Water and Power board votes on electricity rate hike

The average single-family household could see electricity go up a total of $12 over five years under an electricity rate hike proposal going to a vote by the Board of Water and Power Commissioners today.

The electricity rate increases, which will be spread out over five years, has the backing of Mayor Eric Garcetti and was deemed "just and reasonable" by Ratepayer Advocate Fred Pickel, who was appointed to watch over
rate increases at the Department of Water and Power on behalf of customers.

If Water and Power commissioners sign off on the rate hikes, the proposal will be sent -- along with proposed water rate hikes that were approved by the board last year -- to the City Council and the mayor for consideration.

Garcetti said the increases are "critical to modernizing our aging electricity grid and bringing our power system into the 21st century."

"DWP needs to have the resources to be successful," he said. "After five years of rate increases, the typical residential customer would see a $6 to $12 increase to their monthly bill. The price of inaction would be much
higher than this."

Garcetti said the rate hike proposal includes regular monitoring to determine if the extra revenue is being used to improve the DWP's power system, and a formal review after two years.

"These reviews are critical as the utility industry is in a moment of transition and innovation," Garcetti said.

He noted the DWP is expected to replace 70 percent of its power sources over the next 15 years "to meet state mandates, fight climate change and fund the energy efficiency programs that enable customers to lower their bills even as rates rise."

Pickel, who leads the Office of Public Accountability tasked with monitoring the Department of Water and Power, issued a report last week saying the increase is "just and reasonable."

Pickel recommended that the board adopt the rate hikes, but also noted that the 21 percent average increase over the next five years -- which averages 3.86 percent annually -- is "less than what is needed" and the utility's
power system "will continue to be challenged to perform activities at planned levels."

A typical single-family household that uses 500 kilowatt-hours per month -- putting it in "zone 1" -- could see a $12 monthly bill increase after five years, according to the OPA.

Monthly bills for such households would rise from the $76-$78 range to between $80 and $82 after one year, eventually going up to about $90 per month after five years, according to the report.

The rate hikes would mean that DWP power revenue would eventually grow to $4.22 billion in fiscal year 2019-20, up from $3.45 billion in fiscal year 2014-15, according to the OPA's report.

The OPA report also raised concerns that there would be inadequate staffing "for the growing levels of planned capital project expenditures, in part due to the anticipated personnel retirements and constraints on

DWP officials said they were "pleased" with Pickel's assessment of the planned rate hikes, which were proposed to pay for the replacement of aging infrastructure needed to keep electricity service reliable.

The rate hikes -- if approved by the DWP board, the City Council and mayor -- would "allow us to continue the transformation of our power system to a clean energy future that protects the environment, while complying with
regulatory mandates," according to a statement issued by the utility.

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