DWP’s plan to boost water rates is reasonable, ratepayer advocate says (December 12, 2015)

The Los Angeles ratepayer advocate said Friday that a proposed boost in water rates for Department of Water and Power customers is just and reasonable.

The proposed plan would increase water rates by an average of 4.7% annually over the next five years, according to ratepayer advocate Fred Pickel, executive director of the Office of Public Accountability.

It would also double the number of payment tiers for water rates to put the heaviest burden on residents who use the most water. Angelenos who use low or typical amounts of water at home will see their bills increase by an average of 4% annually, while higher water users will have to pay heftier increases – 7% annually over the five years of the plan, Pickel wrote.

The biggest increases may occur in the first year of the plan, but rate increases should slow in the following years, provided that Los Angeles emerges from drought conditions as predicted, the ratepayer advocate wrote.

In his review of the proposal released Friday, Pickel said those rate increases will still fall short of what the DWP needs to speed up the replacement of deteriorating pipes as much as it would desire.

But it could be impractical to boost rates even more. The utility may have trouble getting the planned work done because of staffing limitations, including a wave of retirements and restrictions on outsourcing work, Pickel said.

Outside consultants hired by the Office of Public Accountability echoed those concerns in a report, urging the DWP to find ways to streamline hiring and contracting.

Many of its plans rely on rapid hiring and contracting out, two activities the department has historically struggled with, Navigant Consulting Inc. wrote.

Pickel also said he supported the use ’em or lose ’em structure of the plan, which allows for rates to be adjusted down if the utility does not spend money as promised.

That system allows for adjustments midcourse if they are not achieving their goals, Pickel explained.

Utility officials say that boosting water revenue by $330 million over the course of five years will help Los Angeles fix its aging infrastructure, comply with water quality regulations and decrease its reliance on water imported from Northern California and the Colorado River.

But the agency has suffered from mishaps — including the rollout of a new billing system two years ago that sent wildly inflated bills to many customers — that have affected public trust in the utility. Those may be a political hurdle as the department seeks to get rate increases approved.

To help people understand how they might be affected by the proposed changes, the DWP has created an online water rate calculator that allows people to compare what they would be charged under the proposed rates to the existing rate.


Source: Emily Alpert Reyes, Los Angeles Times

Webmaster note: 4% compounded annually for five years works out to be a 17% increase. 7% compounded annually for five years works out to be a 31% increase.