LA City Council Approves Increase in DWP Electricity Rates

Environmentalism trumped DWP pay scales on Tuesday when it came time for the Los Angeles City Council to approve an increase in electricity rates for the city's homes and businesses.

After two hours of comment, questioning and discussion, the council voted 10-4 to approve the requested 11.1 percent increase. It will be implemented in two stages, and fully phased in by the July 1, 2013.

The average cost of a kilowatt-hour will increase from the current 12.69 cents to 14.10 cents. The typical household that now pays $65 per month for electricity will pay an extra dime a day, according to the Department of Water and Power.

DWP needs the additional revenue to increase use of renewable energy, improve efficiency and conservation, and eliminate the use of ocean-cooling water at coastal power plants, said Ronald
Nichols, DWP general manager. Funds will also be earmarked for upgrading "aging" power distribution equipment.

Eventually, the announced goal is expected to reduce reliance on bringing in power from out-of-state coal-fired plants.

In recent years, critics have accused the DWP of deferring maintenance and modernization of its system, which suffered several temporary albeit high-profile outages of both power and
water during the past decade.

At the same time, wages paid DWP employees have risen. And in at the top level in 13
classifications, wages exceed those paid to their counterparts in other utilities by as much as 40 percent, according to a report prepared by PA Consulting.

During the council meeting, that report was cited and one councilmember, Jan Perry, read from it.

The city's desginated ratepayer advocate, Fred Pickel, urged the DWP to seek reductions to its labor costs through such means as outsourcing, but at the same time endorsed the need for the rate increase.

"The rate increase is driven largely by mandates in the capital program, not by wages," Pickel said.

The IBEW union that represents the largest portion of DWP's workforce disputes the notion that workers are overpaid.

DWP labor costs account for a quarter of its $3.1 billion budget, Nichols told the council.
After the vote, Nichols told reporters he believes DWP has "turned a corner."

Los Angeles Mayor Antonio Villaraigosa applauded the vote.

"The DWP rate increase approved by City Council minimizes the impact on ratepayers while improving reliability, funding cost-saving conservation measures and strengthening LA's position as an environmental leader," the mayor said in a statement issued by his office Monday.

Among those who voted against the rate increase, Councilman Mitchell Englander said he believes the DWP has made progress in becoming more open and transparent. But DWP needs to take steps to bring wages more in line with those paid by other utilities and even by other city departments for comparable jobs, Englander said.

Despite the increase, DWP electricity rates will remain less expensive than those charged by most other California utilities, said Councilman Paul Krekorian.

However, "the historical cost advantages appear to be eroding," with costs "increasing more
rapidly than those of its peers," Perry read from the PA Consulting report.

The rate increase requires a second council vote, expected next week, and that will clear the way for the DWP to proceed with the initial 4.9 percent rate increase.

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