City Council Says Not So Fast to Rate Hike

Mayor's office warns the city could go bankrupt if the hike is not approved

Wednesday, Mar 24, 2010  |  Updated 8:41 AM PDT
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The Los Angeles City Council voted unanimously Tuesday to assert jurisdiction over a proposed rate hike approved by the Department of Water and Power board and slated to kick in April 1.

The move gives the council authority to review the plan and either affirm it or reject it and send it back to the DWP with recommendations.

"We need to take incremental steps instead of -- in the midst of a recession -- putting a gun to people's heads and saying `pass this increase,"' City Council President Eric Garcetti said.

The council's action came amid a warning from Mayor Antonio Villaraigosa's office, which contends that rejection of the proposed increase "would be the most immediate and direct route to bankruptcy the city could pursue."

In a briefing paper distributed to council members on Monday night, the mayor's office asserted the DWP needed the rate hike or it would not be able to transfer $73 million into the city's depleted general fund.

"If the city does not receive the additional $73 million transfer, it will run out of cash before the end of the fiscal year," the briefing paper reads.

Councilman Dennis Zine described the warning as an attempt "to hold us hostage."

"This is a scare tactic, and I hope the people of Los Angeles don't fall for it," he said.

The utility has proposed increasing that surcharge by 2.7 cents per kWh over a year, starting April 1, to generate $648 million in annual revenue.

The plan drew protests from Carol Schatz, president and chief executive officer of the Central City Association and the Downtown Center Business Improvement District.

"The increase is huge," she said. "On a large high-rise in downtown, we're talking about $1 million more a year in power rates, and that can't be borne entirely by the landlord. It's going to be passed onto the tenants. The tenants can't necessarily pass it along to their customers.

Villaraigosa has set a goal of having renewable energy make up 20 percent of the DWP portfolio by the end of this year, and 40 percent by 2020. He also wants the city to be coal-free by 2020.
 

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