Does DWP Deserve a Rate Increase?
- 27 Apr 2012
- Written by Jack Humphreville
LA WATCHDOG - Our Department of Water and Power is proposing to increase power rates over the next two years by 11%. And DWP is also asking for another 5% increase in our water rates, which combined with the Water Quality increase in February, will approximate a 15% bump in water rates.
These rate increases will be used in part to fund DWP’s reliability programs that are necessary to keep the lights on and the water flowing.
Needless to say, we do not want DWP’s water and power infrastructure to be in the condition of our streets, the second worst in the nation, courtesy of The Transportation Mayor and the City Council who have diverted money from our infrastructure to fund the $1.3 billion escalation in personnel costs during the profligate Villaraigosa era.
The rate increases will also fund numerous, very expensive environmental mandates, including, but certainly not limited to, the Renewable Portfolio Standards (33% renewable energy by 2020), Once Thru Cooling, AB 32 and the resulting Cap & Trade provisions involving carbon emissions, the Safe Water Drinking Act, and dust mitigation in the Owens Valley.
But should the Ratepayers have to foot the bill for the political follies and pet projects of the Mayor and City Council?
Just last week, Councilmember Ed Reyes stood before the DWP Board of Commissioners and essentially threatened to delay any rate increases because he did not approve of the considered decision of the DWP’s management to support the $25 million floating cover alternative for the Elysian Reservoir as opposed to his pet project, a $110 million concrete covered buried reservoir.
Ratepayers should be thankful that DWP resisted considerable political pressure and made the proper decision to support the floating cover that saved us $85 million.
Nevertheless, the politically appointed Board of Commissioners, after scheming in the back room to overcome this potentially illegal expenditure, approved an additional set aside of $12.5 million for city parks. This payoff was in addition to $3.2 million of DWP recommended enhancements to Elysian Park.
Ratepayers throughout the City are also going to be socked for about $25 million a year to finance the excesses associated with the troubled $319 million Headworks Reservoir Project, an Eric Garcetti / Tom LaBonge pet project designed to preserve the million dollar views of the politically connected Silver Lake residents.
The Los Angeles River Ecosystem is yet another pet project where DWP will be bullied into spending many more millions of Ratepayer money in addition to the millions spent to date on the LA River, all in the name of “economic development” according to former General Manager Ron Deaton.
As for the Power System, a rate increase may not be necessary since the $250 million associated with the beloved 8% Transfer Fee to the City’s General Fund may be illegal as a result of Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) that was passed by California voters in November of 2010.
There are numerous questions that need to be answered before this $500 million increase in our water and power rates is approved.
Why is the proposed increase of 11% in our electricity rates so much lower than the 25% rate increase that was requested in June?
Why is the proposed increase of 15% (including the February Water Quality hike) in our water rates so much lower than the 22% requested in June?
How efficient are DWP’s operations?
Is DWP overstaffed as a result of absorbing 1,600 City employees that cost in excess of $200 million a year?
When will DWP institute benchmarking as recommended in the last two charter mandated Industrial, Economic, and Administrative Surveys so the Department can compare its operations to other regional utilities?
Why should Ratepayers be socked with an additional $800 million for the early phase out of the Arizona based, coal fired Navajo Generating Station, especially since the facility will continue operating for many more years?
How is DWP going to address the IBEW Labor Premium and its Cadillac medical plans that cost Ratepayers at least $250 million a year? And that does not even include the costs associated with overly restrictive work rules?
What are rates going to be in 2021 when 33% of DWP’s energy will be from high cost sources of renewable energy?
Does DWP need the money? Yes. But DWP does not deserve to be reimbursed for pet projects of City Hall and their well financed lobbyists. That is the City’s responsibility.
Our Department of Water and Power and the Ratepayers’ wallets are not City Hall’s candy store.
Tags: Jack Humphreville, LA Watchdog, LADWP, DWP, Ratepayers, Ratepayer Advocate
Vol 10 Issue 34
Pub: Apr 27, 2012