates by an unprecedented $1.4 billion over the next five years.
At the same time, City Hall will extract from the long suffering Ratepayers an additional $175 million in taxes, increasing our total cash contribution to City’s treasury to an estimated $815 million a year. This will cement the DWP Ratepayers role as the largest single source of cash for City’s General Fund.
(Incidentally, this already huge burden does not include the costs associated with the IBEW Labor Premium, the union’s overly restrictive work rules, or City Hall’s numerous pet projects.)
As part of the process to bump our rates by 32% over the next five years, the Ratepayers Advocate will release its report on the proposed rate increase in early December. This detailed financial analysis of DWP’s financial condition and revenue requirements will also include a long overdue benchmarking study of the DWP’s salaries and benefits compared to other regional utilities and city workers.
After this rate request is rubber stamped by DWP’s politically appointed Board of Commissioners, the City Council and its Energy and Environment Committee will put on a dog and pony show as it goes through the motions of approving this massive rate hike, ignoring its blatant conflict of interest involving the $175 million increase in the City’s haul from the Ratepayers.
The new rates are expected to go into effect on April 1, 2016, retroactive to July 1, 2015.
But this five year, 32%, $1.4 billion rate increase must be accompanied by complete transparency into the relationship between our Department of Water and Power and the City and all of its departments, including Public Works, Recreation and Parks, and Police and Fire as well as the Port of Los Angeles and Los Angeles World Airways.
For example, the City will bill DWP $44 million this year for special services: $10 million for legal services provided by the City Attorney, $18 million for charges from Public Works, and $4 million for Central Services.
This also includes a charge from the Fire Department for hydrant inspection services that was instituted during the City’s fiscal woes. In addition to a 41% allocation for backfill costs, this year’s tab of $1.7 million includes a mind boggling 120% mark up of labor costs through the City’s Cost Allocation Plan. This incorporates charges for fringe benefits, central services, division and battalion overhead, and central services.
Of course, this leads to the question of whether all of these services are burdened by excessive overhead charges.
DWP is also the deep pocket for many of City Hall’s pet projects, including, but certainly not limited to, Griffith Park, the Zoo, the Discovery Cube Los Angeles Science Center in Lake View Terrace (formerly the Children’s Museum), the Fiber Optic Network, the La Kretz Innovation Center and the Cleantech Incubator, and the $48 million loan to Street Services to finance LED street lights.
DWP has also entered into below market leases, including some for $1 a year, with numerous City departments (Police, Fire, and Recreation and Parks) and other anointed non-profit organizations that are favorites of the current and past members of the City Council.
DWP would also need to disclose all its contributions to non-profit organizations.
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DWP must also justify the economics of its multibillion plan championed by the friends of campaign funding IBEW Union Bo$$ d’Arcy to develop Utility Built Solar facilities, especially when compared to those installed by more efficient private contractors.
We also deserve to have a better understanding of the status of large capital projects, including the troubled Headworks Reservoir complex that is replacing Silver Lake Reservoir.
At the same time, the City is preparing to stick DWP and its Ratepayers with billions of projects related to its One Water Plan that are not its responsibility. This includes the remediation of polluted aquifers, the replenishment of the ground water supplies, the processing of recycled water (also known as Toilet to Tap), the LA River, and the $8 billion Stormwater Plan.
No disclosure would be complete unless it included an analysis of the 8% Transfer Fee and the associated class action lawsuits that allege that the $273 million transfer is illegal because it violates Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) that was approved by the voters in 2010.
DWP needs a hefty rate increase to repair its water and power infrastructure, develop local supplies of water, and to meet unfunded state mandates to expand its renewable portfolio to 33% by 2020. But whether the Department deserves the full rate increase is up in the air as Ratepayers are concerned that their money is being misdirected to pet projects and sweetheart contracts with the IBEW.
One of Mayor Garcetti’s campaign pledges was to reform DWP. It is past time for our Back to Basics Mayor to step up to the plate and go to bat for the Ratepayers.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected])
-cw
CityWatch
Vol 13 Issue 91
Pub: Nov 10, 2015
