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DWP Rates

July 08, 1994

Eldon Cotton's letter (June 24) neglected to state one key point: The 100 customers who account for 25% of the Los Angeles Department of Water and Power's revenues are already leaving DWP's system for much cheaper rates. DWP's industrial rates are higher than the rates offered to industrial customers by Southern California Edison. These customers have long realized that natural gas cogeneration was a viable and inexpensive means to circumvent DWP's high-priced monopoly. The PUC's proposal would make this option available to more customers, but the biggest customers have been leaving DWP's system for years.

Mayor Richard Riordan believes that these competitive pressures require that DWP become dramatically more efficient. He intends to benchmark DWP against its competition and to relentlessly demand better service and lower costs. The City Council's recent audit of DWP showed that these are attainable goals, stating that the department could achieve annualized savings of $177 million to $223 million per year though greater efficiencies.

Cotton claims that the PUC's proposal threatens the favorable rates enjoyed by residential customers. In our view, these rates are already imperiled due to years of managerial neglect.

MICHAEL F. KEELEY

Deputy Mayor, Los Angeles

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