DWP Rate Hikes Look a Lot Like Tax Hikes

DWPWhen is a utility rate increase really a local tax increase in disguise?

The Los Angeles Department of Water and Power is seeking a rate increase of 25 to 30 percent, spread out over five years, in an effort to raise an extra $900 million for power and $230 million for water, a total of $1.13 billion, to fix aging infrastructure and comply with state mandates for renewable energy.

But over the last five years the DWP has taken $1.23 billion of the money customers paid for electricity and transferred it to the city of Los Angeles to be spent on the general expenses of city government. The transfer was $220 million in 2010, $259 million in 2011, $250 million in 2012, $247 million in 2013 and $253 million in 2014.

The Los Angeles City Charter says “surplus money” may be transferred from the DWP to the city’s reserve fund if the Board of Water and Power Commissioners consents. And the Board may withhold its consent if it finds that making the transfer would have a “negative impact on the department’s financial condition.”

Maybe the board wasn’t reading the financial statements, but the DWP’s Power System has been selling bonds to borrow hundreds of millions of dollars virtually every year. As of June 30, 2010, the Power System’s total outstanding long-term debt balance was $5.92 billion. By June 30, 2014, it was $8.165 billion.

How can the DWP transfer a “surplus” to the city at the same time it’s borrowing money and raising rates? Is this an illegal method of raising city taxes, which under Proposition 218 are supposed to be approved by voters?

In 1999, the Howard Jarvis Taxpayers Association sued the city of Los Angeles for overcharging for water and creating a “surplus” of over $20 million to transfer to the city every year. The case worked its way through the courts for a decade, and in 2009 the taxpayer group was victorious.

As a result, the DWP’s 2008-2009 financial statement for its Water System reported, “The court declared the 2007 Water System transfer illegal based on Proposition 218 and allowed the Water System to retain the $29.9 million and use it for water related activities.”

But over on the Power System side, the judge’s ruling didn’t apply.

The 2008-2009 financial statement for the DWP’s Power System reports that in fiscal year 2008, $182 million was transferred to the city, or 7 percent of the previous year’s operating revenue of $2.6 billion.

But for fiscal year 2009, the city transfer was bumped up to 8 percent. The previous year’s operating revenue was $2.8 billion, for a transfer of $223 million. It has been 8 percent every year since.

Taxpayer advocates are fighting mad.

“Notwithstanding our legal victory over the misuse of ratepayer funds, the city of Los Angeles seems hell-bent on finding ways to gouge the city residents,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “The increase in DWP’s transfer to the city’s general fund unquestionably violates the principle of ‘cost of service,’ which simply means that ratepayers should pay no more for basic utility services than it costs to provide that service.”

What can be done about it? The Board of Water and Power Commissioners has the authority — subject to the veto of the City Council — to approve the city transfer or withhold it. In May 2009, the board actually rescinded a previously approved transfer.

The Board of Water and Power Commissioners is made up of five people: Mel Levine (president), William W. Funderburk Jr. (vice president), Jill Banks Barad, Michael F. Fleming and Christina E. Noonan. They meet on the first and third Tuesdays of each month at 11:00 a.m. in Room 1555-H at DWP headquarters, 111 N. Hope Street, Los Angeles, 90012. (However, the Aug. 18 meeting has been canceled.) Attend a meeting, or write to the commissioners at that address.

Call your City Council representative and the mayor. The DWP’s rates are set by city ordinance, which means the rate hike cannot take effect unless the council passes it and the mayor signs it.

If necessary, a local ballot initiative could amend the city charter to prohibit transfers of surplus money from water and power revenues to the city. Or a statewide ballot initiative could address the problem of utility rates that far exceed the cost of service.

Ratepayers have been abused for too long. It’s time we turned on the power.

DWP Rate Hike Plan Makes Customers Mad as Hell

Today I’m opening the mailbag to share comments from Valley residents about the Los Angeles Department of Water and Power and its proposed five-year rate hike of 25-30 percent:

“The DWP needs to tighten their belts before they ask us for more money.”

“Cutbacks on the least important actions or redundancies should come first before asking for more money. That is how any true business would work.”

“The 8 percent of its gross revenues going to L.A. city treasury boggles the mind.”

“I find this so offensive. … It feels as though DWP is punishing me by increasing the rates because I am using less water. Why can’t the DWP employees take a 5 or 10 percent pay decrease in their salaries or be furloughed for 1 day per 2 week schedule, or maybe lay off a few employees — at least until the drought is over. This is not the time for DWP or the City Council or unions to be greedy at the expense of consumers/constituents.”

“We just celebrated our 50th anniversary and have lived in our Porter Ranch home for over 41 years. Our home is one-story, under 1,500 square feet, no pool and a now-brown lawn because of the drought. We try to avoid using the air conditioning or leave it at no lower than 78 degrees — sometimes 80. However, our DWP bills range from $350 to $400 in the winter to over $850 in the summer. We simply cannot afford those bills now and would be devastated if they were to go even higher. We don’t want to have to choose between turning off the air conditioner to afford our mortgage and medical bills or losing our home where we raised our family.”

“Prior to the installation of the 2nd meter, my domestic water usage was calculated and averaged more than 5 times my true usage. I’m certain that anyone who has not installed a 2nd meter is being inaccurately (almost fraudulently) charged more than 5 times what they are responsible for.”

