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Proposition 23's rate-hike myth

Supporters of Proposition 23 assert that there will be huge electricity rate hikes — of up to 60% — unless the initiative passes. It's simply not true.

October 26, 2010|By David Nahai

I've been shocked by many of the specious claims made by Proposition 23's proponents. Supporters say it would save jobs, when in fact it would kill the state's fledgling green tech industry. They say it would suspend California's signature climate change law only temporarily, when in fact it sets up criteria for restarting the law that the state is unlikely to hit anytime soon. But the claims I find most absurd are those that assert huge electricity rate hikes — of up to 60% — unless the initiative passes.

I served as chief executive of the Los Angeles Department of Water and Power, the country's largest municipal utility, so I can say from experience that in recent years, the DWP has made huge strides in expanding its renewable energy portfolio. At the time of my departure in 2009, we had reached a point at which we were getting 15% of our electricity from such sources, and there's a possibility of reaching 20% this year. That represents an unprecedented expansion in its energy efficiency programs and dramatic reductions in greenhouse gas emissions. And it was accomplished without exorbitant rate increases.

When I asked a Proposition 23 spokesperson for the genesis of the 60% rate hike allegation, I was told that the Southern California Public Power Assn. had predicted such an increase. But in fact, the association posited rate adjustments that don't even begin to approach such a drastic escalation. Arriving at the 60% figure requires a tortured distortion of the association's data.

The group's report did predict significant rate increases if a particular (since discarded) cap-and-trade scheme were enacted and if utilities were forced to purchase costly "allowances" while also pursuing emission reduction programs. The truth is that the California Air Resources Board is set to unveil its cap-and-trade measure on Oct. 29, and all indications are that utilities will not be subjected to additional onerous financial obligations.

The Proposition 23 camp's apocalyptic claims of radical rate increases are baseless. Relying more heavily on renewable energy will certainly require a significant investment by utilities. However, if managed correctly, this will be an investment well worth making — an investment in our economy, in jobs, in our environment and in a new energy future where power is both clean and cheap.

Proposition 23 is a glaring example of the worst abuse of the initiative system. Oil companies, seeking to protect their profits, have mounted a campaign designed to take advantage of the fear and vulnerability Californians are feeling in tough economic times. Californians should rebuff their reprehensible ploy.

David Nahai is president of his own consulting firm and an attorney. He is the former chief

executive of the Los Angeles Department of Water and Power and the former president of

the DWP Commission.

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