L.A. City Council Vetoes DWP's Proposed 5.7 Percent Rate Increase
A fight over proposed energy-rate hikes for Los Angeles commercial and residential property owners has resulted in a draw after the Los Angeles City Council vetoed the Los Angeles Department of Water and Power’s proposed 5.7 percent rate increase.
The City Council had recommended a 4.5 percent increase for homeowners and a 5 percent to 6 percent increase for businesses in a compromise to Mayor Antonio Villaraigosa’s push for higher energy rates to offset alternative energy efforts.The City Council’s late-night veto on March 31 effectively tables the discussion for three months because California law stipulates that rate changes can only be implemented on a quarterly basis.The City Council’s recommended energy-rate increases for businesses amounted to an increase of 0.6 cents per kilowatt-hour. On March 27, the Council had voted down Villaraigosa’s original proposal, which called for an increase of 0.8 cents per kilowatt-hour. During the City Council meeting, council members said they had been advised that a 4.5 percent to 6 percent increase is the smallest possible increase that will grow the troubled DWP’s revenues enough to keep the department’s bond rating from being downgraded.
Villaraigosa’s plan, announced on March 15, caused an uproar among Los Angeles–area business owners, who would have seen their DWP bills grow by as much as 28 percent in the coming year and up to 37 percent by 2014. As it was proposed, Villaraigosa’s plan would raise more than $600 million per year toward investment in renewable power supplies and transmission, thanks to a “Carbon Reduction Surcharge.” The goal of the surcharge was to fund the city’s move away from coal-fueled power, reducing its dependence on coal by 20 percent in 2010. The mayor also argued that failure to approve his rate increase would result in the DWP reneging on a promise to give the city’s “general fund” $73 million—something that could push the city into the red by June 30.
Steven Needleman, president of ANJAC Fashion Properties, lobbied against the DWP rate increases and said he is pleased with the City Council’s move to reduce the proposed hikes. “To me, it was a battle won. The fashion industry has been decimated [by the recession], and those businesses that are still hanging on are barely making it. This is not the time to be increasing rates,” he said. ANJAC, which owns 1.5 million square feet of real estate in Los Angeles County, pays for utilities in its buildings and will most likely increase rents to accommodate the rising DWP rates, Needleman said.
