May 6, 2008
RATE PLAN THAT PROMOTES ENERGY CONSERVATION
LOS ANGELES – The Los Angeles Department of Water and Power (LADWP) Board of Commissioners unanimously approved a plan to restructure electric rates that will encourage energy conservation and alternative clean energy sources such as solar photovoltaic panels.
The amended electric rate ordinance, which would become effective July 1, 2008, pending approval by the City Council and Mayor Antonio Villaraigosa, calls for a tiered pricing structure designed to encourage residential customers with high energy usage to reduce consumption during peak energy days.
The tiered rates are based on two different temperature zones, with three tiers for each zone defined by the amount of energy usage. The rate restructure is revenue neutral, so that there will be no increase or decrease in revenues collected by LADWP within each tier.
“This rate restructuring plan demonstrates LADWP’s environmental leadership by rewarding energy conservation and discouraging energy wasting,” said Nick Patsaouras, president of the Board of Commissioners. “By designing fair and equitable rates with strong economic price signals, LADWP is encouraging customers to shift to off-peak, lower cost periods, and reduce their use during peak periods when demand and cost is highest.”
The new rate structure also will encourage customers to make the most of energy efficient appliances and technology, such as compact fluorescent lights (CFLs). LADWP offers many rebate and incentive programs to assist customers in purchasing energy efficient technologies.
Other features of the plan, such as encouraging customers to go to a “time-of-use” rate schedule, are also designed to save energy and save costs. The “time-of-use” rate rewards customers by reducing costs when they shift their energy use to the off-peak period.
“This feature is a win-win for the ratepayers and the City,” said LADWP CEO and General Manager David Nahai. “Not only does it save money on customers’ electric bills, but lowering energy demand during peak load periods reduces the amount of generation required, which saves energy and benefits the environment. It also reduces the strain on the distribution system, which helps prevent power failures due to overloads.”
Another feature provides further incentives to customers who install solar systems by allowing these customers to realize a quicker pay-back on their solar system investments. Net metering customers on “time-of-use” may apply the retail rate cash value for excess energy generated to their current electric bill, and carry over excess credit to future bills.
The rate restructuring also supports the City’s Alternative Maritime Power (AMP) program to encourage participation by shipping lines.
LADWP revised the rate restructuring ordinance to address concerns raised last fall by the City Council, which required the new structure to utilize a formula that is equitable to ratepayers throughout the City. The revised proposal addresses these concerns through modified temperature zone boundaries, and adding a mandatory time-of-use requirement for large residential customers using over 3,000 kilowatt-hours per month.
To ensure the temperature zone boundary is equitable, LADWP used a UCLA Department of Atmospheric Sciences study that maps summer average daily temperatures for the microclimates of Los Angeles. In the Los Angeles region, the temperature varies as much as 20 degrees. Each temperature zone is assigned a baseline allocation based on the reasonable energy needs of the average residential customer.
“Our goal was to delineate the temperature zones as fairly as possible, while also establishing a baseline allocation for energy use in each zone that is reasonable, based on how much electricity a typical household requires for that temperature zone,” Nahai said. “We used the UCLA map to adjust the temperature zones to accommodate residents and businesses in Los Angeles that experience average temperatures in excess of 80 degrees,” he said.
The rate restructuring ordinance has been endorsed by numerous organizations in the environmental community.
For more information about the electric rate restructuring, please visit http://www.ladwp.com/.
The Los Angeles Department of Water and Power, the nation’s largest municipal utility, provides reliable, low-cost water and power services to Los Angeles residents and businesses in an environmentally responsible manner. LADWP services about 1.4 million electric customers and 680,000 water customers in Los Angeles.
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