The typical single-family household in Los Angeles could see its monthly electricity bill go up a total of $12 over five years under proposed electricity rate hikes backed Tuesday by the Board of Water and Power Commissioners.
The panel, which oversees the Los Angeles Department of Water and Power, voted to recommend that the City Council also back the rate hikes.
Board President Mel Levine said it would be “irresponsible” for elected officials not to approve the hikes.
City officials have “no choice” but to increase electricity rates, since the majority of the rate hike revenue would go toward complying with state mandates to switch to renewable energy sources,
The rest of the revenue would go toward fixing the city’s aging and broken electricity infrastructure, which would reduce and prevent blackouts, Levine said.
The electricity rate increases, which would be spread out over five years, already have the backing of Mayor Eric Garcetti and Ratepayer Advocate Fred Pickel, who was appointed to watch over rate increases at the DWP on behalf of customers.
With Water and Power commissioners signing off on the rate hikes, the proposal will now be sent—along with proposed water rate hikes that were approved by the board last year—to the City Council and the mayor for consideration.
Garcetti said Monday the increases are “critical to modernizing our aging electricity grid and bringing our power system into the 21st century.”
“DWP needs to have the resources to be successful,” he said. “After five years of rate increases, the typical residential customer would see a $6 to $12 increase to their monthly bill. The price of inaction would be much higher than this.”
Garcetti said the rate hike proposal includes regular monitoring to determine if the extra revenue is being used to improve the DWP’s power system, and a formal review after two years.
“These reviews are critical as the utility industry is in a moment of transition and innovation,” Garcetti said.
He noted the DWP is expected to replace 70 percent of its power sources over the next 15 years “to meet state mandates, fight climate change and fund the energy efficiency programs that enable customers to lower their bills even as rates rise.”
Pickel, who leads the Office of Public Accountability (OPA) tasked with monitoring the DWP, issued a report last week concluding the increase was “just and reasonable.”
Pickel also noted that the 21 percent average increase over the next five years—which averages 3.86 percent annually—is “less than what is needed” and the utility’s power system “will continue to be challenged to perform activities at planned levels.”
A typical single-family household that uses 500 kilowatt-hours per month—putting it in zone 1— could see a $12 monthly bill increase after five years, according to the OPA.
Monthly bills for such households would rise from the $76-$78 range to between $80 and $82 after one year, eventually going up to about $90 per month after five years, according to the report.
The rate hikes would mean that DWP power revenue would eventually grow to $4.22 billion in fiscal year 2019-20, up from $3.45 billion in fiscal year 2014-15, according to the OPA.
The OPA report also raised concerns that there would be inadequate staffing “for the growing levels of planned capital project expenditures, in part due to the anticipated personnel retirements and constraints on outsourcing.”
DWP officials said they were “pleased” with Pickel’s assessment of the planned rate hikes, which were proposed to pay for the replacement of aging infrastructure needed to keep electricity service reliable.
If ultimately adopted, the rate hikes would “allow us to continue the transformation of our power system to a clean-energy future that protects the environment, while complying with regulatory mandates,” according to a statement issued by the utility.
