Ratepayer Watchdog Endorses 11% DWP Electricity Rate Increase

The voter-approved ratepayer advocate charged with vetting Los Angeles Department of Water and Power Rate proposals gave a thumbs-up Wednesday to a two-year electricity rate increase.

The public will have an opportunity to meet and question ratepayer watchdog Dr. Frederick Pickel, 6 to 7:30 p.m., Thursday, Aug. 23, at St. Nicholas Greek Church, 9501 Balboa Blvd., Northridge. The forum is sponsored by Councilman Mitch Englander of District 12.

Pickel told the Board of Water and Power Commissioners that the proposed 11 percent rate increase over two years is justified by the billions of dollars in capital projects and infrastructure improvements needed to meet clean and renewable energy targets that are mandated by the state and federal governments.

However, Pickel said the department must do more to reduce labor costs in future years. DWP employees are paid "substantially in excess" of workers at comparable public and private utilities, Pickel said.

He also cautioned that the department's current reliance on borrowing to fund building projects, if kept up, will become risky in future years.

Pickel's approval of the rate proposal drew a sigh of relief from DWP General Manager Ron Nichols, who had been anxiously awaiting the selection of the ratepayer advocate and his report since the middle of last year.

"The summary report reaffirms that the cost increases our power system is facing to comply with legal mandates and invest in basic reliability are unavoidable and absolutely necessary," Nichols said.

Pickel credited Nichols and the department with successful ongoing cost-cutting efforts and "an unprecedented" level of transparency in providing the necessary information to review the rate proposals.

Nichols called it an "an exhaustive, but important effort to honor the charter amendment approved by voters nearly 18 months ago."

Voters in March 2011 approved the creation of a ratepayer advocate post and Office of Public Accountability after the City Council, Councilman Mitch Englander and Mayor Antonio Villaraigosa waged a public battle with the DWP over the department's 2010 rate proposals.

Councilman Jose Huizar, who chairs the council's Energy and Environment Committee, applauded Pickel's findings.

"Today, transparency at the Los Angeles Department of Water and Power took a critical step forward," Huizar said. "Beyond the short-term findings, the ratepayer advocate is pointing out long-term challenges that the DWP must address ... I am committed to instituting new cost-controls and setting up checks and balances to ensure the financial integrity of the utility."

Pickel plans to release his assessment of DWP's proposed water rate increase next week. The full City Council is scheduled to vote on both rate proposals the week of Sept. 24.

Click here to see Dr. Pickel’s biography.

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