DWP board approves Villaraigosa's renewable energy rate increase
Los Angeles Mayor Antonio Villaraigosa’s appointees at the Department of Water and Power took the first step Thursday toward imposing electric rate increases of up to 28%, despite complaints from neighborhood activists and business groups.
On a 4-0 vote, the board agreed to increase the cost of electricity by 0.8 cents per kilowatt hour, the first of four increases planned over the next year to help the nation’s largest municipal utility cover its financial commitments and continue Villaraigosa’s plan for securing more renewable power.
DWP commission President Lee Kanon Alpert said he feared that inaction would be greeted unfavorably by leaders of Wall Street agencies, who could respond to a ‘no’ vote by reducing the utility’s bond rating. Such a move would add $70 million to $80 million each year to the agency’s borrowing costs, DWP officials said.
“What’s very striking to me is the risk and potential of harm that will come to this department and our ratepayers if we do not approve this,” he said.
The City Council must now decide whether it wants to conduct its own review of the proposal, which would otherwise take effect. Council members Eric Garcetti, Jan Perry and Dennis Zine said they want to do so.
On a 4-0 vote, the board agreed to increase the cost of electricity by 0.8 cents per kilowatt hour, the first of four increases planned over the next year to help the nation’s largest municipal utility cover its financial commitments and continue Villaraigosa’s plan for securing more renewable power.
DWP commission President Lee Kanon Alpert said he feared that inaction would be greeted unfavorably by leaders of Wall Street agencies, who could respond to a ‘no’ vote by reducing the utility’s bond rating. Such a move would add $70 million to $80 million each year to the agency’s borrowing costs, DWP officials said.
“What’s very striking to me is the risk and potential of harm that will come to this department and our ratepayers if we do not approve this,” he said.
The City Council must now decide whether it wants to conduct its own review of the proposal, which would otherwise take effect. Council members Eric Garcetti, Jan Perry and Dennis Zine said they want to do so.
Backers of the plan called it a major step away from coal power, which makes up 44% of the DWP’s energy portfolio. Coal has been less expensive but is a huge polluter. Opponents said the increases would hurt businesses and families already hard hit by the recession.
“You will have businesses that will not be able to afford it, and you will have employees that will lose their jobs,” Larry Rauch, president of Los Angeles Cold Storage, told the board.
The money generated by the increase would allow Villaraigosa to carry out a longtime political promise: securing 20% of the DWP’s power from renewable sources, such as solar and wind energy, by Dec. 31. The increased revenue also is needed to “maintain the financial integrity” of the DWP and pay for the rising cost of coal, according to a report on the plan submitted to the commission.
DWP Acting General Manager S. David Freeman said that leaving the status quo in place would have made it harder for the utility to continue to help balance the city’s budget by contributing a figure expected to exceed $220 million this year.
Once all of the increases are in place next year, residential customers would see increases in their bills ranging from 8.8% to 28.4%, depending on where they live and how much power they consume, according to data provided by the mayor’s office. Businesses are expected to receive increases of 21% to 22% over the same time period.
Environmental groups, including the Coalition for Clean Air and the Sierra Club, warned that the state would impose financial penalties on the DWP if it doesn’t wean itself off of coal. They also argued that a refusal to act would exacerbate global warming, leading to more drought and local wildfires.
“This investment in renewables is very, very important to the health of our Earth,” said Kathy Seal, a Sierra Club volunteer who co-owns property in West Los Angeles.
A representative of the Los Angeles Unified School District had a less charitable view, warning that the increases would force his agency to pay an extra $8.7 million annually. “This increase could not come at a worse time,” said Randy Britt, the district’s director of sustainability initiatives.
-- David Zahniser at Los Angeles City Hall
“You will have businesses that will not be able to afford it, and you will have employees that will lose their jobs,” Larry Rauch, president of Los Angeles Cold Storage, told the board.
