Sacramento Democrats are raising the cost of a vehicle license by a dollar and two dollars, based on vehicles. The people of Los Angeles are going to have water rate increases—while the union running the Department of Water and Power ripped off the ratepayers of $40 million and refuse to abide by court orders and city council requests for an audit of that money—yet the council is giving the corrupt union MORE tax dollars. Any wonder water rates are going up in LA? Corruption and unions, one in the same. Then you have a city council they issues press releases ranting about this, then quietly gives the corrupt union more money.
“The Los Angeles Department of Water and Power Board of Commissioners recently approved a $2.95 raise in average customer power bills beginning in July. That followed a 33-cent average increase from the previous quarter from April to June.
Board approvals and automatic adjustments led to increases in water rates that DWP’s Chief Financial Officer Phil Leiber said would result in an average $6.41 increase in residential water bills from July through September.”
‘No rate increases?’ Not exactly
BY KELLIE MEJDRICH, Los Angeles Register, 8/21/14
5 questions
Fred Pickel, the city’s ratepayer advocate
Q: Are rates going up in water and power?
A: Yes, over the intermediate and long-term. Weather, energy markets, and other factors may make rates go up or down in the short term. For example, if it rains a lot throughout California this winter, if we have a big El Niño, overall water rates may go down for a few quarters.
Q: How much of the cost of water and power is within the city’s control, and can you explain?
A: About half in both cases, on average, because about half of the rates depend on costs from outside sources that vary with the weather, energy markets, and other factors. Right now, because of high drought-related purchased water costs, the share of the water cost under city control is even smaller.
Q: So when the mayor says no rate increases this year, what does that actually mean for ratepayers?
A: We understood it was just for base rates. Base rates on water are about 20-25 percent of current costs. Base rates on power are about half. To achieve many infrastructure replacement and environmental goals, base rates and some components of the non-base rate adders need to go up. All utility services are experiencing tremendous change, and we need to revisit rates and their driving factors regularly.
Q: Is your office working toward better explaining these rate structures?
A: They’re explained now, but I think we need to communicate what all is involved in these costs better.
Mayor Eric Garcetti promised water and power rates wouldn’t go up this year in Los Angeles. They’ve gone up anyway.
The Los Angeles Department of Water and Power Board of Commissioners recently approved a $2.95 raise in average customer power bills beginning in July. That followed a 33-cent average increase from the previous quarter from April to June.
Board approvals and automatic adjustments led to increases in water rates that DWP’s Chief Financial Officer Phil Leiber said would result in an average $6.41 increase in residential water bills from July through September.
“What’s the bottom line? The bottom line is that the proposed action will result in slightly higher rates,” Leiber said at a March hearing when the board approved an average 41 cent water rate increase.
The increases are “entirely consistent with council policy and the mayor’s statement,” according to DWP spokesman Joe Ramallo.
The distinction between Garcetti’s promise that the rates won’t go up and moves by the board of water and power commissioners to do just that has to do with something called “pass-through” rate adjustments.
Pass-through costs are designed to recover expenses to the utility that are outside their control, such as needing to purchase water during the drought and the fluctuating prices in purchased power, said Ramallo said.
Applying these pass-throughs has led to higher water and electricity rates overall for customers compared to last year, according to the Office of Public Accountability.
“I will not allow the DWP to raise rates this year,” Garcetti said to a standing ovation at his 2014 state of the city address in April. “The department must earn back your trust.”
The mayor really meant the base rate wouldn’t go up, according to spokesman Jeff Millman. And it hasn’t, even though utility staff wanted base rate increases for water and power this year.
The city’s Office of Public Accountability, entrusted with keeping an eye on the city’s water and power rates, said that when people talk about no rate increases, they mean the city’s base rates. Those haven’t increased for water since 2009. Power rates increased in November 2012 and July 2013.
But that makes up a fraction of what people actually pay on their bills.
“They don’t think the public will understand what a layered cake we’ve got here,” said Camden Collins, deputy director with the Office of Public Accountability. “Because there’s lots of layers to this cake.”
Still, the council can decide to reject these pass-through costs, as they did in 2010, when Garcetti served as council president. He and other councilmembers led the charge against the utility for a significant increase in rates through a pass-through called the Energy Cost Adjustment Factor.
That sparked a call for an independent ratepayer advocate to oversee the rate changes. The battle was so contentious the DWP at one point threatened to withhold its annual revenue transfer, which would have substantially affected the city’s budget.
But this year, the changes in rates approved by commissioners have gone into effect without objection from any councilmembers or the Mayor. They were informed of and approved the use of these pass-through costs in 2012, though the exact costs weren’t specified, Ramallo said.
LAYERS OF THE CAKE
The system is so complicated that Fred Pickel, the executive director and ratepayer advocate with the Office of Public Accountability said “we have a hard time explaining it to other experts as to how this works.”
Seventh District Councilman Felipe Fuentes, who in a motion issued Wednesday called for the utility to give a presentation next month on a structure he said is “very complex and can be difficult to decipher for the average ratepayer.”
Essentially, there’s a base rate – increases needing mayor and council approval – and then there are a myriad number of pass-through costs. Some are automatic, like that for purchased water. Others require approval from the city’s board of water and power commissioners.
Base rates today make up about half of a customer’s power bill. For water, the base rate reflects only 20-25 percent of the costs, Pickel said.
General Manager Marcie Edwards told commissioners March 18 she doesn’t take pass-through increases lightly. But with the drought forcing the utility to purchase more water, Edwards said, the increases must be made to keep the utility financially healthy.
“Without the ability to collect (pass-through costs) rapidly, our reserves would be exhausted in short order,” Edwards said March 18. “And the drought showed that.”
There’s some relief for ratepayers in October, when water pass-through costs drop slightly, resulting in a $3.25 decrease in average customer bills, Leiber said. That’s partly because the utility believes rain is on the way. But even with the decrease, the water costs are still higher than last year.
COUNCIL-APPROVED RATE INCREASES AHEAD
Water rates have largely been increasing during the drought because the city has had to rely on purchased water to meet demand, much of it coming from the Municipal Water District of Southern California. And With no increase on water rates in five years, inflation has chipped away at the spending power of the base rate, Pickel said.
But the rates have to go up just to keep everything maintained, too, Pickel said.
“For both the water and power side, upgrades are needed on the aging infrastructure. The local grid, the local mainlines and trunklines and so forth,” Pickel said.
Meaning even more rate increases are on the way.
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