“It seems like the DWP pays a far greater salary than the private sector and gets better retirement benefits, too. Something is wrong here.”

“The DWP should be run like a corporation, not a cozy club.”

“The DWP should be replaced with a new organization that places great value on keeping spending tight, watching everyone’s overtime, and eliminate waste and fraud. So far, the DWP has proven that it lacks leadership that responds to ratepayers, yet has policies that empower the employees.”

“Roll back all senior level DWP management salaries 10%. Appoint an independent auditing committee to oversee exactly what some of these positions are within the DWP structure and do away with the vast majority of them.”

“For the past four years, I have taken many measures in cutting back on my water usage but I continue to have extremely high bills. I have called DWP 3 times asking for an inspection and have been told that they don’t have time.”

“The DWP replaced our water meter, and the next bill was for $3,277.93!”

“NO matter what the citizens are doing to ‘save the planet,’ the more we do, the more we are punished for our complying with the requests.”

“That there is about $230 million of overcharging being sent to the City is a travesty. Of course, we get to pay a 10% City tax on that overcharging, so it is only compounded. Our DWP should not be a taxing authority!”

“I have been so upset with the excessive spending and loss of funds that have happened with the DWP, and now for them to have the nerve to say they must raise our bills. Why can’t they eliminate some of their unnecessary “management analysts” or reduce some of their outlandish salaries?”

“Giving money to the city of Los Angeles is outrageous … how did this happen??”

“We have lost two pine trees because of not watering in this drought. No rewards for conservation! Higher ‘taxes’ instead. Private business would tighten belt, but our government is increasing salaries!”

“The accumulated effects of continued cost increases and tax hikes are forcing me to leave the state.”

“In my opinion, DWP is nothing but a bloated, redundant, multilayered bureaucracy with little accountability.”

“I am sick & tired of additional fees, taxes, costs, gouging, etc.”

“Could you interview the DWP ‘Ratepayer Advocate,’ Fred Pickel? The public would like to know what he has been doing.”

Email your comments to me at the address below — everyone’s voice should be heard.

Susan Shelley is a San Fernando Valley author, a former television associate producer and twice a Republican candidate for the California Assembly. Reach her at Susan@SusanShelley.com, or follow her on Twitter: @Susan_Shelley.

Writing the Rules for the Republicans’ Big Quiz Show


Some years ago I worked in game show development for a wonderful actor and TV host, Bert Convy, who’d recently formed a production company. He asked me to create game elements for a new show, and we negotiated an agreement that would pay me a very minimal royalty. I remember sitting in an upholstered leather chair in his office as he stood leaning against the front of his desk, looking irritated.

“I’m really a producer now,” he said ruefully. “I’m screwing the talent.”

Today, I’m going to use this odd talent to solve the problem of how to get 16 Republican candidates into one televised debate.

In addition to my background in game shows, I present my credentials as a former Republican candidate in a primary for U.S. Congress and two elections for the California Assembly. I have participated in debates and forums where there were two candidates, three candidates, four candidates, and 10 candidates. Once I was excluded from a debate and spent the evening in the parking lot talking with members of the press and public.

I offer my considered opinion — as a uniquely qualified professional in the field of bells, buzzers, questions and cameras — that it is a really bad idea to hold a debate with 10 candidates on stage and six in the parking lot.

Aside from the problems inherent in the selection process, 10 is too many candidates to have on stage at the same time. Answers will be repetitive and viewers will struggle to remember who said what. Candidates will pay joke writers for zingers to help them get into the news stories.

And the spectacle will become the story. An MSNBC host will remark that the candidates look like boarding group B for a Southwest flight to Cleveland. Fox News will respond that Hillary Clinton flies on private jets because nobody could afford the airline fees for that much baggage. CNN will cut to a report on a missing plane.

Instead, the Republican presidential debates should follow a format similar to Major League Baseball’s All-Star Game, where players take the field for just two or three innings. It would work like this:

Segment 1: Four candidates take the stage. Each is given a 20-second introduction by the moderator. Each makes a one-minute opening statement. Then a question is randomly chosen from a selection of questions on domestic policy, and the candidates each have two minutes to answer. Next, a question is randomly chosen on foreign policy, and each candidate has two minutes again. Finally, the candidates each have 30 seconds for a closing statement.


The format repeats until all the candidates have been heard. Current polls would be used to determine the order in which candidates take the stage. The suggested timings would present 16 candidates, in four segments, in two hours.

To give viewers the opportunity to hear more, the sponsoring news organization would conduct interviews of each candidate in advance and post the full-length videos on its website as the debate begins. It’s not the Nixon-Kennedy era anymore — we have the “second screen” to offer options for deeper content than television alone can provide. Viewers can be pointed to the online material with on-screen graphics and comments by the moderator.

This format treats the candidates respectfully and provides clarity for viewers, with a reasonable blend of pace and depth. And it accomplishes the most important goal of a televised debate: enabling voters across the country to see and hear the people who are seeking to become the next president of the United States.

After all, this isn’t a game.


Reach the author at Susan@SusanShelley.com or follow Susan on Twitter: @Susan_Shelley.