With the promise of promoting clean and renewable energy sources and improving reliability, a city panel on Wednesday recommended approval of an 11.1 percent average power rate increase over two years for the Department of Water and Power.
The City Council’s Energy and Efficiency Committee urged the full City Council to adopt the new rates for the utility, which has been working on the proposal for 16 months. It would be the first rate increase in more than two years and it is scheduled to go to the full City Council on Tuesday.
The proposal would raise rates about $3.65 a month for the average homeowner, but those with larger homes could see an increase in their bills of about $18.79 a month.
DWP General Manager Ron Nichols said most of the increase is needed to meet state and federal mandated programs as well as the need to upgrade an aging system and meet state-set goals for getting off of coal power.
“This will allow us to work for the next two years to meet our goals and develop a strategic plan,” Nichols said.
Chief Financial Officer Philip Lieber said the rates vary based on consumption of power, with a goal of having an equitable rate across the city.
“Many of our customers use 500 kilowatt hours or less and will see only a modest increase,” Lieber said. “It will be less than the 5.5 percent. Those customers will see their bills go from an average of $65.79 per month to $69.44. Those who use more energy will see
Lieber said the utility also was sensitive to complaints from San Fernando Valley residents.
“We know San Fernando Valley residents have felt they are paying disproportionately more and we believe 88 percent of the residents in the Valley will face less of an increase than the systemwide average,” Lieber said.
Unlike past rate hearings, the session drew only a few protests, with a number of environmental groups testifying in favor of the proposals – particularly the goal to get away form the use of coal.
Councilman Paul Koretz said he is concerned about the DWP entering into long-term contracts for natural gas to supplant coal.
“It is still a fossil fuel and I don’t want to see us tied down to another non-renewable source of energy,” Koretz said.
Nichols said the agency was working on a number of fronts to promote solar and wind energy to be used in conjunction with the natural gas.
One of the mandates the utility is facing is to build new natural gas facilities that do not rely on ocean cooling.
These are the first DWP rate increases subject to review by the city’s new ratepayer advocate, Fred Pickel, who endorsed the hikes along with a series of recommendations on where cost savings and management efficiencies should be explored.
Councilman Jose Huizar, chair of the Energy and Environment Committee, asked for periodic reports to update officials on the status of that work.
Pickel said one of the primary reasons for his support of the rate increases is to ensure reliability.
“The most expensive power you have is the power you don’t have,” Pickel said. “Having reliability is the most expensive consideration you have.”
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