Mon, Jan

DWP Ratepayers Get Screwed … Thanks to the Mayor and the City Council

LA WATCHDOG--On Wednesday, the City Council approved, behind closed doors, a Settlement Agreement involving a class action lawsuit against the City of Los Angeles and the Department of Water and Power that alleged that the City had illegally collected over $1.8 billion in Transfer Fees from DWP and its Ratepayers subsequent to the approval of Proposition 26 (The Supermajority Vote to Pass New Fees and Taxes) in November of 2010.  

The plaintiffs also requested that the Transfer Fee be eliminated since it was not approved by the voters. 

But once again, we are getting the shaft. 

Under the terms of the settlement, DWP will place $52 million into a Settlement Fund.  But at the end of the day, only $40 million will be available to the Ratepayers as the ambulance chasing lawyers who “represented the best interests” of the Ratepayers will be paid at least $10 million from the Settlement Fund. 

The Net Settlement Fund of $40 million represents a meager 2.2% of the $1.8 billion that Ratepayers forked over to our profligate City to fund ever increasing salaries and pension contributions.   

For the average household that uses 500 kilowatt hours a month, the total refund is whopping $10.  This compares to $460 that the average Ratepayer forked over to DWP to finance the Transfer Fee over the past seven years. 


The Settlement Agreement does not eliminate the Transfer Fee.  Next year, the City will hit up the Ratepayers for $242.5 million, an amount equal to $62.50 for the average Ratepayer, over six times the refund credit of $10.  

Our Elected Elite will claim that Ratepayers will save hundreds of millions of dollars as the ongoing Transfer Fee will be calculated by eliminating the 2016 recent rate increase from the previous calculation.  But that is complete malarkey as we will still be on the hook for almost $250 million a year for this illegal tax that has not been approved by the voters pursuant to Proposition 26. 

The City claimed that the statute of limitations applied to past Transfers.  But the class action lawyers were not willing to fight for us because it would have required considerably more time and effort on their part and would have eaten into their fat profits.  

The City should be required to repay the $1.8 billion of past Transfers because the City Council and the Mayor knew that annual authorization of the Transfer Fee violated Proposition 26.  And in this case, the statute of limitations does not apply to fraud. 

Of course, the deck was stacked against the Ratepayers from the beginning.  The ambulance chasing lawyers are in it for a quick buck and are not working in the best interests of the Ratepayers.  And the arbitrator is also looking to protect his reputation and livelihood by working out a deal prior to a trial that satisfies the ambulance chasing lawyers and our Elected Elite who know they have violated Proposition 26 and ripped off the Ratepayers. 

According to several insiders, the broad outlines of a deal were worked out last year.  But the City opted to delay the Settlement Agreement because it did not want the ill will of this unfavorable deal to interfere with its efforts to pass new taxes in November and March: the increases in the sales tax to fund Metro and the County’s homeless initiatives and Measure HHH, the City’s $1.2 billion bond to fund permanent supportive housing for the homeless.   

This Settlement Agreement is not “fair, reasonable, adequate, or in the best interests of the Ratepayers.”  And as such, we should protest the Settlement Agreement and/or opt out of the Settlement Agreement and preserve our rights to sue the City pursuant to Proposition 26. 

More later when the terms of the Settlement Agreement see the light of day.

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council.  He is a Neighborhood Council Budget Advocate.  He can be reached at:  [email protected].)