Legal Mandates and Aging Infrastructure Driving Need for Rate Increases
April 20, 2012
LOS ANGELES — The Los Angeles Department of Water and Power (LADWP) will hold a series of community meetings throughout the city beginning April 25 to educate and inform customers regarding proposed power and water rate changes needed over the next two years.
The proposed changes are necessary to meet a series of regulatory mandates that affect much of LADWP’s existing energy and water supplies, and to invest in replacing aging infrastructure to maintain reliability for LADWP’s 1.4 million electric customers and 657,000 water customers.
General Manager Ronald O. Nichols and LADWP Senior Managers will present the proposed power and water rate changes during the upcoming meetings, answer questions and take comments. “We began a conversation last summer regarding the fundamental reasons why LADWP needs to increase water and power rates,” Nichols said. “A lot has happened in the past year; legal mandates that were unclear have come into focus. Aging equipment has gotten older and deferred costs are mounting. A ratepayer advocate has been appointed and is at work reviewing these proposals.”
The proposed rate change is most critical for power. Legal mandates are driving the need to rebuild or replace over 70 percent of LADWP’s existing energy resources and generation. In the next 10 to 15 years, LADWP will need to expand renewable energy to 33 percent of the power provided to customers; transition out of coal generation and replace it with a mix of renewable energy, natural gas and expanded energy efficiency measures; and rebuild aging generating units at three coastal natural gas power plants.
The power rate proposal requests a 4.6% increase beginning July 1, 2012 and 5.9% effective July 1, 2013 for a total of 10.5% over 2 years, an increase of 1.4 cents per kilowatt-hour (kWh) to the current average rate. For the typical residential customer, using 500 kWh, this would add $3.35 per month to their current $65.79 monthly bill.
The proposed power rates will also fund new investments in energy efficiency programs, as a way to mitigate the potential bill impacts. Energy efficiency is also a cost-effective way to meet environmental mandates and improve reliability.
On the water side, the Water Quality Factor adjustment approved earlier this year–$0.35 per billing unit (748 gallons) for mandated drinking water quality improvements–enables LADWP to defer consideration of an additional water rate action until later this year.
In fiscal year 2012/13, customers will see an automatic adjustment for purchased water when the price is adjusted in late Spring. An additional increase of about ½ percent is planned, as part of rate adjustments that require Board of Water and Power Commissioners action only, to support continued development of local water supply programs. These include water conservation, recycled water, stormwater capture, and groundwater cleanup—all of which reduce reliance on imported and purchased water.
For fiscal year 2013/14, LADWP is proposing a 4.6% water rate increase effective July 1, 2013, excluding the cost of purchased water, to invest further in pipeline and related infrastructure replacement, local water supply programs and additional water quality investments that are part of $1.1 billion required for water quality compliance. Nichols stressed that while action on the request was not needed immediately, the increase needs approval this year to allow time to approve the necessary construction and related water quality improvement contracts and hire and train pipeline replacement crew members.
Following are the dates and locations for the regional meetings. In addition, LADWP is planning to hold additional online webinars and meetings that will be announced in the near future.
RSVP’s for the community meeting are encouraged, but not required. To RSVP, please click on the link below each meeting, or call 213-367-1361.
Wednesday, April 25, 6:30 p.m. – 8:30 p.m.
Crowne Plaza Hotel, Salon A
601 S. Palos Verdes St.
San Pedro 90731
Thursday, April 26, 6:30 p.m. – 8:30 p.m.
Holiday Inn Express & Suites
22617 Ventura Blvd.
Woodland Hills 91367
Saturday, April 28, 9:00 a.m. – 11:00 a.m.
LADWP John Ferraro Building Headquarters
111 N. Hope St., A Level
Los Angeles 90012
Monday, April 30, 6:00 p.m. – 8:00 p.m.
LADWP Crenshaw Service Center
4030 Crenshaw Blvd.
Los Angeles 90008
Wednesday, May 2, 6:30 p.m. – 8:30 p.m.
Recreation and Parks Ramona Hall
4580 N. Figueroa St.
Los Angeles 90065
Thursday, May 3, 6:30 p.m. – 8:30 p.m.
LADWP Van Nuys Service Center
14401 Saticoy St.
Van Nuys 91405
Thursday, May 10, 6:30 p.m. – 8:30 p.m.
Stephen S. Wise Temple, South Taub Annex
15500 Stephen S. Wise Drive
Los Angeles 90077