The money generated by the increase would allow Villaraigosa to carry out a longtime political promise: securing 20% of the DWP’s power from renewable sources, such as solar and wind energy, by Dec. 31. The increased revenue also is needed to “maintain the financial integrity” of the DWP and pay for the rising cost of coal, according to a report on the plan submitted to the commission.
DWP Acting General Manager S. David Freeman said that leaving the status quo in place would have made it harder for the utility to continue to help balance the city’s budget by contributing a figure expected to exceed $220 million this year.
Once all of the increases are in place next year, residential customers would see increases in their bills ranging from 8.8% to 28.4%, depending on where they live and how much power they consume, according to data provided by the mayor’s office. Businesses are expected to receive increases of 21% to 22% over the same time period.
Environmental groups, including the Coalition for Clean Air and the Sierra Club, warned that the state would impose financial penalties on the DWP if it doesn’t wean itself off of coal. They also argued that a refusal to act would exacerbate global warming, leading to more drought and local wildfires.
“This investment in renewables is very, very important to the health of our Earth,” said Kathy Seal, a Sierra Club volunteer who co-owns property in West Los Angeles.
A representative of the Los Angeles Unified School District had a less charitable view, warning that the increases would force his agency to pay an extra $8.7 million annually. “This increase could not come at a worse time,” said Randy Britt, the district’s director of sustainability initiatives.
-- David Zahniser at Los Angeles City Hall
EDITOR'S PICKS:
So, if I've been paying for DWP Green Energy for the past several years, is that surcharge going to disappear? Or will they layer this rate increase on top of that?
Posted by: Jack | March 18, 2010 at 05:34 PM
So in one paragraph they say Coal has been less expensive, and in the following paragraph the report says the increase is to pay for the rising cost of coal. Where's the money been going that they have been saving on the cheaper coal?
I'm so glad I'm moving out of L.A. next month. Of course the panel that is appointed by the mayor is going to vote on a change the mayor proposes, why wouldn't they, after all they're all friends.
Also, if you use less power, expect to see the larger of the proposed increases. That's just the way they work.
Posted by: Hamster-Style | March 18, 2010 at 05:54 PM
Time to install a battery charger and a bank of batteries. You can charge for an hour then use with a power inverter to use the dc into ac power. This worked very well for me for three years off the grid. One hour charge for three hours of usage. laptop, satelite television, 13 inch tv, 100 watt stereo speakers, cell phone charger, printer, and digital video cammera. Wanna find out more seek out my name.
Posted by: joemamabush | March 18, 2010 at 07:13 PM
I applaud LADWP for continuing to support renewables and moving ahead toward the long-term vision of a coal-free L.A. We all need to take advantage of LADWP energy audits, rebates, and advisory tips to learn to conserve, conserve, conserve.
Posted by: Vicki Kirschenbaum | March 18, 2010 at 07:53 PM
"Environmental groups, including the Coalition for Clean Air and the Sierra Club....also argued that a refusal to act would exacerbate global warming, leading to more drought and local wildfires." From the Department of No Comment: Southern California always has been a drought-prone environment, with fires required to regenerate the chaparral biome.
Posted by: David | March 18, 2010 at 08:31 PM
What arrogance? First they give their employees big raises, paying them much more than their counterparts in other City departments. Then they come up with the goal of 20 percent renewable energy probably because some businesses will profit out of it. Now you have to pay for it to make their management and the mayor look good. How do you like it paying more for electricity than anybody else in the country?
Posted by: Bill Green | March 18, 2010 at 10:23 PM
The actions of the DWP Commission were taken at an illegal meeting and are voidable with the filing of a Brown Act lawsuit against the City.
Posted by: Morris | March 19, 2010 at 07:32 AM
This plan was known as Proposition B last year and was rejected by the voters. All they are doing now is ignoring the public and going ahead with it anyways. I do believe there may be some sort of legal issue here, I could be wrong since I am not a lawyer, but common sense tells me this isn't right.
Posted by: rs | March 19, 2010 at 02:32 PM