Electric Rate Hikes Not Happening for at Least 3 Months as DWP Board & City Council Stand Off

Photo by C-Ali via Flickr

Photo by C-Ali via Flickr
The dramatic saga over Mayor Antonio Villaraigosa's carbon surcharge plan was halted last night when the Los Angeles City Council late last night unanimously voted to reject the second rate power rate hike in two weeks. By state law, any changes to rates can only be set on a quarterly basis and that deadline was last night . That means LADWP customers expecting to see higher bills this month won't, but the debate over rate hikes will continue as the next quarter deadline approaches.

It was early last month when Villaraigosa tried to prime the public on a carbon surcharge that would lead Los Angeles to be powered by 20% renewable energy by the end of 2010. To achieve that goal, the Board of Water & Power Commissioners voted in a 0.8-cent per kilowatt hour rate hike, equivalent to at least an 8.8% increase on bills. But the City Council asserted jurisdiction over the matter--a move in which they can only approve or reject the rate hike, but not change it--and ultimately vetoed it. On Tuesday, the group recommended a modest rate hike of 0.6 cents per kilowatt hour, a 4.5% increase. Then the Board took up the recommendation Wednesday afternoon, deciding to approve a 0.7-cent per kilowatt hour hike, saying it was a compromise, despite warnings from Councilmembers that it would be rejected. Holding true to that promise the Council stood ground last night, unanimously rejecting the Board's "compromise."

"No proposal before the city has drawn as much anger as I've seen from this. I have heard from people who have never been involved in City Hall politics," Council President Eric Garcetti told the board at their meeting.

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"I still have not seen information from the DWP on what it will do to reduce its operation," added Jan Perry. "If I'm frustrated, you can only imagine how the public feels."

The utility, which traditionally transfers millions to the city's struggling general fund, has threatened to withhold $73 million, which could save 1,000 jobs.

Villaraigosa has publicly played up the environmental aspects of the surcharge, even garnering campaign-style support from the likes of former Vice President Al Gore and others. But behind closed doors and in memos, he has warned of bankruptcy--a word he later disavowed, later phrasing it as running out of money--due to a bond rating downgrade. That's added to the confusion because a recent bond ratings report says LADWP is healthy.

Former Daily News Editor turned activist Ron Kaye has called the carbon surcharge process a "display of lies," hinting to Villaraigosa's desperate moves for Los Angeles to become the greenest city in the nation. "It was just three weeks ago that the mayor leaked a fraudulent story to the New York Times that the DWP was losing $5 million a week and desperately needed massive rate hikes to pay its bills and avoid a downgrade in its credit rating," Kaye said.

All the mishaps and mismanagement in the last month has the LA Times editorial board questioning the LADWP. One problem seems to be voter approved amendments to the City Charter that has given the Mayor power over the Board and General Manager. That has led to a very undemocratic process: "Because the commissioners and the general manager are equally answerable to the mayor, it's unreasonable to expect the board to object to an initiative that comes from the department or directly from the mayor's office."