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DWP rate hike plan sent back to the drawing board

L.A. City Council wants the utility to further hone a proposal to raise its quarterly surcharge on residential customers to cover rising renewable energy costs.

September 03, 2009|David Zahniser

The Los Angeles City Council voted Wednesday to send a plan for raising the city's electrical rates back to the Department of Water and Power, saying the utility needs to do more work on the proposal.

Mayor Antonio Villaraigosa's appointees on the DWP commission hoped to increase the size of its quarterly surcharge on residential electrical bills to help the utility absorb the rising cost of renewable energy -- wind, solar and geothermal power.

But Councilwoman Jan Perry said the new surcharge would hand a "blank check" to the DWP.

The existing surcharge has already gone up by 1% every three months since the fall of 2006.

"I know we want to reach our renewable energy goals, but we need to come up with an equitable way, a way that is much more forthcoming to the public," Perry said.

Villaraigosa promised in his July 1 inaugural address to make renewable energy 40% of the DWP energy portfolio by 2020. He has also vowed to wean the city off coal by that year.

DWP officials said that even if the proposal is eventually adopted, they would still keep residential rates in Los Angeles lower than those imposed in other cities by Southern California Edison.

They also said the plan would restructure the rates, so the households that use the most electricity would feel the greatest effect.

To a lesser extent, the surcharge would also address the rising cost of coal, DWP officials said.

Deputy Mayor S. David Freeman, who oversees energy issues for Villaraigosa, said he was comfortable having the utility do more work on the plan. He said the DWP faces rapidly rising costs because it is investing in sources of renewable power that will last for decades.

"As we buy a wind farm, we pay for 40 years of electrical power on the front end," he said.

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david.zahniser@latimes.com

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