LA WATCHDOG - During the week of August 20, the Ratepayers Advocate is expected to release his review of the proposed two year increases in LADWP power rates (12%) and water rates (26%).
Underlying these rate increases are extensive unfunded environmental mandates, the need to repair and maintain the DWP’s aging infrastructure, contracted wage increases, escalating benefit expenditures, and higher pension contributions.
And in the case of the water system, rates are also increasing because of the higher cost of purchased water from the Metropolitan Water District (MWD), in large part to offset the significant diversion of our water to Mono Lake, Mammoth Lakes, and the Owens Valley.
While the Ratepayers Advocate will review the proposed $500 million of rate increases in light of DWP’s revenue requirements, its annual budget, and the impact on homeowners and other classes of Ratepayers, will he address the issues of Transparency?
Just last week we learned that the DWP “invested” $222,000 for LED lighting and grass in the significantly over budget $1,000,000 renovation of City Hall Park. This expenditure was justified in part by the claim that it would save 930,000 gallons a year, less than three acre feet. (Link)
http://wavenewspapers.com/news/article_efff424c-d1ea-11e1-abba-001a4bcf6878.html
But this investment does not make any economic sense based on the projected water savings.
Based on current MWD prices of $794 per acre foot, the savings of $2,265 represents a return on investment of 1%, not enough to even pay the interest expense. And assuming a 5% increase in MWD prices, the payback is almost 40 years.
The Energy and Environment Committee, chaired by Jose Huizar, is scheduled to review the proposed rate increases beginning on September 19, several days after the anticipated approval by the DWP Board of Commissioners. And under the current schedule, the City Council will approve the rate increases to be effective in November.
While the financial impact on Ratepayers of this 14%, $500 million rate increase is certainly not insignificant, the DWP cannot afford any further delays if it is to meet Sacramento’s unfunded environmental mandates.
And, in its defense, DWP did not have a rate increase last year.
Furthermore, DWP management proposed rate increases in the spring of 2011, but consideration was deferred because the Garcetti led City Council delayed the formation of the Ratepayers Advocate for almost a year from the March of 2011 election when 78% of the voters approved the Ratepayers Advocate.
Transparency, on the other hand, deserves a full hearing over the next seven months so that Ratepayers and voters have a better understanding of the operations, efficiency, and finances of our Department of Water and Power.
This would involve a thorough review and analysis of what the rates will be in 2020 as a result of the mandate that 33% of DWP’s power be from renewable resources and AB 32, California’s 2006 Global Warming Solutions Act.
We also need to establish benchmarking techniques and analysis to determine the efficiency (or inefficiency) of DWP’s operations compared to other regional and Western utilities.
We also need greater transparency regarding the IBEW Labor Premium as requested by Bernard Parks and Jan Perry last year, a request that was buried by the other three members of Executive Employee Relations Committee, Mayor Villaraigosa, then Council President Eric Garcetti, and wannabe Controller Dennis Zine.
Transparency would also require a review of the City Council’s pet projects, such as City Hall Park, the Los Angeles River, and the $500 million Headworks Reservoir / River Supply Conduit that was designed to preserve the million dollar views of Silver Lake residents.
The Transparency analysis must include not only the Energy and Environment Committee, but the Audit and Governmental Efficiency Committee, chaired by very vocal Dennis Zine, and the Office of Controller Wendy Greuel, the City’s independent fiscal watchdog.
We also need the written opinion of City Attorney Carmen Trutanich as to the questionable legality of the $250 million transfer from the Power System to the City’s General Fund as this transfer appears to be inconsistent with Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) that was approved by the voters in November, 2010.
The Mayor and the City Council have always viewed our Department of Water and Power as their piggy bank as witnessed by the recent underhanded scam involving City Hall Park. But during this election cycle, we can put candidates Garcetti, Greuel, Perry, Zine, and Trutanich in the hot seat and demand full and complete disclosure of DWP’s operations and finances.
And as a reminder to the candidates, Ratepayers, especially homeowners, vote, as witnessed by the voters 2009 rejection of Measure B, the Mayor’s Solar $4 billion initiative that was payback to campaign funding Union Bo$$ d’Arcy.
So it is very simple. Ratepayer’s votes require Transparency.
(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at: [email protected]) –cw
CityWatch
Vol 10 Issue 64
Pub: Aug 10, 2012