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Business & Tech

Community Council Representative Calls for Analysis of Proposed DWP Rate Hikes

Jim Rea, who represents Area 3 on the Pacific Palisades Community Council and sits on the Los Angeles Department of Water & Power's oversight committee, wants to see a ratepayer advocate evaluate the increases before the City Council votes on them.

Last week, a Pacific Palisades Community Council member expressed his concerns about rate hikes that the Los Angeles Department of Water & Power proposes to levy over the next three years. 

“This rate hike is coming down the pike without the benefit of the ratepayer advocate to evaluate the proposal,” Area 3 representative and budget committee member Jim Rea told Patch. Rea sits on the DWP MOU (Memorandum of Understanding) Oversight Committee, which was established to collect feedback about the DWP from neighborhood and community councils across the city. 

Rea pointed out that voters authorized an Office of Public Accountability in the March election to investigate the rates LADWP imposes on residents. That office was supposed to have a rate advocate, but no one is currently in the seat.

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“The City Council is supposed to enact some enabling ordinances that create the office and they’ve yet to do that,” Rea said.

The LADWP estimates that it will need increases in revenue totaling $1.8 billion over the next three years. That revenue would be met with bond sales and rate increases for residents.

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The department breaks down the proposed budget into two major categories:

Basic Costs: $1.312 billion (three-year cost)

  • Regulatory Mandates
  • Local Water Supply
  • Purchased Water
  • Inflation
  • Pensions
  • Energy Efficiency
  • Solar Incentive Program
  • Fuel Price
  • Protecting Ability to Borrow

The LADWP says it has implemented hiring freezes, staff reduction, more efficient operations and reduced spending. However basic cost is still on the rise.                     

Strategic Investments:  $559 million (three-year cost)

  • Replacing pipeline
  • Supply development
  • Conservation strategies
  • Development of efficiency, renewable energy and reliability

According to Rea, the biggest red flag in the budget is a line item listed as “Protecting Ability to Borrow," which calls for $180 million for water and $525 million for power over the next three years. 

The "Ability to Borrow" maintains the utility’s creditworthiness at the level it exists today. To maintain that creditworthiness, the LADWP is required to maintain an income flow of $705 million over the next three years.

"If the rating went down ... that would cost us $75 million more a year in interest,” said Rea.  However, a lower rating would mean less in terms of rate increases. How much less is something that would be ascertained by the ratepayer advocate.

“The DWP MOU Committee believes the ratepayer analyst needs to look at those numbers and make sense of them,” Rea said, “but without the advocate, planned increases could go before the City Council for a vote without complete analysis.”

The LADWP is holding meetings all over the city for people who want to learn more or contribute feedback about the proposal. You can find its documents via Rea's website

Residents may also contact City Councilman Bill Rosendahl to urge him to speed up the process of establishing the Office of Public Accountability.

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