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Is the LADWP Rate Hike Temporary or Not? Here's Your Clarification

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The LADWP Headquarters | Photo by Omar Omar via Flickr
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Was the approval of a rate hike last week temporary or not? Many are confused, even some councilmembers, and it's bleeding into media reports (even we've been confused). So after discussions within city hall, here's what we know.

As approved by the City Council and Board of Water and Power Commissioners, a 4.6% annual increase will take affect in July. That rate is not temporary or bound by any three-month time period so unless it's voted to be increased or decreased, it stays. What is temporary is the ability of the Board to adjust rates by that much again.

So here's the nerdy version of that. Currently, the LADWP base rate for electricity is 13-cents per kilowatt hour and as of July 1st, the new rate will be 13.6-cents per kilowatt hour. The difference comes in the Energy Adjustment Cost Factor, or ECAF (currently it's 5.2 cents of the 13-cent base rate). The ECAF is basically a pass through that utilities are allowed to charge on a quarterly basis for fluctuations in price of fuel (if fuel goes up, they can charge customers more). However, by law, there is a cap on how much that adjustment can be and it's currently at 0.1-cents. But with the economy as of late and Mayor Antonio Villaraigosa's vision of a green city, the Carbon Surcharge plan called for changing the ECAF cap way beyond the 0.1-cent one, allowing for bigger rate changes on a quarterly basis.