Will Our Electricity Rates be Affordable?

LA WATCHDOG - Under the Department of Water and Power’s LA100 Plan where 100% of our electricity would be generated by 100% renewables, our rates are projected to quadruple by the deadline of 2035, or about 15% on average for each of the next ten years.   

Obviously, this is not affordable, especially for seniors on fixed incomes and lower income Angelenos. But the impact on commercial and industrial customers who account for 62% of power system revenues and provide over two million jobs must also be considered.  The impact on single family residences that account for over 40% of the City’s dwelling units and even more of the population also needs to be considered.

LA100 is an overly ambitious plan, a fact that is becoming obvious to many of our elected elite, even to those that are kowtowing to the environmental community who do not take into consideration our wallets in achieving their goal of 100% carbon-free power.

The Ratepayer Advocate recognizes that affordability is a real issue.  In a September 3 memo to the LA100 Leadership Team, the RPA recommended that DWP “treat affordability as a design constraint in achieving its LA100 goals” and that “DWP ensure costs and benefits are apportioned equitably across customer classes and communities, making sure people and businesses across Los Angeles can afford the transition.”

While the Ratepayer Advocate said that looking at average rates may be misleading because it does not show the severe impact on disadvantaged communities, average rates are an indication of the overall impact on all ratepayers.  

There are two ways that DWP can lower the impact on average rates.

First, rather than achieving 100% renewables, lowering the goal to 80-90% will result in savings in the range of $20-30 billion on this $80-90 billion plan.  According to the previous Ratepayer Advocate, eliminating the last 10% of fossil fuel generated power will cost $1,250 for each ton of greenhouse gas eliminated. This compares to today’s cost of $50 per ton of greenhouse gas.  This will have a dramatic impact on the average rates.

Second, extend the deadline to 2045, the original goal until Mayor Eric Garcetti unilaterally lowered it to 2035 to kiss the rings of the environmental community. This would lower the annual rate of increase to 7% compared to the 15% under the 2035 plan.

By adopting these two recommendations, we would still have reliable and clean energy, but at affordable prices for all classes of customers, including for lower income Angelenos, homeowners, and commercial and industrial users that employ over two million Angelenos.

(Jack Humphreville writes the LA Watchdog column for CityWatch, where he covers city finances, utilities, and accountability at City Hall. He is President of the DWP Advocacy Committee, serves as the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and is a longtime Neighborhood Council Budget Advocate. With a sharp focus on fiscal responsibility and transparency, Jack brings an informed and independent voice to Los Angeles civic affairs. He can be reached at [email protected].)