FOR IMMEDIATE RELEASE
October 2, 2007
Darlene Battle, (213) 367-1368
Carol Tucker, (213) 367-1815
LADWP COMMISSIONERS APPROVE NEW
WATER & ELECTRIC RATE ACTIONS
FIRST BASE RATE INCREASE IN 15 YEARS PROTECTS
CUSTOMERS, PROMOTES RELIABILITY AND ADVANCES
LOS ANGELES – Following four months of intensive scrutiny and public workshops, the LADWP Board of Water and Power Commissioners approved a series of water and electric revenue adjustments, and an electric rate restructuring that provides historic investments in aging water and electrical infrastructure to enhance reliability, while protecting customers from volatile rate swings and adding protection for low-income and lifeline customers.
The new revenue enhancements are designed to promote energy efficiency, demand-side management (DSM), and further offset solar installations, and to improve water quality. The revenue actions will require review and approval by the Council Committee on Energy and the Environment, the full City Council, and are subject to approval by the Mayor.
The electric rate restructuring provides protections for customers through caps on a new cost adjustment factor to support power reliability, as well as protects low-income and lifeline customers by exempting them from the reliability cost adjustment factor.
“The electric rate actions we took today reflect the LADWP Board’s commitment to providing predictable and affordable rates, strengthening the City’s water and power system infrastructure and reducing the level of greenhouse gases and other pollutants through increased investments in renewable energy projects, energy efficiency, DSM, Port electrification and other measures,” Board President H. David Nahai said.
The electric rate restructuring enables LADWP to recover costs based on customers’ use of electricity, and to encourage energy conservation and alternative clean energy sources such as solar photovoltaic panels. The proposed rate structuring will establish price signals, such as tiered, seasonal, and time-of-use pricing. As designed, the new tiered rate structure will be revenue neutral, so that there will be no additional increase or decrease in revenues collected by LADWP within each customer class.
“We strongly support LADWP’s efforts to restructure their electric rates to send signals to customers that conservation is important,” said Rhonda Mills of the Center for Energy Efficiency and Renewable Technologies. Additionally, the newly structured electric rate will provide further incentives to customers who choose to install solar systems. The new tiered rate structure will allow these customers to realize a quicker pay-back on their solar system investments.
Citing the need to upgrade critical infrastructure that is between 40 and 70 years old, the Department is planning an aggressive, multi-year Power Reliability Program (PRP) over the next several years to replace transformers, poles, underground power lines, and improve customer service. The PRP will be supported through the new power reliability adjustment factor as well as the base rate increase – the first in a series of base rate increases since 1992.
The average residential customer using 500 kilowatt-hours (kWh) per month will see an increase in their bill of $1.75 per month effective Jan. 1, 2008 under the proposal and additional increases of approximately $1.75 per month effective July 1, 2008 and July 1, 2009. Altogether, the base power rates will increase 9 percent, about $5.25 per month, as of fiscal year 2009-10.
While LADWP’s power system reliability remains exceptionally strong when compared with other major California utilities as ranked by national benchmarks for the frequency and duration of outages, recent independent studies have recommended a major power reliability program to ensure the robustness of the system for the next 50 years. “The old infrastructure needs to be replaced and upgraded for our customers to continue to experience superior reliability,” said Robert Rozanski, LADWP acting general manager.
On the water side, the Board approved a proposal to increase water rates by about $1 per month beginning July 1, 2008 and July 1, 2009. For commercial, industrial and governmental customers, rates would increase about $1.30 per month or higher depending on the size of their meter. The proposed rates would support further investment in upgrading or replacing water system infrastructure. The increase revenue also will support water quality improvements to meet state and federal requirements that pertain to storing water in open-air reservoirs and other new mandates.
The revenue adjustments were presented to the Board on June 5 by General Manager Ronald F. Deaton, following the Board’s approval of the 2007-08 fiscal year budget. The presentation kicked off a 120-day public review and comment period under the Department’s memorandum of understanding with neighborhood councils.
Both water and power rate adjustments also were subject to an independent review by the Huron Consulting Group (Huron acquired the Barrington Wellesley Group), administered by the City’s Chief Administrative Office and Chief Legislative Analyst’s Office.
After this thorough review, Huron concurred with the Department’s proposed rate increases for both water and power. The report found the rate increases are necessary to meet operating costs and improve reliability.
In terms of public outreach, the Department conducted 25 public meetings and presentations throughout Los Angeles, from the San Fernando Valley to San Pedro with neighborhood councils, residential and commercial ratepayers, and other stakeholders.
“We conducted an extensive and transparent public outreach process to ensure that questions and issues were communicated and understood,” Rozanski said. In addition to the workshops, all power and water revenue increase information has been continually posted on the Department’s website, and neighborhood council representatives have been provided regular electronic notifications that included all of the budget and rate action presentations, fact sheets, question-and-answer documents and other information.
In comparison with other electric utilities, LADWP electric rates will remain extremely low-in some cases more than 50 percent less than the average monthly rates of the State’s investor-owned utilities such as PG&E, SCE, and SDG&E, Rozanski said. For instance, after the first 3 percent increase in January 2008, LADWP customers using 500 kWh would pay 11.39 cents per kWh, while customers of the State’s three major investor-owned utilities average monthly bills of 14.12 cents per kWh. Customers using 2,000 kWh will be paying 11.54 cents per kWh, while the rates of the three major investor-owned utilities average 23.84 cents per kWh. LADWP also ranks second lowest when compared to five other municipally owned utilities (Glendale, Burbank, Sacramento and Anaheim), which average 13.39 cents per kWh.
LADWP’s water rates also will remain very competitive with other city water utilities in California. The average monthly bill will increase by 90 cents on July 1 2008 and an additional $1 on July 1, 2009. LADWP rates will remain lower than those paid by residents of San Diego, Oakland, Long Beach, San Francisco, and Glendale, officials said.
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. For more information, please visit www.ladwp.com.