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DWP Rate Hike Proposal a Shock to the System

The Los Angeles Area Chamber of Commerce applauds the veto last Friday by the Los Angeles City Council of the largest proposed Department of Water & Power (DWP) electricity rate increase in years. The Council took this action because the proposed rate increase over the next year would have taken an enormous financial toll on the City's residents and businesses. Today the Council, led by L.A. City Council President Eric Garcetti and Councilmember Jan Perry, will make its own recommendation to the DWP Commission.

At issue is a carbon surcharge proposal that would raise electricity rates in order to accelerate DWP's transition from coal generated power to cleaner solar, wind and other renewable energy sources. The transition is a laudable goal and a necessary step over the next decade to meet long-term air quality standards, but must be done at a pace that is affordable to ratepayers.

The problem is that the DWP's proposal to raise rates by 7 to 28 percent over the next year would have put many existing businesses and jobs at risk at a time when our unemployment rate is at a 75-year high. The proposal was developed without input from businesses or residential ratepayers who were caught off guard by the action.

Businesses and residents who generally support renewable energy were being asked to spend their hard earned and scarce money during an economic recession on a plan they didn't help develop and did not understand. It seemed like DWP was asking for a blank check from city ratepayers.

The Los Angeles Times editorial page was correct in stating that all of us should have been able to support such a plan. However, "all of us have little choice but to call for its rejection" due to the lack of transparency and the hastiness in which this proposal was presented to the DWP Commission and the public last week.

The L.A. Area Chamber and its members know how important it is that DWP retain its excellent bond rating. As a result, we believe that the City Council should approve today an immediate but small rate increase in the range of 0.5 cents per kWH.

At the same time, we urge the Council to reject any future rate increases unless they are preceded by a plan to create greater savings and transparency in the overall operation of the Department and a clear strategy for converting to more renewable energy sources in the future. Ratepayer input will be essential.

Meeting renewable energy goals and protecting the city's ratepayers are not mutually exclusive. To the contrary, that's how the people of Los Angeles become personally and financially invested in the greening of our city. We all have a responsibility to be engaged in this conversation. Today's action by the City Council should be the first step.

And that's The Business Perspective.