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We'll pay now or pay later

The mayor's proposal to raise DWP rates isn't popular, but something must be done to wean the city from fossil fuels.

March 29, 2010|By Greg Goldin

Everyone, it seems, is angry at Mayor Antonio Villaraigosa over his stalled bid to raise utility rates in the service of ending the city's fossil fuel addiction.

Local business leaders said the higher rates from the Department of Water and Power would have forced them to lay off workers. Outraged citizens complained in droves. And the City Council, reluctant to impose steep rate increases during a recession, rejected the mayor's proposal Friday, kicking it back to the DWP's board for reconsideration.

The proposed charges, designed to balance the DWP's ledger while underwriting the mayor's $648-million renewable energy trust fund, would have added anywhere from a few dollars to $50 a month to residential customers' bills. Now, they almost certainly will be revised downward. The department's past shenanigans on Measure B, and its seeming unwillingness to deliver a cost-efficient and verifiable green power roster, have made council members and the public understandably skeptical about whether the agency can be trusted to spend money wisely.

If the rate hikes are cut drastically, the mayor's ambitious promise to unplug the city from dirty energy will be put on hold. But softening the blow today is only postponing a sobering reckoning for tomorrow. Pain, and lots of it, is about to be visited on Los Angeles' electricity customers. The cost of power is going up, and nothing is going to halt the climb.

Here are the facts. Right now, Los Angeles gets more than 40% of its power from coal-fired plants in Arizona and Utah. These plants blanket the Grand Canyon in sulfurous haze, pour carbon fumes and deadly coal ash into the atmosphere, drain billions of gallons of precious Colorado River water, deposit mercury in the soil and leave a legacy of disease on Navajo and Hopi lands. Coal used to be cheap and dirty power. But it's about to become expensive and dirty power.

An independent review of the DWP's rate hike proposal prepared for the City Council estimated that the utility's cost of generating electricity from coal will rise at a rate of $175 million a year from 2009 to 2014 -- more money than would be raised annually by the mayor's carbon surcharge.

And that's not all. The DWP's cost for nuclear power is projected in the review as likely to rise from $61 million to $86 million from 2009 to 2011. And although no one can predict for certain , there is a fair chance that natural gas prices will inch back up toward their historic highs of just three years ago.

As the council's independent analysis makes clear, with or without a transition plan to renewable sources, the cost of generating electricity will continue to jump year after year just to keep fossil fuel power flowing over the transmission lines.

And then there's the really bad news: looming penalties for carbon emissions. While it's not yet entirely clear what the impact will be, laws aimed at curbing global warming are likely to result in stiff federal and state penalties if Los Angeles continues to rely so heavily on coal. One reason DWP rates historically have been lower than those of most other utilities is our dependence -- the heaviest among California utilities -- on all those train loads of bituminous black rock.

But that reliance is likely to result in new costs, estimated at between $330 million and $749 million a year, for emissions permits or carbon taxes. On the other hand, as the independent analysis notes, the introduction of a carbon tariff would make converting 20% of the city's power to renewable sources seem far less costly, since every dollar invested in a clean-energy grid would mean less money spent on carbon penalties.

A recession certainly isn't a convenient time to raise utility rates, and even a hefty hike won't wean the city any time soon from its reliance on coal. But even if the DWP Board of Commissioners scales back its proposal, as is likely, the utility still will be forking over larger and larger sums to continue our unnecessary and immoral consumption of dirty power -- and one way or another, Los Angeles ratepayers will foot the bill. We will be paying a hefty, self-administered tax to maintain a diet of 19th century fuel when we could have begun the admittedly arduous and expensive transition to clean energy.

And what would have been the price? For the vast majority of the city's residents, significantly less than the cost of a tank of gas a month.

Greg Goldin is the architecture critic for Los Angeles magazine.

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